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Issue 6 - Boris Johnson Back At Work

It is amazing how quickly the time goes by and it seems as though I’ve only just finished one newsletter and it’s time to write the next.  Maybe that’s just a sign of getting older!

It is pleasing to see the statistics improving in terms of the Covid-19 cases and the number of deaths declining, both in the UK and overseas.

With a number of countries now looking at starting to open up various aspects of the economy, we can see how things slowly take on the new norm that we are all going to have to get used to.

It was good to see Boris Johnson back at work in Downing Street this week and although he gave a very cautious message, I think over the course of the next few days, we are likely to see the first steps in relaxing the lockdown.  We are already seeing some DIY stores and drive through fast food outlets re-opening and construction sites are getting back to work.  In themselves, they are small steps, but they are all going in the right direction, although, as we keep hearing, social distancing is going to be something that we live with for the foreseeable future.

I commented a couple of weeks ago that I felt we were in the calm between two storms and yet the second storm seems quite reluctant to manifest – no complaints there of course!  As always, there are conflicting views and one thought is that markets are ready for bad news in whatever form it comes and therefore, there is little, or no impact being felt.

The alternative view, and the one that I expressed a couple of weeks ago, is that as Companies go through their earnings declarations, we are looking to see these being downgraded from the highs that were reached in February this year.  I think therefore, it is too soon to assume that we have reached the bottom of the cycle and we should expect volatility to continue.

I think it’s fair to say that the last 4 week in markets have been buoyed by the Central Bank interventions and the progress that has been made with Covid-19 screening and the development of potential vaccines.

Over recent months, we have witnessed growing references to ESG – Environmental, Social and Governance – and how people are seeking reassurance from Companies and other organisations that they are taking socially responsible steps.

With the Covid-19 lockdown, pollution levels have dropped dramatically, such that fish have been seen in the canals in Venice for the first time in many years and even in India, it has been possible to see the Himalaya mountains from a distance that has not been possible for a long, long time.  It is difficult to deny, given these examples, that our previous lifestyle has a negative impact on our plant and consequently, the expectation is that ESG considerations will become the norm in the Companies that are not only going to survive the current crisis, but thrive in the future.

I know that on the political stage, there have been concerns about the rise of populism globally and in particular since the 2008 meltdown,  but some aspects of populism could actually be beneficial in particular in relation to ESG aspects and perhaps, we will see this in the form of the larger employers focussing more on their employees than on their shareholders.  Only time will tell!

These are all long term issues and to quote Warren Buffet once again, ‘Someone is sitting in the shade today because someone planted a tree a long time ago.’

I will now close this edition with a thank you to all those who have sent positive comments in response to our News and Views.  It is always good to hear from you.

With best wishes and stay safe.

Richard, Chris and Lesley

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