What started as a slow day for markets ended with the S&P 500 hitting a rather significant milestone by the close of play: The US index has grown by 100% since the covid lows it saw on March 23rd 2020. The move up from 2,237 then to 4,479 last night took just 354 trading days to achieve, making it the fastest doubling of a market since World War 2. Usually it takes around three times as long for such a doubling to occur and had the S&P carried along its trajectory in the 15 months prior to the Covid crash then it would now only be trading at around 3,855 – which means that the Fed’s money printing programme is responsible for everyone with an S&P tracker fund being a lot better off than they otherwise might have been.


Markets might be treating covid like a distant memory, but in the US the case numbers in five states are now seeing the highest daily covid cases since the start of the pandemic. The US is seeing the health system back under pressure and case numbers look like they could head north of 200,000 a day nationally in the next couple of weeks, with current case numbers up by 700% since the start of July. Pfizer has submitted data to the FDA that shows a booster jab administered 6-12 months after the original double vaccine gave a much stronger immune response to all covid variants than just the two shot programme and it’s probable the FDA will recommend the programme – though the problems in the US aren’t really down to people needing a third shot, it’s that they need more people to get their first and second, with only 60% of those eligible to be fully vaccinated being so.


The corporate concern that covid isn’t behind us is manifesting in record amounts of cash being hoarded on balance sheets, according to a Wall Street Journal article: They say that globally companies are sitting on $6.84 trillion in cash which is  45% higher than the five year average and up a by a couple of percent on last quarter, which goes against the theories that companies would go on a post-pandemic spending spree. Companies that have been badly impacted such as restaurants, cruise and air lines have continued to increase their cash buffers in case they get shut back down again with variants, though the hope is that we won’t and that this cash will make it back off the side lines and either into cap-ex spend or dividends/share buybacks.


Covid cases in Australia are on the up, with New South Wales reporting 452 new cases yesterday and are expected to rise substantially in the coming few weeks. The prolonged lockdown in various states in the country could tip the nation into a second recession, though the central bank has confirmed that it stands ready to turn the money taps back on if required.


New Zealand has also had a confirmed case with unknown origin, which has led Jacinda Arden to put the country into a three day lockdown which starts at midnight tonight – just 5 hours after Jacinda Arden announced it (that’s how you do it, Boris!). New Zealand has only managed to double vaccinate 19% of the population, whilst Australia fares slightly better at 21% – though relatively that’s an awful position to be in if the delta variant were to start to take off. We’re not sure if this case find and three day lockdown reduces the chance of New Zealand raising interest rates tomorrow, but the currency has sold off on the news of the single case.


The Afghanistan situation continues to develop rapidly – though not as quickly as it otherwise might have, because the speed of the fall of Kabul even caught them by surprise and meant that senior Taliban leaders weren’t able to make it to the capital in time. Joe Biden has defended his decision and says that America should not be fighting for the country if they are not willing to fight for themselves. The UK is going to announce a refugee scheme today, which is said to be based on the Syrian scheme which saw 20,000 refugees resettled here. The government hasn’t put any numbers on their commitment this time, but it must be at least as big, if not more. The FT has an interesting read on how the world needs to be ready for the Afghan exodus and that countries that were involved in the conflict have a moral responsibility to step up. The UN estimate that more than a quarter of a million Afghans have already been forced to flee their homes.


Today we’ve already seen UK unemployment numbers show another reduction to 4.7%, whilst job vacancies rise to a record high – such a combination is going to continue to put upward pressure on wages and therefore even more pressure on rishi Sunak to ditch the pension triple lock this year.


We’ve also seen the release of the government’s hydrogen strategy, which aims to generate 5 gigawatts of low carbon hydrogen by 2030 to replace natural gas in powering 3 million homes. The taxpayer is going to have to subsidise the move and there’s criticism that the UK strategy is divergent from the European one, because we’ll include so called ‘blue hydrogen’ that is produced using fossil fuels, which crushes its green credentials. The FT has more.


Have a great day


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