You are using an outdated browser. Please upgrade your browser to improve your experience.
Article | 02 June 2020 |
Follow the vaccine
Markets rebounded sharply after the tumbles of March, hoping for a V-shaped economic recovery. Confidence has faltered somewhat in recent weeks and momentum has slowed. So what could now provide the magic bullet? Headlines about a vaccine against Covid-19 have kept markets gripped. Swinging from hope at new developments to despair at the challenge of supplying perhaps a billion doses before the next winter flu season. Meanwhile, research has revealed that the virus is not mutating as fast as others of its type. That could make a vaccine more effective and go some way to soothing nervous markets.
A lender not a spender
That’s how Chairman Jerome Powell described the US Federal Reserve (Fed). He has a good point. While the Fed and other central banks can boost liquidity, buy bonds and keep interest rates low or even negative, only governments can spend the huge sums of money required to reboot stalled economies. But could consumers also hold a key to unlocking the rebound? The past months of lockdown have seen spending fall much faster than salaries. Once shops and restaurants re-open, this
so-called ‘saving overhang’, which could amount to billions of dollars, could provide a much needed economic stimulus.
Safety on the road?
Lockdown has been little short of disastrous for car producers. Sales in Western Europe alone fell by almost 80% in April. However, better news might not be too far down the road. In China, now driving the charge towards economic unlocking, individual car use has been jump-started, as people try to avoid public transport. So much so, that congestion in some cities has returned to 90% of former levels. The car industry wants to ‘build back better’, and in order to preserve our clean air, is looking to give electric cars a push.