Has anything changed?
In some ways, yes. We are starting to see Asia emerge, with positive news from China, South Korea and Japan, showing there is an end. However, mainland Europe waits to see more positive impacts from their lockdowns and curfews, which are likely to take a few more days.
The USA is in a rather disjointed position with some States enforcing lockdowns, whilst the Federal Government seems to be less decisive and clear. It is this unknown which is unsettling the markets and will continue to do so for the next few weeks.
Are Governments helping reassure markets?
The initial announcements of financial and economic assistance did little to help, as it was just announcements of large spending packages with little or no detail. As details have emerged, there has been a more positive approach taken by the markets and this explains part of the rally at the end of last week.
Won’t the new restrictions make markets more nervous?
Our view is that markets have priced in the fact that nearly all major economies will need to go into some sort of lockdown to slow the spread of the virus and ensure that health services are not overrun. For the UK and USA, the question is more about the timing and duration of the lockdown.
What is the impact of an economic lockdown?
This is one of great unknowns, as many people can and will continue to work. Certain types of employers such as restaurants, hotels, certain retailers and leisure facilities will either close or face an almost complete collapse in their revenue, but many others will be able to continue, as we have at Completely Financial, with little or no disruption. Unfortunately, we won’t know the answer until after the event, so the assumption from the markets is to look at the worst case.
Something positive?
The UK governments commitment to protecting jobs has ensured that a significant number of workers will continue to have an income. Already a number of employers have used this opportunity to ensure employees are not left ruined financially and once we start to return to normality, these employers should be able to re-open and continue to run their profitable businesses with little or no delay.
Whilst we have seen a number of retailers close shops permanently, we have also seen the supermarkets chains generate up to 45,000 new posts to help them cope with the higher levels of demand.
Finally, Colin, who as some of you know lives in Spain, has confirmed that despite facing over a week of lockdown and facing a further 3 weeks after a further extension was announced on Sunday, reports there are no food shortages, the supermarket shelves are fully stocked and most importantly, toilet paper is available in abundance.
Following last night’s announcement, we will all be working from home. Our phones will continue to be answered by our outsourced receptionists, where you can leave a message and we will get back to you.