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There has been a fundamental change today in our outlook – it is raining! That appears to be the only change today as last night the UK Government confirmed a further three weeks of lockdown as although our progress against Covid-19 is more positive, it is not yet enough to consider reducing restrictions in some areas.
In the investment markets, we have seen a recovery in portfolios since the 23rd March based on improving news on the rate of global infections. Markets are now starting to consider some more fundamental aspects of the economy as company earnings season gets underway. So far this week the market has proved relatively robust to this news flow that has highlighted, as expected, that companies profit margins are taking a real hit.
As with our population, it remains unclear which companies will fall victim to Covid-19, but we are trying to focus our client portfolios on companies with strong cashflows and robust business models that should get through this current pandemic and emerge the other side with growth potential fully intact.
Despite confusion over many aspects of how the world deals with Covid-19, one thing appears to garner agreement. It will be dangerous to relax restrictions too quickly for fear of inviting a second wave of who knows what proportions? Therefore, we must expect a very gradual relaxation of restrictions and we are in for a long, but hopefully sensible, road to recovery.
As always, please do stay safe and well, should you have any questions that we can help you with, please do not hesitate to be in touch.
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