The Week UK - 28.03.2020

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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

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