The market has seemingly shunned European banks, perhaps remembering the near collapse of the sector in 2008. However, we think banks have the capital to absorb potential losses in the current COVID-19 environment. As part of the solution to this crisis, European banks could improve their ESG scores and enhance their investor appeal.
Whew…what a half-year! The COVID Crisis has exposed underlying inequalities and revealed insecurities, despite emerging after the longest expansionary business cycle of 128 months. Unprecedented GDP declines, locked in consumers and locked out workers, sectoral shutdowns (travel, hospitality, recreation, transportation etc.), and high unemployment have characterized the past quarter.
The Fed highlights persistent economic uncertainty but makes no policy changes. Canadian housing starts rebound in May. Industrial production plunges in UK. Minor upward revision to eurozone Q1 GDP. Larger upward revision to Japanese Q1 GDP. Business conditions improve in Australia.