CAXTON FX

FINANCE DON’T WORRY ABOUT INFLATION (YET!)

As the coronavirus pandemic shows signs of having reached its peak, at least for this infection wave, attention is beginning to turn to what comes next for the global economy; which is undoubtedly now in its first recession in over a decade, and likely in the deepest contraction since the ‘30s. One question that many are likely pondering is whether the post-virus economy brings with it an inflationary wave. In the immediate-term, as the world continues to grapple with getting the epidemic under control, disinflation is blatantly on the horizon. In the longer-term, however, an inflation wave is likely to surface, possibly before the year is out. By Michael Brown, Senior Market Analyst at Caxton FX ever – sparked by a combination of the Saudi-Russia price war, and evaporating global demand, will naturally have a downward impact on CPI. It is, at this point, key to understand that without demand, you cannot have inflation. Until the coronavirus lockdown measures are lifted, there will not be a substantial pickup in demand. However, looking further ahead, the eventual pick-up in demand, combined with the present expansionary monetary policy environment, should see an inflationary wave return in the medium-term; especially given policymakers’ tendencies to allow economies to run ‘hot’.

COLLAPSE IN CRUDE

Firstly, let’s look at the current environment. At a very basic level, a recession is naturally a disinflationary environment; the drop, or collapse in this case, in demand caused by an economic downturn instinctively depresses prices. Furthermore, the recent collapse in crude prices – including US oil falling into negative territory for the first time

A BOUNCE IN DEMAND?

While some demand has undoubtedly been lost forever, nobody will be going for three haircuts on the same day to make up for those missed for example, there will be a near certain bounce in demand; especially as those who have been cooped up inside for weeks on end flock to businesses in the services sector at the first taste of freedom. Even those who have, sadly, found themselves unemployed as a result of the coronavirus crisis will likely contribute to this demand surge due to the stronger social safety nets implemented by governments worldwide. Furthermore, it will be difficult for OPEC+ oil producers – particularly Saudi Arabia and Russia – to sustain themselves with oil close to $20bbl. As such, further production cuts remain a distinct possibility which, along with an eventual pick-up in demand, should help prices to recover at least some of the losses. For markets, an eventual return of inflation may dampen the attraction of bonds in the longer-term, with expansive asset purchase programmes from almost all G10 central banks set to keep yields relatively depressed. Meanwhile, a solid hedge against inflation has always been gold; while equity market returns will likely outpace that of bonds in the longer-term. In the FX world, a pick-up in inflation may have a rather muted impact, given the pick-up is likely to be relatively symmetrical across developed markets.

With foreign currency being a fundamental part of business, Caxton are providing a free consultation service to all members, available Monday to Friday 8am-6pm. Simply email kevin.bottwood@caxtonfx.com to arrange a time to speak or alternatively ask any questions you may have.

#ATHOMEWITHGSC

The Guildford Shakespeare Company has curated a special online programme of activities to keep audiences entertained and inspired during the coming months. Calling on help from the many actors and creative artists GSC have worked with over the past 14 years, and together with their own in-house team, the charity has devised a programme of work that can be accessed online for free, with different content every day.

Released on Mondays and Fridays, #TheseOurActors are short recorded performances by previous GSC actors of favourite speeches, sonnets or songs from, or about, Shakespeare.

Tuesdays shine the spotlight on the GSC Team itself with individual members talking about their role at the charity. ‘A Chat With Matt’ (Co-Founder Matt Pinches).

On Wednesdays is a live YouTube broadcast of a talk on Shakespeare’s life. Split into eight 30-minute episodes, these are broadcast at 7.45pm and include a live chat facility for audience members to ask questions.

Finally, Thursdays see the release of a weekly Podcast, #GSCsRudeMechanicals, which features an interview with a member of the company’s creative teams, from sound design to choreography, from directing to vocal work.

“Though we are unable to produce any live theatre in our usual way right now, we wanted to be able to stay in touch with our audiences,” explains Matt Pinches. “Our audiences and our artists are central to everything we do. GSC is a family and in these unprecedented, difficult times it is of paramount importance that we all can find a way to keep in touch. “We’re indebted to the time and talent our artist friends have donated in this way. Our hope is that alongside bringing a little colour to people’s daily lives, we are also ensuring GSC will continue to inspire and entertain once this is all over.”

Alongside the #AtHomeWithGSC content, GSC have also been working hard to ensure that the busy Education Department continues to provide opportunities for people to stay involved, be creative and in contact with their friends.

All normal classes are running, adapted to run online. “We’re delighted that our popular weekly primary school clubs, Saturdays and adult evening classes are running next term, and we’ve introduced a new Play

writing Adaptation course. We’re also striving to ensure the social isolation projects, begun through our Brave New World initiative, will also continue. “At a time of such uncertainty, it’s more important than ever to offer people some sense of normality, and we are extremely pleased to be able to continue to run these classes.”

For full details of all the #AtHomeWithGSC content and the Education classes visit: guildford-shakespeare-company.co.uk

A message from our managing director:

Foxhills and Farleigh are in the hospitality business and they exist to make people feel great. Right now, they are closed and when they will open is unclear. Many of you will be in a similar position and I feel for you. Surrey’s businesses are among the strongest and most innovative in the country, we will endure. And when we do, my clubs will be there to greet you. Maybe not with open arms, at first, but with a broad smile and sanitiser. We’ll be there to help you thank your staff and to spend time with your clients, without a flickering screen between you. We’ll be there for you to relax with friends and family, without a ‘quiz night’. Best of all, each club measures over 350 acres so plenty of room to socially distance either with or from your family. Until then, be safe, take care and we will see you on the other side.

Marc Hayton