In previous updates I’ve been critical of the media with my perception that they report negatively in most instances, well this last week has given the media and in particular journalists the opportunity to go town. It’s been a Scottish football sandwich with players,either end of this last week, unable or unwilling to follow the guidelines and of course there has been the issues with the Scottish Exam results.
What has been surprising is just how harshly the football players have been judged, the opportunity was just too good I suppose.
On a personal level after reporting about my return to my own football career last week, pre-season training has continued this week. It really is however a terrible feeling when you have to accept that you just cannot do certain things anymore!
Moving on quickly, it’s back to school this week for most children, seen as a huge step in returning to normality and for some this will be a welcome relief after such an extended period of home schooling but I’m sure for all parents there will be concern about health and safety. In the fight against the virus this is however a significant step, future generations need the same opportunities as their predecessors received and schooling is fundamental. It will undoubtedly mean a rise in infection rates but the management of local lockdowns has so far been effective and timely and the alternative of continuing to not going back isn’t an option.
Already this week we’ve seen it reported that employment in the UK fell by the largest amount in over a decade between April and June, the number of people in work decreased by 220,000 on the quarter, said the Office for National Statistics and this is anticipated to be the tip of the iceberg. The furlough scheme, which had 10 million workers at its peak, has masked the real impact of the virus and if as expected this ends in October then it’s therefore imperative that the country returns to normality and that we begin to live with the virus as opposed to putting everything on hold.
As if to emphasis this the Bank of England have announced that they will do more and faster quantitative easing if the economy slows and markets wobble again. In true business speak they said “is we see signs of [market] dysfunction there is still significant headroom to do more QE if economic risks crystallised.” Basically they have more tools in their toolbox to help stimulate the economy should it be required, these will however inevitably mean loading the country with more debt for longer.
Is it all bad news?
No, Ruth Gregory, Capital Economics’ senior UK economist has said that “By July, we think that around 4 million people had already left the government’s job furlough scheme and 6 million remained on the scheme, the fall is faster than we had expected” but tempered this by going on to state that “it doesn’t however change our forecast that the ILO unemployment rate will reach a peak of around 7% by mid-2021.”
The number of vacancies, rose from its record low by 10% in May to July as lockdown restrictions were eased.
However, there are some less jolly signs.
The number on employer payrolls had only dropped marginally in the previous two months, but saw a much bigger drop in July, down 114,000, in spite of the reopening of many shops, restaurants and pubs. And employers are increasingly making employees bear the risk that there isn’t enough work for them to do, with the number of zero-hours contracts rising above one million for the first time.
Add in the record drop in self-employment and you get the picture.
How is all of this affecting the markets?
Well the FTSE finished yesterday on a high even as the number of COVID-19 cases in Britain surged , the hopes of more global stimulus and some upbeat data keeping alive expectations of an economic rebound.
Oil prices rose on an improvement in Chinese factory data and as Saudi Aramco forecast rising energy demand.
In the US the focus is on the stimulus package after President Donald Trump signed executive orders on Saturday partly restoring enhanced unemployment payments.
But it’s still early days, we expect the volatility will remain for a considerable period and the markets will be impacted as new Covid spikes arise across the globe and at home but we will move forward.