Come gather round people where ever you roam, the times they are a changin bob Dylan

Equity markets remain in fear territory as investors lack confidence as to when the end will come or what the ultimate damage to the economy will be, particularly in the short term. Streets in London are almost abandoned and those shops that are open are deserted. As painful as the economic effect may be on the world there may be cultural benefits. The world had probably all become guilty of focussing too much on what we did not have, rather than what we did have. At present keeping healthy is the main priority. New venues spending endless sums in décor hoping to reclaim the money from affluent members may have to survive some tough times. Greed in the stock market had spilled into other walks of life. This period of enforced isolation will give time to reflect, perhaps the latest phone was not quite as important as it seemed.

Central banks are doing what they can in a coordinated manner but cheap money will probably not keep those companies afloat who survive by issuing new debt to pay off the old, known as zombie companies. What it will do is help the major corporations and will ensure the financial system continues to function.

The probability is that many companies that have managed to maintain dividends will now use this time to cut. New records were being set to the upside just a few weeks ago now being set to the downside. Less than 5% of stocks in the S&P 500 are now above the 200-day moving average, the lowest since early 2009. Equity weightings are now at extreme lows having been at peaks a few weeks ago. Fund managers ran from equities at the biggest rate in the past month in history. As far as our savings go it is worth remembering that these are the times that the money is made assuming one can stay liquid and not forced to sell.

Now for the good news and the bad news. During the past 100 years there have been 19 recessions, the average fall from the peak for the S&P 500 during those recessions has been 27%. Roughly what we have had to date in 2020. The worst between 1929 and 1932 saw almost 90% of your equity value wiped out. Fear has gripped equity markets, and there may be something of a relief rally, but the pain may continue for some time.  On the plus in 1929 the central banks did little to support the global economy as real interest rates rose curtailing investment, on this occasion they are far more focussed having experienced 2008.