Assessing the economic hit from measures to stop Coronavirus

A summary of some of the estimates from industry bodies, economists and analysts on the impact of the economic damage from the measures introduced to slow the rate of infection of Covid-19.  The horse and cart made way for vehicles powered by the internal-combustion engine because the newcomer was faster and more efficient. Comparably, mass … Continue reading “Assessing the economic hit from measures to stop Coronavirus”

Scarring: Mapping the damage of the lockdowns

Governments are looking at the longer-term impact of lockdowns on their economies. Expect to hear more around the world about ‘scarring’ over the next few weeks. Chastened governments are examining the damage that lockdowns have brought. They are cautious about the speed at which they can relax to get more people back to work. They … Continue reading “Scarring: Mapping the damage of the lockdowns”

Tiptoeing back to work

As the government starts easing some restrictions to try and get people back to work the danger of a spike in new Covid-19 infections is very real. This means it will take some time. On both sides of the Atlantic progress in getting back to work is slow and patchy. This is not going to … Continue reading “Tiptoeing back to work”

Same virus, different market reactions

Coronavirus dominates share market thinking and brought on the big bear dip in most markets. It does not, however, seem to be the severity of the virus that differentiates between the different countries. This week the value of companies quoted on the US Nasdaq index continued to outpace the value of all the listed companies … Continue reading “Same virus, different market reactions”

Plumbing the depths

Yesterday The Office of Budget Responsibility in the UK tried to update its forecasts for the UK economy. They emerged at the pessimistic end of the current range of estimates but attracted news coverage because of who they are. They anticipate on the scenario they published a fall of 35% in the UK second-quarter GDP, … Continue reading “Plumbing the depths”

‘Lockdown for longer’ is a major market threat

Stock markets have staged a significant recovery from the Coronavirus slump, rallying sharply from lows hit in March. But gains of 10% or more are common in bear markets – and the crisis at many of the world’s businesses has only just begun. A wave of insolvencies will puncture the optimism, as companies with too … Continue reading “‘Lockdown for longer’ is a major market threat”

How long a shutdown can governments afford?

If a return to work is organised after the three-month stage, there will be some rebound, but economies will not spring back into full output immediately. The Central Banks have responded quickly and with great force to the crisis. Led by the Fed they have produced huge amounts of cash to keep markets afloat, rescuing … Continue reading “How long a shutdown can governments afford?”

US Senate reaches agreement to a $2 trillion fiscal stimulus package

As expected, the US Senate reached agreement between the parties to a $2 trillion fiscal stimulus package yesterday, which gave the markets a big boost. Democrats allowed substantial funds to be available for business through a $500bn fund for industries, cities and states, with a $367bn loan programme for small business. They also accepted the … Continue reading “US Senate reaches agreement to a $2 trillion fiscal stimulus package”

Covid-19: Three economic scenarios

Markets are governed by the duration and impact of the many measures being taken to limit and reduce the number of people contracting the COVID-19 virus. This was the week when the western advanced world changed dramatically, with the governments deciding to ban or advise against all events, tourism, entertainment and hospitality outside the home. … Continue reading “Covid-19: Three economic scenarios”

International trade winds and stock markets

If the coronavirus situation escalates, world trade is in for a major supply shock that will damage company earnings and productivity. The outlook remains unclear. There were attacks on the international order of promoting free trade before the coronavirus hit. Many emerging countries refused to make rapid progress to lower tariffs and fewer barriers to … Continue reading “International trade winds and stock markets”

The virus sickens stock markets

As we feared last week, the reality of Chinese closures, damaged supply chains and worried consumers has hit world equity markets. The wall of money central banks have been injecting led people to anticipate a short, sharp decline and recovery which they could look through whilst driving shares higher. Suddenly, investors show concern that the … Continue reading “The virus sickens stock markets”

Why is the current market vulnerable?

Sharp falls in equity markets are never pleasant for investors, but the recent market weakness needs to be viewed in context of last year’s market environment, where we saw one of the strongest rallies in global equities in recent times. To illustrate, the US stock market (S&P 500) returned 31.5% in US Dollar terms last … Continue reading “Why is the current market vulnerable?”

The biggest winner from coronavirus is Donald Trump

It should come as a surprise to no-one that the figures from China about coronavirus infections and deaths have been massaged to make them look better. As the crisis in Xi Jinping’s government from his mishandling of the situation mounts, the biggest winner is now becoming clear. It’s looking more and more likely that Donald … Continue reading “The biggest winner from coronavirus is Donald Trump”

A wall of money battles the virus

Some investment commentators had been relaxed about the Chinese virus, reading into the official numbers the idea that new cases had peaked. The Fed, the Bank of Japan, the European Central Bank and the People’s Bank of China are all running supportive policies, putting money into markets in various ways. As this money helped drive … Continue reading “A wall of money battles the virus”

Big troubles for China

The Chinese government is facing pressures on a number of fronts. Its rulers may be about to find out that, for investors, good governance really matters. We have been negative about the prospects for the Chinese equity markets for some time. We worried about the slowdown in 2019 and the continuing hostility of the US … Continue reading “Big troubles for China”