In Europe, a slow start to vaccinations in Q1 meant that the region’s economies took longer than the US to pull out of recession. European Central Bank President Christine Lagarde warns that the recovery there is still fragile. But as vaccination rates accelerated in Q2, so did growth, and European equities have done well, outperforming Japan and Emerging Markets last quarter. The spread of new Covid-19 variants, notably the Delta and Delta-Plus variants, has raised some questions about the summer opening in Europe. Vaccination rates have been highest in the UK so far, but the rate of new infections there has accelerated also, predominantly among the still unvaccinated.
For much of the rest of the world, vaccinations are still far below what is needed to combat Covid-19. New and more dangerous variants have more of a chance to develop and spread in unprotected populations, but they pose a risk to everyone as they can jump across borders. For almost 18 months now, economists have had to combine health projections with economics. As the world opens up again, all of us—investors, workers, business leaders, teachers, parents, policymakers—will have to keep one eye on the latest coronavirus news.
At RockCreek, as in many other firms, we had more people coming into the office this quarter. It was mostly delightful to mix and mingle with colleagues again. But differing health and family status means hybrid work and varying norms around mask-wearing and social distancing. After so many months of Zoom meetings, it turns out that going back to the office presents new technological and personal challenges. But for many people, the energy generated by working together while keeping a safe workplace will continue for the rest of 2021 and likely into 2022.