On both sides of the Atlantic this week decisions have been made to keep interest rates at historically low rates. On Wednesday night the Fed’ announced that US interest rates would remain near zero for at least 3 more years. Less than 24 hours later the Bank of England’s Monetary Policy Committee voted unanimously to keep interest rates on hold and make not change to its bond buying programme. This was largely expected as policy makers focus on how best to stimulate economic recovery.
Covid’ testing backlogs in the UK and the growing opposition to Boris’s proposed bill have also attracted media comment. The testing backlog appears to be nationwide and feels inexcusable. The fiasco unfolded as government moved to restrict our behaviour and limit socialising to reduce the spread of the virus, yet it can’t actually measure the spread. How can the spread be managed when it cannot be measured? Our essential NHS staff are advised to self-isolate at home until testing is made available to them. It raises further questions as to how readily we can expect a vaccine to be available and perhaps more importantly thereafter, how quickly and effectively it will be distributed. The whole world urgently needs a vaccine to get back to life as we knew it.
Despite this Boris’s Internal Market’s bill seems to be the priority and while the bill was passed by a majority of 77 to the next stage, there is significant opposition from heavyweight politicians. Either Boris is being underhand as his critics suggest and will lose credibility or he’s playing a clever game with the EU to out manoeuvre them. Financial markets are more likely to be influenced by movement on the bigger virus issue than Brexit negotiations.
I listened with interest to an interview with celebrity chef Nick Nairn this week. He was explaining the challenges his sector faces and telling of how his own businesses are fighting, day to day, for survival. Christmas is typically the busiest time of year for restauranteurs and it doesn’t look likely to be a bumper one this year. He spent his first day off in months crunching numbers in an attempt to avoid the sword of Damocles which he said has been hanging over him since the pandemic started. He talked of a recent Covid’ scare in one of their businesses and the commercial consequences, arguably making his trade high risk: damned if you do, damned if you don’t. These personal stories from smaller business owners are all too common.
Travel and hospitality are not good stories but big business (which is where most of us are invested) has generally had more favourable results. A rise in the oil price this week helped energy companies and recovery of retailer H&M has been better than expected which is welcome news in this sector. On balance financial markets are holding onto the value recovered so far and it feels as if they are slightly stagnant awaiting a vaccine or drop in infection rates: some tangible, good news that we’re getting back to normal.
In the meantime, behaviour remains under the spotlight with restrictions affecting how we live. Despite this, have a good weekend and enjoy what looks like reasonable weather before autumn takes hold.
Regards
Kenny