Sanjay's Blog
Fall in markets explained, 16 April
Global markets fell overnight and our market will fall today. It is not surprising given that daily market movements are based on investor sentiment. Investors panicked as the effect of the virus on corporate earnings emerged. As we know, this was expected and corporate earnings will be disastrous over the next couple of months but to put it simply; companies cannot earn money when they are closed. Nonetheless, it is human nature to hope instincts are wrong, and when they are right there is still disappointment.
We know that a recession is impossible to avoid as by definition a recession occurs when there is a fall in GDP (which is determined by trade and industrial activity) in successive quarters. Given that there has been a lockdown in production globally for weeks and potentially more in certain parts it is clear that the fall will happen.
Recession is just a word, and the recovery will be dramatic; the issue is that we don’t know when that will be given the nature of the virus. Europe and the US believe it will be soon as they are already planning on lifting restrictions. Patience is vital amidst such volatility as markets will be unsettled over the next few months until there is global confidence that the virus is dissipating for good.
Thanks for reading and stay healthy.
We know that a recession is impossible to avoid as by definition a recession occurs when there is a fall in GDP (which is determined by trade and industrial activity) in successive quarters. Given that there has been a lockdown in production globally for weeks and potentially more in certain parts it is clear that the fall will happen.
Recession is just a word, and the recovery will be dramatic; the issue is that we don’t know when that will be given the nature of the virus. Europe and the US believe it will be soon as they are already planning on lifting restrictions. Patience is vital amidst such volatility as markets will be unsettled over the next few months until there is global confidence that the virus is dissipating for good.
Thanks for reading and stay healthy.
Encouraging trade news, 15 April
Despite another dark day in London as far as COVID-19 goes, the market stayed static.
Elsewhere in the world, markets rallied on the back of better than expected data out of China. Imports in that nation slid less than 1%; far less than the 10% that was expected (they were down by 4% in January and February) . Exports retreated by 6.6%; less than half of that predicted. This shows that demand in China and across the borders is coming back hard.
However, the market is bracing for production figures coming out on Friday which will show a contraction for the first time in 20 years.
With the virus still crippling countries around the world, it is hard to see positive production or export figures from China for a while yet. The US, Europe and Asian markets all performed strongly on the back of the news, with The American market rising to its strongest position in a month.
Investors are looking through the poor data which is slowly emerging believing that much of the bad news (including shocking unemployment figures which are continuing to soar) has already been priced into markets.
As industries await the end of lockdowns and the stimuli around the globe is keeping workers and employers afloat, markets are still wary of continuing restrictions and a second COVID-19 wave.
Still, as deaths and new cases fall, we can only remain hopeful that we have seen the worst.
Thanks for reading.
Elsewhere in the world, markets rallied on the back of better than expected data out of China. Imports in that nation slid less than 1%; far less than the 10% that was expected (they were down by 4% in January and February) . Exports retreated by 6.6%; less than half of that predicted. This shows that demand in China and across the borders is coming back hard.
However, the market is bracing for production figures coming out on Friday which will show a contraction for the first time in 20 years.
With the virus still crippling countries around the world, it is hard to see positive production or export figures from China for a while yet. The US, Europe and Asian markets all performed strongly on the back of the news, with The American market rising to its strongest position in a month.
Investors are looking through the poor data which is slowly emerging believing that much of the bad news (including shocking unemployment figures which are continuing to soar) has already been priced into markets.
As industries await the end of lockdowns and the stimuli around the globe is keeping workers and employers afloat, markets are still wary of continuing restrictions and a second COVID-19 wave.
Still, as deaths and new cases fall, we can only remain hopeful that we have seen the worst.
Thanks for reading.
Market Update, Tuesday 14th April
I trust you all had an enjoyable albeit different Easter break.
It has been a positive start to the day with our market up close to 1% as I write. It will be an interesting week with much data being released globally. Unemployment figures will be shocking and manufacturing figures will be the worst we have seen for decades. It is extremely important to realise that the figures relate to activity prior to the beginning of the virus and that which occurred during the spread. Economic activity and company productivity will be slashed this year as they are lagging indicators. China is the perfect example . Companies are back at work now and there is meaningful productivity but the end result will not come out in meaningful figures until later in the year. However, from a consumer sentiment point of view, people can see things happening physically which is positive.
It is generally accepted that productivity predictions globally will be 40-50% in excess of actual production. The surge we have had in markets over the last week is typical following significant downturns. A peak in deaths and new cases is fabulous and will promote optimism but it will be counteracted by the raw data which will continue to be way down from normal as restrictions remain and probably will continue to some extent for longer than businesses would like. Nonetheless a prudent approach is clearly preferable to prevent a second wave of infections.
The good news is that the world outlook is much more positive than it was a week or two ago as we edge forward to some form of normality. I will update you further as to how global markets begin the working week.
Thank you for reading and let’s continually remind ourselves how lucky we are to be in this country.
It has been a positive start to the day with our market up close to 1% as I write. It will be an interesting week with much data being released globally. Unemployment figures will be shocking and manufacturing figures will be the worst we have seen for decades. It is extremely important to realise that the figures relate to activity prior to the beginning of the virus and that which occurred during the spread. Economic activity and company productivity will be slashed this year as they are lagging indicators. China is the perfect example . Companies are back at work now and there is meaningful productivity but the end result will not come out in meaningful figures until later in the year. However, from a consumer sentiment point of view, people can see things happening physically which is positive.
It is generally accepted that productivity predictions globally will be 40-50% in excess of actual production. The surge we have had in markets over the last week is typical following significant downturns. A peak in deaths and new cases is fabulous and will promote optimism but it will be counteracted by the raw data which will continue to be way down from normal as restrictions remain and probably will continue to some extent for longer than businesses would like. Nonetheless a prudent approach is clearly preferable to prevent a second wave of infections.
The good news is that the world outlook is much more positive than it was a week or two ago as we edge forward to some form of normality. I will update you further as to how global markets begin the working week.
Thank you for reading and let’s continually remind ourselves how lucky we are to be in this country.