June 1st marked the first significant step on returning to normal after lockdown with some children returning to school and hopes that non-essential shops and restaurants might re-open later in the month.
We seemed to have passed the peak here in the UK
The numbers of new cases and new deaths on a day by day in the UK seems to have passed it’s peak about three weeks ago. Other countries that locked down earlier and then eased restrictions sooner have by and large fared quite well with no dramatic second spike as yet. The continuing rise in cases and deaths in Brazil, Russia and India is very worrying but the death toll is not as severe as we have seen in Europe. However, I am not entirely sure how trustworthy these figures are. There seems to be doubt in the UK so who can tell the real figure in less transparent countries!
These dreadful figures notwithstanding, most major stockmarkets continue to move cautiously upwards with only the Hong Kong market showing a decline over the past month. Stockmarkets are meant to be an indicator of economy viability and are meant to price in all current thinking and translate that into whether the concensus is for things to get better or worse. Since mid-March there seems to have been optimism in the markets well before anyone knew how long the crisis would last and how bad the consequences would be. The key driver can only have been the government stimulus packages. We will now over the course of the easing process, start to see the extent of the economic carnage. Will all those who have been furloughed still have jobs to return to?
Will we see more streamlined companies?
I have posited previously that this crisis could be an opportunity for companies to streamline the workforce and maybe emerge as more efficient, profitable companies going forwards. Out of any disaster there is opportunity and some businesses have already been able to take advantage of that. But that is not to say there haven’t been casualties and that list will grow the longer the lockdown continues hence the urgency of returning to the workplace despite the obvious risks. The World Health Organisation recommends a 1 metre distance and the use of masks and frequent hand washing should allow some normalization.
The coronavirus headlines are wearing thin
One thing that I think has changed over the past few weeks is the naked panic that the press seemed keen to whip us all into. Obviously lurid headlines sell papers and that is what keeps journalists in jobs, so the more dramatic the headline the more people NEED to read. Frequently the actual story is somewhat less newsworthy and I genuinely think that people are starting to get bored. They are breaking lockdown rules because they have seen that whilst there is a real danger, a significant number of the deaths have been those with pre-existing health conditions. The elderly, those with existing lung conditions and diabetics are more at risk.
The big stories of the past week have been Dominic Cummings and the “covidiots” on the beaches. Dominic Cummings seems to be a law unto himself and could probably plot his Machiavellian schemes from inside a prison cell but that is another story. The beach is in my opinion a great example of people losing patience with it. If I haven’t got Covid and the person 50cm from me on a beach hasn’t got Covid, I cannot catch Covid and I am sure that a lot of the “covidiots” were thinking something like that (or maybe not). The problem is however that the more people mix and mingle with people they don’t know and the more things people touch that other people have touched previously the risks shoot up exponentially. But a controlled return to work should be possible for many people.
So as lockdown eases, I see no reason why the economy should be plunged into a downward spiral. There are talks of a depression, inflation, deflation but as with the virus itself, all the “experts” are expressing their personal opinions.
Try not to panic
I don’t classify myself as an “expert” on anything (maybe ice cream if you forced me to choose) but I also like to deal with things that have happened and then take a reasonable perspective. It was my opinion, after the initial drop in markets and your funds, that it was probably best to stay put and not panic. In truth, I didn’t expect things to get back to this stage so quickly. I didn’t expect the Covid to spread so quickly with such devastating effects and I didn’t expect such a disconnect between Covid and global investment markets. Going forward, there will be continued trade spats between the US and China, there will be continued problems with the Brexit process and these will move markets up and down on a daily basis but thus far I am far more positive about the investments than I have been for the past two months.
I will repeat what I have previously written which is that I simply do not know where markets and your investments will be in a week, a month or a year. I will continue to advise you to the best of my ability and I will resume my annual meetings with you. I haven’t really done many reviews over the past ten weeks because it is easy to make mistakes in times of great volatility. Now that things have calmed down, I would like to think that it will be a return to normal but I don’t quite know what the new normal is yet.
I will reiterate my previous message that if you do have any thoughts or concerns please do get in contact with me.
In the meantime please keep safe and follow official guidelines.