Here’s your next weekly update from Calculis, sharing the good, the bad and the more light-hearted news.

What’s happening?

The good

“Past the peak”                                                               

Boris Johnson said yesterday that he will set out a “comprehensive plan” next week on how to kick start the economy, reopen schools and help people travel to work.

He announced that the UK was “past the peak” of the outbreak but stressed the country must not “risk a second spike”.

COVID-19 treatment brings hope

AstraZeneca has agreed to manufacture and distribute a coronavirus vaccine being developed by the University of Oxford, if the treatment proves effective. The plan is to submit the vaccine for fast track regulatory approval in the fourth quarter of 2020, and for it to be ready for limited use by the end of this year.

The bad

The Confederation of British Industry announced earlier this week that British retailers suffered their biggest fall in sales since the 2008 financial crisis in the first half of April due to lockdown measures.

This was followed by news that British Airways plans to lose more than 1,100 pilots and make big cuts to its Gatwick airport operation. Ryanair also announced plans to cut 3,000 jobs and talk to Boeing about delaying plane deliveries as it does not expect European air traffic to recover fully from the coronavirus crisis until 2022.

As the effects of lockdowns on the global economy become clearer, positive signs of recovery for the FTSE were brought to an abrupt end yesterday.

As you can expect, the poor company data is worrying markets, but we hope that a clear plan to exit lockdown next week will begin to reverse concerns.

Are we ready to reopen? Factors needed for a quick & robust recovery

1. Infection rates contained, leading to eased travel restrictions

Progress so far:
– Infections slowing in Continental Europe
– Infections plateauing in the US, UK

Further progress required:
– Vaccine ready for mass production
– Countries meet criteria ready for shutdown exit strategy

2. Policy response –
Fiscal stimulus of sufficient size and nature & central bank backstop

Progress so far:
– US stimulus increased (now USD 2.4tn)
–  European Central Bank (ECB) and Bank of England join Fed in supporting credit markets

Further progress required:
– Credible ECB backstop
– Details of EU joint solution
– Brexit negotiation extension

3. Economic resilience

Progress so far:
– US unemployment so far deemed ‘temporary’
– Furlough schemes being well utilised in Europe

Further progress required:
– Earnings season doesn’t prove to be disruptive
– Unemployment low/temporary


An interesting read…

Six more biases you should know about but were too afraid to ask

Last week we shared with you some interesting content from an article in Citywire, which explored six behavioural biases that are prevalent during times of uncertainty. Here is a quick summary of part 2, which focuses on six more biases that impact how we process information, how we react to what is going on around us, and how our own confidence can derail even the best-laid plans.

1. The Semmelweis reflex – a metaphor for the reflex-like tendency to reject new evidence/new knowledge because it contradicts established norms, beliefs or paradigms.

This is often seen in science and academics when a new theory is put forward that most people don’t accept immediately. For example, when we are told to wash our hands for longer to prevent the spread of COVID-19, we may be slow to accept the benefits.

2. Herding bias – a psychological phenomenon in which people rationalise that a course of action is the right one because ‘everybody else’ is doing it. 

Sometimes we’re driven by the fear of missing out. Rather than imitating the actions of larger groups, it’s important to remember to think independently, basing decisions on your own principles and values.

3. Processing difficulty effect – people have an easier time remembering information that takes longer to read and understand.

Get straight to the point? Not in times of uncertainly. When we’re anxious, the brain’s decision-making centre will be clouded, so there is value in providing more information and giving people time to process the information.

4. Hindsight bias – the tendency for people to perceive events that have already occurred as having been more predictable than they actually were before the events took place.

‘I knew It all along…didn’t I?’ As an event unfolds, it is easy to reflect back on what was said at the beginning and draw a conclusion that you were right all along. When we process post-event information, learn from what happened and accept that its outcome and your ‘prediction’ were nothing but a fortunate coincidence.

5. Dunning–Kruger effect – where people think their cognitive ability as greater than it actually is.

In areas where we have some competence, we estimate our skills as higher than they really are because we don’t know what we don’t know. The more competent we are, the more we realise we don’t know.

6. The Peak-End rule – people judge an experience largely based on how they felt at its peak and its end, rather than based on the total sum or average of every moment of the experience.

When this pandemic ends and life resumes, we will no doubt be overjoyed. However, it’s important not to downplay the significance of recent events by focusing solely on how you felt when it all ended.

It’s not all doom and gloom…

Here are some other stories which show a different side to these unprecedented times.

Captain Tom Moore’s NHS appeal tops £32m on 100th birthday

The appeal by NHS fundraiser Captain Tom Moore topped £32m as he celebrated his 100th birthday. The war veteran, who raised the money by walking laps of his garden, has also been made an honorary colonel. The occasion was also marked with an RAF flypast and birthday greetings from the Queen and prime minister. Read more

Send a free postcard & support the NHS

Positive Post is a new initiative that lets you send free postcards to spread your love while donating to NHS staff. From food deliveries to overnight stay kits, the appeal will support the brave NHS staff and volunteers treating COVID-19 patients.  Read more

Bus-stop art gallery lifts spirits in lockdown London

A London bus stop has been transformed into a children’s art gallery by a local resident who wanted to brighten the drudgery of lockdown life. Read more

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