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Contents
Click on the links below to get to the stuff you really really want.
USA – Trump issued restriction release guidelines; Stocks nudge up; Bonds steady; Scary data continue to roll in
UK – Lockdown extended; Stocks volatile on hopes v data; Bonds steady
Continental Europe – Investors cautiously optimistic; Inditex leads Spanish stocks down
Elsewhere – Stocks up across Asia Pacific; Brazilian nut-job president sacks his health minister
WTF – Art imitating life
Links
Numbers
Ts & Cs
USA
The emotional tear between the data and the hopes continues. Everyone wants the pandemic to be over so that we can all get on with our lives again. But a premature lifting of restrictions could lead to a second wave of contagion. Trump is being pressed by his corporate sponsors to restart the economy as soon as possible. So he’s come up with a plan…
Trump’s administration has issued guidelines to state governors that would allow most of them to lift all social distancing practices within four weeks. By contrast, New York State Governor, Andrew Cuomo, has brought in a team of scientists to provide evidence-based guidelines on how best to lift restrictions without losing control of the contagion rates. Don’t be surprised if Cuomo is running for president in four years’ time.
Hopes of a lockdown release gave investors reason to be optimistic that their losses might be repaired fairly soon. So up went stocks with the S&P 500 adding 0.6% on the day. Healthcare, consumer and technology stocks posted the biggest gains, but nowhere near the scale of movement we’ve seen recently. Bonds didn’t move much as folk wait to see what will happen next.
All this steadiness in prices came against a background of scary data. Reuters is reporting that “22 million Americans have sought unemployment benefits over the past month”, while housing sales data have slumped. Corporate reports have been coming in with profits slashed, and on top of all of this, the Chinese economy posted its first decline since at least 1992.
The lockdown is painful but necessary. A premature end to it will only revive the pandemic, and then we really would have problems.
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UK
As was widely expected, the UK’s lockdown measure has been extended for a further three weeks. In addition to this announcement, Dominic Raab took a swipe at China saying that it could no longer be “business as usual” with the world’s second-largest economy. I doubt that anyone in Beijing would bat an eyelid at the fist shaking from such a relatively tiny world player. But it probably made Dominic feel all manly. For its part, the Chinese embassy came out with some laughable nonsense about the source of the virus being undetermined. So we all got our dose of fiction from the news.
Over in the equally bizarre world of stocks and bonds, things were going up and down like the needle on a lie-detector attached to the Chinese ambassador. By the end of the day, the hopes attached to US lockdown relief just about won out, leaving the FTSE 100 and FTSE 250 0.5% and 0.2% higher on the day. The stuff that had fallen the most in value were among those rising the most with financials, tech and autos leading gains.
The less trigger-happy world of bonds was also fairly sanguine. The yield on the benchmark 10-year Gilt (UK government bond) trundled along at around 0.3%. This is a very low level, but it’s settled down from its huge swings of recent weeks.
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Continental Europe
Bonds on the continent were similarly stable after a few days of sharp ups and downs. Investors appeared to be cautiously optimistic that the US lockdown alleviation would be financially beneficial without triggering a second wave of contagion. Most national stock indices across the region made only minor changes overall on the day.
One exception of note was the Spanish Ibex 35 which dropped by 1.1%, led down by clothing retail group, Inditex. The parent company of Zara, Massimo Dutti and a few others fell by 5.0% after receiving a broker downgrade.
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Elsewhere
Stocks across the Asia Pacific region are trading higher this morning. Folk are following the US lead as usual, hoping that the lockdown pressures can be released and we can all forget it ever happened. Stocks in Korea have jumped the most as people there are hoping that the virus levels have peaked.
But let us turn our attention to a different region. There is a world leader who makes Trump look measured and sensible. His name is Jair Bolsonaro and he is the president of Brazil. He’s just fired his government’s health minister, Luiz Henrique Mandetta, who kept insisting on things like social distancing and evidence. Bols knows better; it’s “just a flu” he announced. Which is good because the expected peak in the pandemic is still weeks away according to Bloomberg. The now former Health Minister, Mandetta, has a higher popularity rating than Bols, and has been given vocal support by the governors of Sao Paulo and Rio de Janeiro. He may yet return.
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WTF (What’s The Fact?)
Art imitating life
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Links
Investopedia – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point
Guffipedia – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies
Guardian – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott)
Times of India – Why use five words when 37 will do?
Daily Mail – Click it. I dare you.
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IMPORTANT
This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my
opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you are too stupid to recognise the devil’s ear wax when you see it, then you’re on your own.
