The FTSE slightly outperformed its European counterparts, as it came out of the EU leaders meeting that there isn’t yet going to be a coordinated bailout between the countries.

There are differing opinions around the table, with Dutch PM Rutte saying that without knowing what the impact will be, it would be unwise to throw all of the support measures at it straight away. Meanwhile Angela Merkel has said that the impact is likely to be greater than that of the global financial crisis. Never one to be outdone, Emmanuel Macron has said the virus risks becoming “the death of Schengen”, Europe’s open border policy.

The immediate impact of the virus in the US is clear to see, with more than three million people signing on for unemployment benefits last week. That is more than four times higher than any previous peak they’ve ever seen in the fifty years they’ve been compiling the data and the numbers. It’s worth clicking on this Bloomberg article if only to see the chart, but whilst you’re there they have some more details.

With the US approach to their financial support – direct payments rather than furloughs and subsidised paychecks, they do risk a far higher percentage of unemployed than we might in the UK. Some are putting the number as high as 50 million job losses. This Washington Post long read is interesting if somewhat depressing.

Trump is still talking about getting the US back to work ASAP and says there are vast swathes of the farm belt where people can and should be getting out to work. He’s planning to use a labelling system to denote which areas of the country should tighten or loosen their social distancing and quarantine measures. Trump doesn’t have the power to decide what is and isn’t open for business, that falls to the individual states, but with his adamance that this is the correct approach, we’d expect even the most reluctant of Republican states to fall into line.


Staying in the US; the Fed’s balance sheet just increased past the $5 trillion mark. The additional QE they’ve undertaken has seen the number raise from $4.7trn to $5.3trn in just a week, with that number expected to grow again next week. Additionally, their budget deficit could easily head to more than 10% of GDP this year, which we think can only lead to one thing; inflation. There’s a long, detailed article in the Telegraph this morning that agrees with us and goes into more detail -worth a read if you can stick with it.

A market at no risk of rising anytime soon is the oil market. There are estimates that demand could fall another 20% as the lockdown continues – India imports some 5 million barrels per day and has just gone into lockdown – overall the global market is expecting to shed about 18-20 million barrels per day of demand over the next month. In addition to a cliff edge fall in demand, the oil that is being produced has a very finite amount of places to be stored – so production is going to have to halt. Halting production isn’t that easy though and the physical methods to doing so can often damage the oil wells, so it often can be more economical to permanently close a well rather than to do so temporarily. This could mean that once we get to a point that oil is required again, we’ll be looking at a shortage of supply and could see prices skyrocket as a result.

As we go into the weekend, we’re starting to see the stocks rally from earlier in the week  unwind – with the FTSE down close to 4% as I write this. Whether this maintains to the close is anyone’s guess. There will be plenty of people looking to bank a quick profit after the rally earlier in the week, but plenty of real money funds will be hoping that their return to the market wasn’t in ill-timed and in vein.

Be well.


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