The Week UK - 28.03.2020

CITY 49

28 March 2020 THE WEEK

Talking points

WallStreetenjoyed“itsbestdaysince

2008”aheadofthegiant$2trnCovid-19

reliefpackageagreedbyCongresson

Wednesday:theS&P 500 jumpedby9%

andbatteredstockmarketsaroundthe

worldenthusiasticallyfollowedsuit,said

theFT.Alas,therewereplentyofother

eerieechoesofthatfinancialcrash–not

leastthefactthatbylunchtimeonthe

followingday,therallyhad“fizzled”

inEuropeandAsia,withinvestorsstill

“deeplyscepticaloverwhethermarkets

hadreallyhitbottom”.Givensurging

coronaviruscasesworldwide,the

widespreadviewwasthatthisweek’s

equityreboundcouldwellbea“sucker

rally”.Ifso,someoneforgottotell

DonaldTrumpandhistreasurysecretary,SteveMnuchin,said

TheDailyTelegraph.Announcingthedeal,afterdaysofintense

wranglingwithDemocratsinCongress,theUSpresidentoutlined

thattheaimwastogettheeconomy“raringtogo”byEaster.

Actually, theeconomicoutlook issoawfulit mightbeadvisable

to “coveryour eyes”,saidDealBookin TheNewYork Times.

“Mosteconomists agreeavirus-inducedrecession has probably

alreadybegunand that itsscalewillbedevastating.” Oneofthe

scariestforecaststodate,fromStLouisFed president James

Bullard,isthatUSGDP growth“coulddrop50%” inthe next

quarter, pushingtheunemploymentrateup from3.5%to30%.

“MorganStanleythinkssecond-quarter

growthwillfallby3 0 %;GoldmanSachs

says24%;andJPMorganChase–for

now–iscurrentlyat‘only’14%.”Even

so,oneofthedebatesinpoliticaland

financialcirclesiswhetherthisunpre-

cedentedstimulus–includingmeasures

toprop-upthefinancesofindividuals

andcompanies–couldactuallymake

thingsworse.“Wecannotletthecurebe

worsethantheproblemitself,”Trump

tweeted.Currentmeasurestocontainthe

outbreakcouldbere-evaluatedwithin1 5

days,“settingupashowdownbetween

epidemiologyandeconomics”.

Therewasoneglimmerofhopefor

globalinvestorsthisweek–intheformoftheUSFed’scurtain-

raisingbond-buyingpackage,“thebiggestcentralbank

interventionyet”,saidJohnStepekinMoneyWeek.TheFedis

“lendingasmuchmoneyasfinancialinstitutionsneed”,and

pumpingcashintogovernmentandcorporatebondmarkets,

whichshouldhelpdefuse“fearsofamassive corporate bond

marketmeltdown”. Crucially, itis“alsomakingdollarsfreely

available”to othercentralbanks inabidto stop investors

“desperatelyscrabbling” toget hold ofthem.The good news is

thatthedollarstar tedfalling –the bestnewstheFedcould get.

“Because ifanythingisgoingtobreaktheglobalfinancialsystem,

it’sarun forthesafety ofdollars.”

Issue of the week: the US goes for broke

TrumpandMnuchin:a“suckerrally”?

Small business: defying the odds

●Floralgarland

Thousands ofsmall

businessesareexpected togo

to the wallbefore allthisis

over.But“adefiantspirit is

emerging”amongBritain’s

“pluckyentrepreneurs”,

evenasthevirusthreatens

to bring the economy toa

standstill,said Peter Evans

andLiamKellyinThe

SundayTimes.According

toFreddie Garland,who set

up hisLondon-basedonline

flower-deliverybusiness

Freddie’sFlowersfiveyears

ago,the past month has

presented“thetoughest business

conditionshe haseverknown”.But

Mother’sDay offered somesolace.Thanks

to a“glut of supply fromhis wholesaler in

Holland”and “shutteredfloris tshops”,

his company,which madesales of £16.5m

lastyear, enjoyedasurgeindemand.

Garland hopesthat acontinued lockdown

will stillworkinhis favour. “Ifyou are

going to be at home for16weeks,having

aregular deliveryoff lowers will brightena

sterile environment,”hesays.“We are

deliveringjoy.”

●Tappingloyalty

There’s actuallyalot of help out therefor

small businesses–going beyondwhat the

Government is providing–ify ou know

where to look,said James Hurley in The

Times. “Loyal customers”

are agoodstartingpoint.

Themoney-raisingplatform

Crowdfunder’snewservice–

allowingcompaniestopre-

sellproductsandservicesto

beredeemedoncethecrisis

abates–lookshelpful,

particularlyasthecompany

haspromised to“coverall

platformandtransaction

feesof listingcampaigns

duringthepandemic”.It’s

alsoworthaskinglarger

tradecustomers and

suppliersforhelp:many

supermarkets, including

AsdaandTesco, have shown willing to

support the cashflow of partners by

speeding uppayments.Rightmove,the

onlinepropertyportal, hasprovided a

“deferredpaymentplan” forestateagents.

●Free advice

Although the crisisappea rs to be bringing

outthe worst insome–withaworrying

rise incases ofscammerstargetingelderly

people–there ar eplentyofother seager

to help,added Hurley .ColourAccounting,

for instance,is offering“free fina ncial

training tohelp small businesses under-

stand theirfinances better”.Meanwhile,

the small business networkEnterprise

Nationisopenfor “supportand free

advice”–inclu ding auseful steer on how

to acce ss g overnment suppor tschemes.

Turningapage

“Eyebrows were raised” whenasigned

first edition ofHarry Potter and the

Philosopher’sStonesoldfor£106,250at

Bonhams in 2017, says Caroline Bullock

in The Sunday Telegraph. Returns on

this scale are frankly rare. But while

you’re holed up, why not build up your

own library? Here are some tips from

Matthew Haley of Bonhams:

Quality over quantity“It’s always

better to spend £1,000 on one first

edition than £100 on ten later ones.”

Content is kingLovely jackets –

say, featuring the iconic printing of

designers such as William Morris–“are

adraw”. But what’s inside counts more.

Haley lists Jane Austen, 1970s

computing and early European Bibles

“as areas of rising interest and value”.

Check out the current zeitgeist

Anything that chimes with cultural

trends is appealing. “We’ve become

more politically minded”, so books with

adystopian element, such as Orwell’s

Nineteen Eighty-Four,are sought-after.

“We’ve also seenahuge rise in value in

Darwin’sOn the Origin of Species.” A

first edition sold for £425,000 last year.

Look out for bargains at auction

Although social media has fuelled

interest among younger bibliophiles,

collectors have traditionally been “older

men”. Collections often come to market

when they move toasmallerproperty,

typically afteralong “holding period”.

Thesizeof theUSgovernment’sstimulusdealismind-boggling–butso,too,isthepotentialforeconomicdisaster

Freddie Garland: petal power

©CAMERA PRESS/TOM STOCKILL