During the second quarter, North American equity markets fell precipitously, led by the S&P 500, which entered bear market territory (a decline of 20%). If leading indicators and newspaper columnists are accurate, an economic recession is in the cards in Canada. In the United States, the R-word appears to have already arrived, according to the media, although the U.S. National Bureau of Economic Research notes that to meet the traditional definition of a recession there must be “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
However measured, recessions have several implications, including the potential for investors to move away from your company due to so-called risk-off rotation. Technology companies have already seen evidence of this rotation.
In this issue of IR focus, we speak to IROs who have gone through the downsides of recessions and lived to tell their stories. Our hope is to give all practitioners advice and ideas on what to do when the bottom falls out of the economy (and the capital markets).
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