McHardy Financial - Update on 3 April 2020

April 2020

We are currently living in a social and economic environment which is no doubt giving everyone challenges in their day to day lives.

There is a lot of press written about the Coronavirus, updates on the issues each country faces and the pressures each health service may face. Here, I have summarised the key points from Delloite’s Chief Economist’s, Ian Stewart weekly briefing on the economic situation:

Global policymakers and governments have learned from past crises. Current fiscal and monetary interventions (as a result of the global downturn caused by coronavirus and the oil price war - amongst other factors) are huge and on an unlimited scale.
The American government are buying both government and private company bonds in unlimited quantities. The aim is to free up the money supply (to fuel the economy) and keep interest rates low to help us through the worst.
The USA approved a $2.2 trillion stimulus package (10% of their GDP).
It is expected that global domestic production (GDP) will contract by anything from 20% to 30% in the second quarter (Q2) of 2020.
An even bigger US economic stimulus package is being lined up imminently to help counter the economic contraction.
We are witnessing vast interventions by both central banks and government to preserve jobs and business for the post COVID-19 upturn.
Governments have acted swiftly in this crisis and on an unprecedented large scale.
Travel restrictions have been eased in the Hubei province in China where the COVID-19 outbreak originated.
NHS England asked for 250,000 healthy volunteers on Tuesday 24th March - the scheme has been temporarily closed as over 702,000 people volunteered to help the NHS. Amazing.
Although the global economy is suffering economic pain, a sharp rebound as expected in quarter 3 / quarter 4 of 2020. Whether this will be the much hoped for V-shaped recovery we will need to wait and see.
The Mercedes Formula One team and UCL engineers have worked together to develop a non-invasive ventilator for the UK NHS. The machine reduces the need for a mechanical ventilator.
Several UK companies have said they will change their production to make ventilators for the NHS - including Rolls Royce, BAE systems and Ford.
Alcohol brands including Brewdog beer , Leith gin and Dundee-based Versant spirits have started to make hand sanitiser. Even luxury goods brand Dior are now producing short-in-supply hand sanitiser.
According to Nasa, nitrogen dioxide levels across eastern and central China have been 10-30% lower than normal.
Virtually every generation are making their best attempt to employ technology to stay connected – shares in Video Zoom Communications inc are up over 29% in a month.

Upon Reflection

There is plenty of fear out there and critical thinking is hard at times when we are afraid.

Not to denigrate the loss of life, we have proven time and again the human race has the genius to overcome any problem thrown at us. This too will pass.

The global economy is suffering and thus the capital market, and the value of our investments, are affected for a period of time until the economy mends.

What history tells us is that the 20th century had terrible events like pandemics and two World Wars with greater effects on our populations. Global economies have dug themselves out of similar, if not bigger situations than the one we are currently in.

McHardy Financial

All our staff at McHardy Financial are working from home and we will strive to continue to provide the same first class level of service to you. Should you have any questions about this briefing or want to discuss your financial arrangements please do not hesitate to contact your appointed Financial Adviser on their mobile or email address.

Stay safe and well.