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Showing posts from April, 2020

COVID for the next 18 months

Markets 
As of 12th April 2020, the FTSE is at 5842, and the S&P is at 2789. This represents draw-downs of 33% for both indices, with the FTSE down 20% and the S&P down 18%. Demand will be suppressed across retail, travel and energy. Consumer and business balance sheets have holes in that need to be recapitalised. In any scenario absent government funding, one would expect more significant declines. But with significant government support, it is difficult to tell how things will evolve. The biggest shifts were in the debt and currency markets, with USD swap lines broken and high yield debt not trading. These issues have largely been sorted out.

According to GS: "The three phases of US fiscal stimulus total about 11% of GDP. A fourth phase to supplement the Payroll Protection Program and provide additional funds for state and local governments and hospitals is pending. The Federal Reserve continues to expand its liquidity facilities to provide interim funding across a broa…