Whenever I venture out into “The Great Outdoors” for supplies these days, I find I have more company than the last time. There are more people wandering the urban sprawl, more cars rumbling around. I notice fewer folks wearing masks, and less attempts to stick as far away from others as possible. There’s much less awkward stepping around other shoppers in the supermarket aisles – people just walk on by.
It may just be in my area, but I get the impression that the fear of the WuFlu has passed, and folks are trying to get back to normal as much as the rules allow them, bent or otherwise. I’m pretty surprised I haven’t had the WuFlu if I’m honest. I live in a very cosmopolitan area of Kensington which sees constant traffic from folks coming and going from abroad. Barely anyone living near me was born in Britain, and the few who are, are married to those who weren’t.
What’s more, this area is used frequently by the commuter crowd and international travellers who have easy access to Heathrow or central London, even if they don’t live here, thanks to the public transport nearby. It’s something of a transitory area, stuffed with hotels which are now loaded with visitors from abroad stranded within.
While I do my best to reduce my exposure to the outside world and only go outside for groceries and the odd bike ride, I’m surprised that I haven’t contracted WuFlu just from the amount of folks flowing through the area. Or perhaps I have already contracted the virus, but I’m lucky enough to have the antibodies.
Or perhaps my appetite for tobacco has helped me out…
Source: Telegraph
But enough of me. I’m damn lucky, all things considered: I’ve got my health, and my job. We at Southbank Investment Research have not been hindered by the outbreak – something which sadly cannot be said for so many other businesses out there. As my colleague Eoin Treacy wrote recently on the lockdown measures that have been enforced across the developed world:
The harsh reality is that there are legions of businesses that are not going to open back up after the lockdowns end. Even for those that do open up, how many will need the same number of workers? We have seen the official unemployment rate double in the UK and some economists expect the economy to contract by 14% this year. Unemployment claims have jumped by more than 16 million in the last month alone.
In the US, the 14.7% unemployment rate doesn’t include people who have chosen to leave the workforce. Millions of elderly people were working past retirement and are unlikely to be looking for work since they are the most at-risk group from Covid-19.
In fact, the unemployment rate doesn’t include a range of different groups. For instance, there are 6.9 million people who want a job but haven’t looked for one in the last year. Put it all together and there are 43.2 million people unemployed in the US at present.
An easy prediction is that once the lockdowns finally end, we are going to see the sharpest drop in unemployment since the Great Depression, but the rate is still likely to be a multiple of what it was before the Covid-19 hiatus…
And then of course was the extraordinary announcement from the Bank of England that we’re experiencing an economic event we’ve not seen since the 1700s…
From the Financial Times:
The Bank of England has forecast that the coronavirus crisis will push the UK economy into its deepest recession in 300 years, with output plunging almost 30 per cent in the first half of the year, but it decided not to launch a new stimulus. In its monetary policy report, the central bank presented rough and ready predictions for the economy, suggesting that output would slip 3 per cent in the first quarter followed by a further 25 per cent fall in the second. This would mean an almost 30 per cent drop overall in the first half of 2020, the fastest and deepest recession since the “great frost” in 1709…
We’ll take a look at this further tomorrow, but it goes to show just how wild the effects of the virus and the resulting lockdown have been on the UK economy.
If you’ve been reading Capital & Conflict for a while, you’ll be aware of the problems the average investor has had to tackle in recent years. We’ve writing about them and the strange problems they pose for some time: the gross indebtedness of both emerging and developed markets… the relentless punishment of savers by central banks through zero and negative interest rates in an attempt to debase the value of paper currency itself… and the strange and distortive effects this has had across financial markets.
The economic lockdown threatens to detonate all the unexploded ordnance that has been papered over in recent years. It’s a global minefield of financial risks that investors were able to wander through, if the wheel of the global economy kept turning: provided revenues kept rolling in and coupon payments kept being paid.
But “The Big Stop” that we’ve seen isn’t what anybody was counting on. Which mine is going to detonate first? That’s what I’m trying to figure out.
In today’s market broadcast, I speak to Eoin Treacy on navigating this global minefield. We started on bitcoin, but got as far as India’s role replacing China within the global economy… Germany’s threat to the eurozone… and how bitcoin is slowly gaining the eye of institutional investors he’s been speaking to –
Until tomorrow,
Boaz Shoshan
Editor, Capital & Conflict
For charts and other financial/geopolitical content, follow me on Twitter: @FederalExcess.
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