Sensible money – back to the future?

Market paradox
Stocks gave up some of their gains week of 20 April 2020, just as we were wondering why markets were rallying as death tolls in the UK, US and parts of Europe reach new heights. In a week when the oil price went negative for a time many short term investors are suffering.

A couple of things to remember in this context:
it would appear that the stimulus the US has given their economy is more vast than anything that has come before. For example the Fed has extended its bonds buying programme to junk bonds. What that means is that companies who would usually find it very difficult to borrow can do so again. As a result investors piled 50% more cash into junk bonds than they did the last time the record was broken. As this kind of stimulus works its way through markets the bet is that after the lockdown growth with rebound strongly, albeit with a different lens vs. before.

And what will this new normal look like from a Stockmarkets perspective? As the FAANGs (Facebook, Amazon, Apple, Netflix, Google) extend their grip over markets could we also see a return to more traditional companies who have been on the frontline of the crisis?

Of course if you are making decisions on where to put your money always speak to your financial advisor first.

 

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