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The Delta Variant - What to Expect?

Badger Investment Group - Aug 19, 2021
Few companies are keeping the S&P 500 at near-record highs due to investors' concentration in the mega-cap secular growth names. These holdings fuel the performance while most other stocks within are telling a different story.

The Delta variant of Covid-19 is creating a frightening deja vu in many countries that are critical to global supply chains, posing another risk to global markets. The high number of infections is forcing governments to take drastic measures to try and limit disruption.

In a recent update to its World Economic Outlook (WEO), the International Monetary Fund forecast emerging Asia will grow 7.5% this year, down 1.1% points from its previous projection made in April. That was a much more significant downgrade than a 0.4 point mark-down for emerging economies across the globe. 

Since last year, China's most severe coronavirus outbreak has added to concerns over an economic slowdown in the country, as Beijing rushes to contain a rise in cases linked to the highly transmissible Delta variant. The outbreak is another challenge for Beijing after a series of recently published data and policy measures indicated that China's roaring economic recovery from the pandemic was under pressure.

China's factory activity expanded in July at the slowest pace in 17 months as higher raw material costs, equipment maintenance and extreme weather weighed on business activity, adding to concerns about a slowdown in the world's second-biggest economy. China's zero-tolerance approach could present significant downside risks to the current economic recovery.


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