Once again we try to make sense of the current pandemic and the impact on investment markets.
Our focus remains with our existing clients’ investments and our thoughts are with those most affected by the pandemic.
We have taken views from some of our investment funds and interspersed this with some of our own views.
After weeks of unprecedented turmoil in markets, things have been calmer over the past two weeks. Effectively, many assets have retraced some parts of their losses from their lows around the 23rd March and in some cases showing a remarkable bounce. It once again reminds us of the impossible (and frankly dangerous) task of trying to think you can time markets.
Major equity indices year-to-date in Europe are still down around 25%, and US indices are down around 15%, though the technology sector is much nearer to flat now. Markets are generally more orderly now. It appears that distressed selling has abated. It appears the market has become more understanding of the epidemiological data and its path, and the fact that lockdown measures are slowing and, in some areas, now clearly reversing the flow of new cases.
There was also the massive government and central bank support, which has now largely been promised, even if not yet delivered. Many of you will be familiar with the UK’s support schemes for employment and businesses and these are widespread in other geographies. Helicopter money – in the US a cheque with Mr Trump’s large signature on it – is now fluttering to the ground.
Also, positively, capital markets do appear to be doing what they should do; i.e. providing capital, at a price, to those that need it.
What is the future?
We need to be aware that it’s not just the virus that can wrong-foot markets, US presidential elections, China tensions, the Gulf are all still live and impactful issues.
We are cautiously optimistic. Medical science has learned fast about both treatment and containment of the virus, and massive government support should limit defaults, especially in larger companies. Against this, there are still investments that can have long term value.
At Trafford and Houghton we remain focussed on providing support for our clients. This has been possible thanks to the ongoing dedication of our advisers and support staff. We continue to conduct regular reviews with clients (via telephone) and have (on the whole) had very positive meetings.
Ian, Martin and Will.