Last Friday in the USA we saw the latest pronouncement of the economically important ‘Non-Farm Payroll’ figures. These figures provide are a very useful economic measure and despite their odd title, are in effect the unemployment figures without ‘The Waltons’. For those who are unfamiliar with that rather tedious television series, it was about the good, albeit seemingly somewhat inbred, farming figures in rural America.

These figures, following all the other dire news we have seen recently, were expected to be terrible. However, much to everyone’s surprise they were astonishingly good. Far from showing a significant increase in the numbers of the unemployed, they were diametrically the opposite and showed a quite remarkable growth in employment. They were so good, that not only did the Dow Jones 30 Index rise by over 3% that afternoon, but also the bunker dwelling President came out into the daylight to celebrate this great news and congratulate himself on his successful policy.

Now please, after my (quite legitimate) rudeness about the President, let me say that this was indeed good news, but news that should be clearly put into some perspective. The re-employment of 2 million is marvellous, however that still leaves the unemployment numbers at a dreadful figure, coming down from the 21 million souls who lost their livelihoods in the past few months. What the numbers do show, is the real structure of the US employment system, fast to fire and fast to hire. Will we see the bounce back being strong enough to have all of those who were fired (the 21 million) suddenly rehired, with as much vim and vigour as they were despatched with? Personally, I doubt it.

We are in the midst of a nasty cocktail of events, which when linked together have the potential to become something far worse. Now, I don’t think that has to happen, but equally the position is not resolved by just one set of better job numbers. With a pandemic, a period of international shut down, a Chinese Cold War brewing, along with domestic unrest in certain key countries, we come back to the key word for proper recovery and improvement: confidence.

This confidence is based on the most important family in the world for a global recovery: Mr and Mrs Joe Shmo (and family) living in Little Rock Arkansas, with a modest mortgaged house, an IRA savings account and probably shopping in Walmart. This family are the bedrock of the US economy, the American consumer who accounts for over 65% of the spending in the economy. What drives the Shmo’s? Everything from a job, pay levels, security, and a feeling of goodwill, enough to go out and spend.

I can take great delight and succour that the American positive attitude towards the future is not dead. They have always been believers in the ‘glass being half full’, whereas the British have had a tedious habit of often considering it not only ‘half empty’, but also well and truly cracked. Americans are the eternal optimists and we certainly need that, but also some healthy realism blended in would not hurt.  

I fear that later in the year, as we see more of the world economy grind back into life again, the longer term economic outlook will not appear quite so rosy and perhaps our autumnal season of gales will provide us with some significant volatility and storms and I don’t just mean meteorological ones. Thus, last Friday’s news was certainly good news, but could appear as ‘fool’s gold’ to those who think that our economic problems are now behind us. What we have seen is a greater relief in markets than tangible action taken, governments borrowing and spending, and some initial results.

For investors, we can use these periods of turbulence for our benefit but with a clear eye on the further actions that need to be taken. Good investors will take a longer-term view and not a shorter-term punt. Growing companies need our support and investment, and if they are brave enough to have sufficient confidence to grow their businesses, then we too should, with proper realism and research, be prepared to apply our confidence and investment in order to back their future success.

And finally… Who needs to drive all the way to Barnard Castle to avoid ant controversy for flouting Covid-19 lockdown? Instead, we can look at the somewhat bizarre actions of a certain Peruvian mayor.

This occurred when Jaime Rolando Urbina Torres, the local mayor, was out drinking with friends in his town of Tantará one night. Unfortunately for him, the police arrived to bust them for defying public health orders amid the pandemic. With a swift use of imagination, he came up with a cracking idea to throw off the police: to play dead.

He decided to pose as a dead Covid-19 victim, by lying in a coffin while wearing a face mask. This he thought might allow him to avoid being arrested for violating the lockdown rules that he should have been helping to enforce.

Señor Torres was detained for violating curfew and social distancing laws. Torres has also come under fire by officials in recent weeks for failing to open emergency quarantine shelters and failing to implement safety checks.

Well, he may not be dead, but his political career probably is.

Have a good week.


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