DAILY MARKET COMMENTARY 15TH MAY 2020

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Markets attempted a rebound from days of negativity. Assessments have been made, of the impact of the virus, as economies re-open. Europe is reopening, as the peak infection and mortality rates decline. Small spikes have not yet hinted at the dreaded ‘second wave’. Church mice remain hidden but the bulk of the population realise and accept the risk. The US once again celebrates the benefit of States and Federalism. They have 50 trial programs running, in various states of return to work and the closely watched outcomes are being monitored.
 
The EUR slipped below 1.0800, while the GBP traded 1.2215, as they charter unchartered waters. Commodity currencies remain extremely vulnerable, as the role of China in the pandemic becomes more clear, while repercussions are being discussed in Europe and the USA. The trade war that will result, may also become a shift from the Chinese supply chain, to a more mechanised/roboticised domestic strategy. The NZD fell back to 0.5985,while the AUD dropped back to 0.6440, amid some murky unemployment data. Australian Unemployment rose to 6.2%, but these are ambiguous numbers. The Government support programs have clearly succeeded, but the shocking news is that the Government now employs/supports nearly 75% of Australian workers! The extent of the economic recession/depression has not yet been realised. The one word that rings clearly, unsustainable.
 
Markets have not yet realised the extent of the economic damage caused the shut-downs. Many workers/beneficiaries are enjoying better financial conditions, dulling any determination to return-to-work that these Government polices have caused . The Government support policies have worked well across many Western Countries, but the population will now be sorely tested, as enthusiasm is balanced with reticence. Universal Wage and other social policies may become more permanent? Serious social repercussions are now becoming an issue to be considered.