WEEKLY FAYRE – Monday, 30th March 2020

March 31, 2020

So, we'll go no more a roving

So late into the night,

Though the heart be still as loving,

And the moon be still as bright.

For the sword outwears its sheath,

And the soul wears out the breast,

And the heart must pause to breathe,

And love itself have rest.

Though the night was made for loving,

And the day returns too soon,

Yet we'll go no more a roving

By the light of the moon.”

George Gordon, Lord Byron – poet – 1788-1824


There was very little to smile about last week, as the country was officially put into lockdown, as this lethal virus starts to take a vice-like-grip on our lives, sending many loved-ones to a premature death. However, I am still smiling with pride at the millions of people who opened their doors and windows at 8.00pm last Thursday to clap in unison in showing fulsome respect for and our grateful thanks to the NHS, the care workers, paramedics and helpers for the selfless and brave commitment to keeping us all safe and well. Together with millions of others, I also salute the 750,000 people who have registered as volunteers to help the sick, afflicted, old and infirmed in the weeks to come. Heartfelt thanks to you all! This is the UK we all love and know!

Finally, on this debilitating issue, we wish the Prince of Wales, PM Boris Johnson, Health Secretary Matt Hancock and all other fellow sufferers a speedy recovery.



23rd March 2020

27th March 2020

% loss

FTSE 100
















S&P 500






















Looking at the performance of global equities (table above), you might be forgiven for thinking that the worst is over. Let’s hope so. However, consider the flow of dire economic data that has been submitted for dissemination and comment last week. Morgan Stanley forecasted that the US’S GDP could drop as low as -30% in the second quarter. Some economists felt that the Germany’s GDP could drop 20% in the same period and that the UK’S could suffer at the rate of -6% per month. Other bodies such as the CEBR think GDP might sink by 15% between April and June!

Then there was IHS’S PMI data for the manufacturing and service sectors for the US, EU and UK to ruminate over – all the readings suggested that these economies virtually fell off a cliff in February/March. There are many analysts and economists, who optimistically feel that this humungous set-back is temporary. However, the final economic nail in the US coffin last week, was 3.3million were flagged up in the official Initial Jobless claims on Thursday, would have been a metaphorical unwelcome blow below the belt. New York has been ravaged, with the possibility of one million people becoming unemployed as a result. Yet, still the President of the United Sates is attempting to call the country back to work after Easter. This is surely the personification of optimism.

Maybe these upbeat investors are right and hence the magnitude of last week’s rally, which saw the DJIA rise like the proverbial grilse by 21%, with the FTSE 100 not that far behind, gaining 16.5% during Tuesday’s, Wednesday’s and Thursday’s 3-day rally, the like of which I have never seen before – not even in 1987. For share prices in companies like BP, Shell, Boeing and Chevron to add 20%+ in a day is surely unheard of, though I do remember Boeing losing a similar amount the day after 9/11. Apple gained 10% that day - $90 billion in value!

This three-day rally coincided with Congress agreeing to the US Government $2 trillion rescue package, which sees everyone get a cheque for $1,200 delivered through their post box. Having been somewhat somnolent in recent weeks, Germany agreed a €1.1 trillion bail-out package near enough at the same time. On Friday, unsurprisingly most global bourses saw dealers take some risk off the table, with some indices losing between 3% and 5% on the day. No one felt that brave, going into a weekend with unnecessary exposure to the vagaries of the marketplace, especially the algorithm and programme traders.

Last week, Waverton asked the question – “Has the relief rally this week marked the low?” "Probably not" was the riposte, “but it could be close.” That is based on the view that there are three things that need to be crystallised in this multi-faceted crisis to have the ingredients for a sustainable market rally. Those are improvements in the health crisis to include testing, effective measures to alleviate the economic demand crisis and assets at attractive valuations.” This may look like an over-simplification of the issues, but it addresses the conundrum investors find themselves facing. In plain words when does this ‘nightmare’ come to an end? When we know, there should be a strong economic recovery, but oh the cost! – eyewatering!

Chancellor Rishi Sunak has on the whole pleased observers with his huge packages, costing hundreds of billions for business, employees and finally the self-employed. Greater experts than I will contribute more succinctly to the debate. However, let me make certain observations. Firstly, as the Chancellor first pointed, it is the logistics that will cause problems, such as getting the loans and money to the beneficiaries quickly enough, in the hope of stopping the dole queue rising with indecent haste. Mr Sunak, in my humble opinion, is a PM in the waiting.

Furthermore, the banks appear to have created problems for those desperately in need of help. It transpireshundreds of businesses are claiming the Business Interruption Loan Scheme comes with too many strings attached and onerous interest rate demands - albeit with a 12-month initial holiday. This has discouraged engagement, with apparently some banks saying they lack guidance from the authorities as to how to administer these loans. This is not good enough, and the only mitigating circumstances are that banks must clearly not lend money if there is no chance of it being paid back. The banking sector will never be given a better opportunity to deal with its tarnished reputation than by responding positively to this crisis. Andrew Bailey, the new Bank of England Governor has proved to be more than a steady hand on the tiller. The BoE has promised to do everything in its power to make sure the banks deliver these facilities. 

UK banks are also being urged to cut bonuses and slash dividends with a view to setting an example to the rest of the community. The FT also reported That the European Central Bank has ordered eurozone banks to freeze dividend payments and share buybacks this year in an escalation of its efforts to avoid coronavirus triggering a credit crunch in Europe. The move is expected to result in many of the region’s largest banks either cancelling or delaying plans to return billions of euros of excess capital to investors. The ECB said banks “should not pay dividends for the financial years 2019 and 2020 until at least 1 October 2020”. It added that they should “refrain from share buybacks, aimed at remunerating shareholders”. 

Talking of dividends, Panmure Gordon’s Chief Economist, Simon French pointed out that £3.5bn worth of dividend payments were likely to be cut to shore up company balance sheets against coronavirus disruption, the biggest drop since the 2008 financial crisis, with the likes of ITV, Kingfisher, Whitbread and M&S showing the way. High street retailers, pubs groups, property companies, car dealerships, travel companies and UK housebuilders were among those seeking to conserve cash with more than £1bn in cuts announced on Wednesday. Russ Mould of AJ Bell was quoted in the FT as saying that the final estimate could conceivably reach £30bn, one-third of the FTSE 100’s projected dividend total for the year, based on four months of disruption.

UK inflation dipped a tick to 1.7% in February, much of the reason for the fall was due to oil prices retreating. Sterling had a decent week against the Greenback rising by over 7% to $1.2452. Gold was steady at $1654 an ounce.

Share and company watchers were pleased to see a ‘U-turn’ by JD Wetherspoon’s CEO Tim Martin, who agreed to pay 80% of salaries, having originally suggested Tesco would be a good place to go for work until the government coughed up the support for incomes it promised. He was vilified in the press for such a tasteless comment. Mike Ashley has also agreed to close Sports Direct’s doors for the time being. It was sad to see the likes of Costa Coffee, Pret a Manger and McDonald’s ‘pull stumps’ for the time being. In the circumstances this makes sense. Sir Richard Branson has made very strong overtures to the Government to bailout Virgin Atlantic, one of many airlines to suffer. Virgin has lost money for the past four years. I doubt Transport Minister will agree a bail-out unless the government partly nationalises these operations. Sir Richard has promised to put in £250 million – a mere bagatelle in the grand scheme of the overall problem. Many think Sir Richard has more front than Brighton Pier in his excessive demands. The Railways is an obvious form of transport that could also be nationalised.

Alok Sharma, the Business Secretary announced that there would be a temporary suspension of wrongful trading rules, applied retrospectively from March 1, meaning that company directors would not be personally liable for their decisions during the pandemic, as well as a relaxation of some regulatory controls. It is fearful to point out that the Sunday Times has flagged up the possibility of unemployment in the UK rising from its current level of 3.9% to 8.5% by the end of September, according to celebrated financial acolytes such as Nomura Securities, which believes that the Coronavirus pandemic is very deep-seated and toxic for business. Let’s hope the world can get back to work by then, before the damage could be irrevocable.

‘Moving House’ is now on hold and prior to this announcement it was interesting to note that Lloyds Banking Group was only prepared to deal with mortgages of not less than 60% of the property’s value.

It would be churlish not to pay tribute to Jim Ratcliffe’s INEOS, Sir James Dyson, RR, Bae Systems, JCB, and other manufacturers such as Ralph Lauren for putting their shoulder to the wheel in helping to manufacture safety equipment and respirators. Thank you.

Economic data posted this week – Monday – Nationwide House Prices, UK Mortgage approvals, US Pending Home Sales, Tuesday – UK Current Account, UK GDP 4th Quarter Est:, US Chicago PMI, US Redbook, US Consumer Confidence, Wednesday – US MBA Mortgage Applications, US ISM Manufacturing, Thursday – US Trade Balance, US Initial Jobless Claims, Friday – UK Markit Services, US Non-farm Payrolls (EST:-123k), Hourly earnings EST: 3%, Unemployment rate 4% from 3.5%.