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Lockdown Diaries – Reasons to be optimistic

13th July 2020

12.6.2020

This is the third update from me. The first one was understandably, a little downbeat in outlook for the world economy and asset prices. The second was more upbeat and this update confirms that I believe there are reasons to be optimistic.

Late last week the US payroll numbers delivered one of the biggest economic data shocks: consensus had been for 7.5 million job losses whereas the report showed 2.5 million job gains! Other data suggests that domestic activity in the US is improving with weekly mortgage approvals and house purchases back to levels seen in mid-January alongside a rebound in new business openings. Why do I consider this to be a reason to be cheerful? Well, the US is nearly always the first economy to come out of recession and at a faster pace than anywhere else and it consistently grows faster than other developed markets. This growth normally spreads to other economies including Europe and the UK. You are probably familiar with the phrase: “when America sneezes, the world catches a cold”.

Last week the European Central Bank (ECB) boosted its pandemic-driven bond buying programme by 600 billion Euros and extended it until at least June 2021. So, central banks continue to support their populations, businesses and financial markets. Governments are also doing “whatever it takes” and it is likely the UK Government is going to have an emergency budget in the coming months that could announce large scale spending plans and other measures to stimulate the economy. Let’s hope that the EU and UK Brexit trade deal negotiators can progress their discussions towards a deal.

The world’s largest pharmaceutical companies at the forefront of COVID-19 vaccine development advise they are making progress and production lines are already set up for when a vaccine becomes available. Positively, they are expecting a vaccine to possibly become available as early as autumn or winter this year. This is a constructive backdrop for getting most people back to work, which would be supportive for asset markets. Contract tracing and the NHS coronavirus smartphone app have identified infections and reduced the spread of the disease, official figures suggest. Analysis of the system that is being used on the Isle of Wight appears to show that it has contained the infection during the trial. The data gives hope that the integrated system could help to control infection rates as the lockdown is eased.

The world’s health seems to be on an improving trend, which is leading to a slowly normalising society, which, in turn, is generating improving economic data. I hope that all continues.

Finally, for now, unselfish behaviour benefits those who engage in it as well as society at large. At a meeting of the Wells Dementia Action Alliance this week it was great to learn how the Wells Coronavirus Network, Heads Up and the Lawrence Centre have come together to provide support to those that need it. Initiatives such as companion calls, delivering cake and meals, social calls for a chat in the garden and enhanced support have been well received.

Volunteers have really enjoyed the experience too. Isolation has a huge effect on those living with dementia and their carers and while there is plenty more to do, these acts of kindness are helping to lighten the load. I hope you and your family continue to stay safe and as always, please do not hesitate to contact us if you would value a discussion.

Peter Hill
Director
Pilgrim Financial Planning Ltd
Peter Hill

 

CII

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