Well the much needed rain is with us for a while and it’s actually quite nice to see it again, although I wouldn’t have fancied my chances if it had rained throughout lockdown!
As we start a positive day within sharemarkets again today, after a quieter day of profit-taking yesterday, it begs the question why? We are seeing job losses starting to abound, companies borrowing vast sums of money (whether they need it or not it seems!) and we are still not out of lockdown.
Well the reason is because the market-makers actually like to see this sort of behaviour within companies; directors who are restructuring their businesses in the face of a challenging market and not afraid to make swingeing cuts. A leaner business with better resource (even if more highly geared) is seen as a business that is well-equipped to grow in whichever direction the new marketplace dictates. So we have rising share prices!
This is clearly no reflection on what we see in the wider domain on a day to day basis however, with confusion and, dare I say, incompetence reigning supreme in some circles.
So where are we with our investments? Well obviously shares are looking good, in spite of the uncertain climate and for the reasons I have outlined (you can decide whether this will be sustainable or not, especially if we encounter headwinds with either Brexit or a second wave of the virus!). The more cautious bond markets seem okay, given the high default rates that have already been built into expectations and, of course, the Bank of England is saying that there is still plenty of money available to lend if needed.
All well and good perhaps, but the big test on a more localised basis, is that of whether many families will be able to generate sufficient means to live (and spend) as they did before lockdown arrived. This is the really emotive issue which concerns me and I’m sure most, if not all of you reading this.
I hope for a quick bounce-back and for job markets to open up again in the months ahead, but some economists are suggesting otherwise. In the meantime we do what we do best and live each day, supporting our families and each other; those bits we can control.
All in all though, a positive investment market to go into the weekend with and the lawn is green again, so I’ll take that for now.
Have a good weekend everyone!