25th March 2020


I have lived through the 1974/5 miners’ strike, the 1987 crash, the Russian credit crisis in 1998, the Iraq War in 2003, the Banking crisis 2008, never have a seen a rally of the magnitude that I saw yesterday. In New York it was the largest daily rally since 1933.

I defy anyone who tells me that they fully understand the recent machinations and errant behaviour of global stock markets, gold, oil or the bond market. Central banks have provided massive help by way of increasing quantitative easing process right across the spectrum. We have been waiting for days for the US $2 trillion stimulus package, which has clearly given the market a fillip. However, does the market deserve one of this magnitude? Other countries have done their bit with massive bail-out packages including the UK. Chancellor Sunak presented unprecedented help, which triggers throwing the fiscal discipline rule book in to the long-grass and quite rightly so. Goodness only knows what the final cost will be – hundreds of billions – Hobson’s Choice! France’s Macron has been very positive, though Mme Lagarde was far too late coming to the party with her very ‘chilled out’ approach to the crisis.

The incredible level of oscillation and market volatility is down to four factors – firstly fear and it’s huge! 2) It is impossible to value shares, when no one has any idea as to how long this virus will damage the world’s economy. Until goods and people are on the move again, the damage being done is immeasurable. 3) technology, algorithm and programme trading have not played ‘spear carrying’ roles in this drama. I suspect their input has been massively significant. 4) Even if it is only for six months a deep world recession is upon us. Morgan Stanley believes the US’s GDP could contract by 30% in the second quarter and IHS PMI service sector surveys for US, EU and UK posted yesterday made terrible reading, suggesting economic activity, apart from food and technology was at rock bottom.

Yesterday’s monster rally was down in the main to expectation that the US government’s $2 trillion rescue package would be agreed by Congress and the Senate. This has made optimistic investors feel that markets were oversold. Surely, it is too early to say whether markets are through the worst period?

Looking at the individual gains made yesterday make the mind boggle. On the Street of Dreams, how about these gains in one day (24/3/20)? - BOEING +23%, Chevron +23%, Exxon +13%, Apple +10%, Facebook +8%, JP Morgan +11%, McDonald's +18% - the following FTSE 100 shares rallied by eye-watering margins - BP +23%, Shell +20%, HSBC +5%, Centrica +7.8%, IAG +6%, easyJet +11%, BT 12%, BAE Systems +10%, M&S +8% (up another 12% early doors). This is data from Walter Mitty stories!

As a pensioner, I am delighted to see markets regain some poise, but it may be folly not to expect some further losses or at best volatility in the weeks to come. As for President Trump’s comment that he hopes to see the US economy back to work at Easter is surely unrealistic. As John McEnroe’s immortal words still ring in my ears – “You cannot be serious!”

Though not critical or at odds with Imperial College findings on Coronavirus, an Oxford University study group suggests that HALF of Britons may have already been infected with coronavirus. What should be the implications if true? Were that it turns out to be true. Anyway, we must stay indoors, away from human contact until this hideous illness dissipates.


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