As I try to gather my thoughts for this edition, it is with a certain sense of déjà vu, particularly as the Covid 19 cases are escalating again and financial markets are experiencing some turmoil of their own; so are we back to what was happening in March this year I ask myself?
As ever, to try to form a reasoned view, you cannot rely on the headlines and need to look somewhat deeper into the facts. After all, the headlines speak of a record numbers of cases, hospital admissions and the daily death toll being on the rise.
Don’t worry, I am not going to do a Donald Trump and suggest that the only reason there are more cases is because we are testing more people – he is right in the sense that if you test more, you will have more results as a consequence but back in March, we simply did not know how many cases there were and consequently, a direct comparison is not possible. However, the hospital admissions is perhaps more telling, but even though numbers are on the rise, in the UK at least, we are not as yet getting close to the numbers earlier in the year. The health professionals also say they are getting to be more adept at treating patients and therefore, the survival rates are improving, which is a positive message.
Clearly there remains a hope that a vaccine will be available before too long and despite some false dawns, it would seem that the Oxford vaccine is now entering phase 3 testing with AstraZeneca, with the hope that this can be rolled out to frontline healthcare workers starting in December and more generally as we go into 2021. There will be a need for 2 doses about a month apart and 100 million doses have been ordered in the UK alone.
Although the vaccine is showing promise, there is no real evidence as yet as to how effective it will be for the most vulnerable people, but it is progress which provides some hope.
We do need to keep this in perspective though, because other data is now suggesting that the antibodies only remain present for a limited time and therefore the potential to catch Covid 19 more than once is probable, but there again, there are something like 4 other Covid viruses, like the common cold, which have the same limited immunity period after contracting and recovering from the virus, but in general, the immune system does learn to recognise a repeat virus and is in theory, better placed to fight it second time around.
I was reading the other day that cases of “normal” flu have been at a remarkably low level so far this year and it is believed that this is in part due to the disciplines being followed, wash hands, socially distance, mask wearing etc., are all key factors in this so there is some additional positive news coming out of the efforts to curb Covid 19.
It may well be that in the long run, there will be no permanent cure and we will simply have to learn to live with it, as we do other things. Hopefully as better testing with quicker results becomes more widely available, this will enable the travel industry to rebuild itself and for other aspects of daily life to return to some semblance of normality.
In the UK, Boots (the Chemist) have announced that they will be making testing available with results in 20 minutes as soon as 2 weeks time. They will be expensive at first, but costs will come down as the test becomes more widely available. Imagine this as a solution for the airlines! We had to get used to only taking liquids onboard in containers up to 100 ml which seemed very strange at first, but is now accepted as normal.
I could see the 20 minute test being part of the check in process at airports with this being the first step on arrival. It would only need a simple system in place and this too would rapidly become normalised. If you could be confident that everyone getting on the plane has tested negative, why wouldn’t you travel?
Something for the (near) future to look out for perhaps.
Turning now to the financial markets, we are indeed seeing some reduction in values globally during what most commentators are describing as ongoing volatility and as always, there are many reasons for this. Covid 19 and the increasing number of cases, is one factor, but in the US, what is referred to as the “millionaire investors” are not particularly negative; they have been taking some money off the table it is true, but only in a proportionate way and the general mood is one of optimism once you look past the US Election, which is only next week of course.
Another reason why US markets have been negative is due to the frustration over the “political stalemate” in terms of the next financial stimulus package, which now won’t get approval until after the election
The general view is that a Biden win is likely to be neutral for markets whereas a victory for Trump would result in a market rally. That having been said, more recent history shows that markets have tended to react positively after a US Election, regardless of which party wins. Let’s just hope that the result is decisive and that the US does not lapse into a legal wrangle over who the winner is – the concern is that if the result is close and Trump loses, he may not “go quietly” – ask me this time next week and I might know the answer!
Brexit uncertainty is also a key factor for the UK, which again, should hopefully be resolved very soon now and we are almost at the point where it matters less what the outcome is but rather more, let’s know what it is so that industry can adapt and focus their business models accordingly.
Will we then enter clear waters for a while – who knows, but with some of the major uncertainties out of the way, the focus of attention for markets can move on to more positive things.
As always, stay safe and we will keep in touch.
Richard, Chris & Lesley