As we arrive at the end of what signals a milestone in the move away from lockdown here in the UK, it has been marred by a spike in virus cases in certain regions both here and abroad. It’s one step forward, one step back, with a lot of media negativity thrown in again I’m afraid!
On a positive note though, there is continuing good progress on many vaccine fronts and a likelihood of a working vaccine by the end of this year or early 2021, so we must keep our heads down until then!
Whilst I heard the Prime Minister and his health advisor talking of a second wave starting, many scientists seem to dispel this notion. My own view is to follow the science and not the PM and his adviser on this one (in fact on many things!), as the virus has never gone away, but what we have witnessed is the inevitable relaxing of distancing and isolating as lockdown eases, as well as factions of poor behaviour in certain areas of society, coupled to a lack of personal testing and isolation, all of which are being cited as major factors in the spike in identified cases. So no second wave perhaps, but definitely a warning sign for society should we need it, that the virus is alive, active and ready to spread if we allow it to.
On to the investment markets and a little clarity as to why we saw a downturn in share prices yesterday. Whilst it was not specifically due to the comments about a ‘second wave’, it doesn’t help to hear such things and it does affect thinking in terms of whether progress will be further setback at an earlier point than predicted, but I think that the primary reason was due to a busy reporting week for many major UK and US companies and Banks and the associated negative sentiment .
As you would expect for many businesses, the results did not make for good reading and whilst this would have been factored in by sharemarkets to a good extent already; it was more to do with the commentary from the likes of the Banks which accompanied their results and which made for grim listening.
We are in a deep recession again and the economy has a considerable mountain to climb; the banks are losing money and that doesn’t usually happen; throw into the mix the job uncertainty, as the furlough scheme reduces its payment basis by a quarter and the obligation for employers to contribute a percentage now, coupled to the fact that the virus is still with us and without a cure and it is evident that sentiment is balancing on a knife-edge, with little effort required to tip it over the edge.
Can we recover and quickly? Well yes, we will certainly recover, if not too quickly and of course it is important to reflect on the fact that every country is suffering in a similar way, so we are very much all in this together. It will require a vaccine first and foremost and then a combined effort between nations to move forward (perhaps a little bit more difficult), but I think that it is now clear that there is little appetite within the UK or EU for further national lockdowns such as we saw previously, or further financial assistance for people and businesses and so it is why it is so critical that we address the current problem and get the message to communities that lax behaviour cannot be tolerated right now, in fact for my part I hope that they come down much harder on it, as where we are right now is pivotal to the pace at which our economy is allowed to recover.
In the meantime though, I know that we are all doing our bit and so it’s out of our hands, so as the saying goes ‘keep calm and carry on!’
Have a good weekend!