Jan Barraclough of Craigs Investment Partners gave a comprehensive view of the status quo and quo vadis for investing decisions in our new abnormal.
Jan led with how, interestingly, equity price levels have not dropped nearly as much as they did during the GFC. There were two underlying themes running through her narrative, firstly nothing is broken in the system - this is an externally triggered pause. Secondly different sectors and companies are experiencing the shock in very different ways.
In this context whilst consumer discretionary and IT/ Communications firms have been winners and are doing fine, industrials/ financials/ property and especially energy are really suffering. Jan underscored that notwithstanding the epic proportions of this government's support and stimulation packages, the very low public debt with which we entered the crisis gave us significant headroom to act and we remain well below the G7 in terms of national debt.
Macro trends driving the environment include more remote working reducing demand for office space, less international travel, reduced migration and increased demand for IT services and communications. At this stage the worst cases scenarios look highly unlikely. Also the rebound has been stronger than expected, national lockdowns are a thing of the past, fiscal stimuli look likely to continue and we have the fiscal headroom to support these, and finally there is no sign of inflation.
Areas of concern include the potential for a second wave, the sustainability of current consumer confidence and global uncertainties including trade tensions being driven by the current US regime. All in all a stimulating, practical and timely address.