Sombre

Published on 11-06-2020 12:25:00

The mood is sombre. We’ll keep things brief so as not to wallow. The FTSE All Share’s down 2.5% because, after the limbo of yesterday, the Fed was downbeat, signalling that it will be years before it withdraws economic support. As stocks fell, even the prospect of freshly minted money couldn’t overshadow the pessimism.

Oil’s down today. Gold dithered before heading up and yet low lithium prices and reduced investment may jeopardize the switch to electric vehicles. Given the dismal mood, it might not have been the best timing for us to know that Goldman Sachs has made $1bn from commodity trading this year.

It’s a grim double whammy for the UK – we are forecast to suffer the worst economic damage among developed nations and are second in the number of deaths per million. Boris Johnson and Keir Starmer, meanwhile, argue over schools in a phone call. Unilever, at least, still has some faith in the UK.

We find that economists have no clue how big the UK GDP hole is. But we do know Johnson Matthey is slashing 2,500 jobs, Centrica 5,000 and Heathrow says it has 25,000 at risk. Where to turn in these conditions?

Some seem to be playing the stock market like a casino, which partly explains why equity markets don’t correlate with GDP growth. But the FT is concerned that investors are over-exposed with few options given interest rates almost reaching zero.

As our own Alistair George comments in his latest analysis published today: ‘We continue to believe investors should inject a note of caution into asset allocations, despite equity market bullishness.’

Depressed now? Sorry – it will pass in time, if only because your conscious mind isn’t a thing. It’s a process. And all processes move on.

Until next time,
The Stream Team

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