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DoubleLine Podcasts

S8 E18 Moody’s Analytics’ Mark Zandi Guests on The Sherman Show

Mark Zandi joins DoubleLine’s Jeffrey Sherman and Samuel Lau to discuss, among other topics, if June’s recovery means an end to the recession, what shape the next federal fiscal package might take, the fallout from layoffs possibly spreading into higher-wage jobs and the economic outlook for the second half of 2020. Mr. Zandi is the Chief Economist for Moody’s Analytics. The podcast was recorded June 25, 2020.

Mr. Zandi says a June end to the recession would make the three-month recession the shortest on record as the typical recession lasts nine months. But, Mr. Zandi notes, it would also be the most severe, with a peak-to-trough decline in GDP on a monthly basis of 12% to 14%, contrasting to a peak decline of 4% during the Global Financial Crisis. And while he says that he did feel the long post-Global Financial Crisis expansion was leading to the preconditions for a recession, with the chances for one in 2020 likely, the COVID-19 blow to the economy was unprecedented.

Messrs. Zandi, Sherman and Lau speculate on what further fiscal aid might be coming from the U.S. government, with the Federal Reserve having firmly passed the baton to Congress. Mr. Zandi says three things need to happen: The package has to be at least $1 trillion, with his number rising in the face of the re-intensification of COVID-19; it has to happen before the August congressional recess, with the $600 boost to unemployment insurance set to expire at the end of July; and half of that $1 trillion has to go to state and local governments.

Mr. Zandi says housing has held up remarkably well in the pandemic, bolstered by the government agencies. The other surprise is the stock market, supported by the performance of very large companies. He sees one of the longer-term impacts of the pandemic being the concentration of business activity into the hands of fewer companies across all industries. “The stock market is now a market for winners,” he says.

In terms of risks for the second half of 2020, Mr. Zandi sees the continuing lack of leadership in handling the pandemic as incredibly disconcerting. He also expects November’s presidential election to be “really ugly,” with COVID-19 impacting voting procedures and a nightmare scenario playing out if there is no clear winner on election night.

Guest Speaker Bio

The views and opinions expressed herein are as of the date recorded and should not be construed as an offer to buy or sell any securities. Such views/opinions may differ from those of DoubleLine Capital or other of its affiliates and are subject to change without notice. DoubleLine has no obligation to provide any updates or changes. The following audio presentations represent DoubleLine’s intellectual property. No portion of these presentations may be published, reproduced, transmitted or rebroadcast in any media in any form without the express written permission of DoubleLine. DoubleLine has no obligation to provide any updates or changes. To receive permission from DoubleLine please contact info@doubleline.com.

Neither DoubleLine nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed.

DoubleLine is not providing any financial, economic, legal, accounting or tax advice in these podcasts. The receipt of these podcasts by any listener is not to be taken as constituting the giving of investment advice by any DoubleLine entity or individual to that listener, nor to constitute such person a client of any DoubleLine entity. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.

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