After being berated for thinking that Monday was a Bank Holiday by a friend of mine (I did work it though!), I had to concede that, along with life as we knew it, it had in fact been cancelled (if it ever existed in the first place… blinking Chinese diaries!).
After a poor end to the week in financial markets, there are some signs of promise again, with the FTSE share index opening up this morning by just under 2%, after a decent day in the US sharemarkets yesterday. Why is this, when companies and economies are struggling, I ask myself?
It would seem that the measure of future success is based around the plans and contingencies that are being put in place by governments’ now and to highlight this, apart from our own obvious effort of financial support to the private sector and employees/self-employed finally arriving with its end users in recent days, I see that the United States have raised an extra $3 trillion in debt in just the last 3 months in order to assist their ailing economy. To put this in context, they borrowed $1.8 trillion to address the whole of the 2009 recession.
The scale of the borrowing required globally is startling, but reflects the levels that governments’ are prepared to go to in order to protect their economies and people’s livelihoods, hence the share markets seem to favour this attitude and, of course, we are all suffering in this together.
Companies are also seeking to take advantage of low-cost lending, in order to boost their financial strength and expansion capability going forward; expect to see quite a few mergers and acquisitions globally after all of this, the markets like this type of activity.
As I have mentioned in my previous notes, investment markets have generally been in a positive recovery mode in recent weeks, in spite of the more obvious issues facing countries with this virus, but this is because they are planning ahead and it is probably fair to say that we are now moving towards an easing of lockdown, at least in terms of allowing the re-opening of many types of business (does anyone actually know what the current rules for this are, because all I can see is a completely inconsistent approach to it all within the UK?).
The next stage ahead for investment analysts’ and fund managers will be to try and decipher the public’s appetite for certain products and services and this will be the real test during the second half of this year, which I am sure will continue to require governmental support for some months to come; let’s hope that they can provide it and that we don’t see a second wave of this virus too soon.
So it’s a real emotional roller-coaster, but we are past the peak and hopefully this journey will end soon, well at least the first leg of it.