Weekly newsletter for women who want to be smart about money: financial news, personal finance and investing
Welcome to our #21 weekly newsletter in 2020.
Every week we curate key articles and content so you can stay informed and inspired about money and investing. And we spend hours sifting through content every week so you don’t have to.
We apply a female-lens to news and content about money and investing so that it is more meaningful to you.
Stay in the know. Keep on top of global economic, financial and investing news and trends. And read about what this means for you and your money in 2020 during Covid-19 and beyond.
If you’re short on time, listen to the editorial on audio for a brief overview.
“When we take control of our financial future we can live life on our terms”
-Jana Hlistova
Photo: August de Richelieu
From The Purse…
Editorial from the Founder
Global economies are slowly reopening as the pressure mounts to get ‘people working again’.
The global stock markets continue to be divorced from reality although the markets have been more cautious in May.
Investors consider: how fast will economies recover and what is the likelihood of new infections?
In April, Britain posted the largest budget deficit since records began and central government spending increased 57% whilst revenue fell 27%.
Inflation almost halved in April to 0.8% and unemployment is now at 2.1m. However things could get worse.
And for the first time the UK sold debt with a negative yield-which effectively means that investors are paying to lend to Britain.
The US is divided about a second $3tn stimulus package which would include handing out more $1,200 cheques as total unemployment reaches 38.6m Americans.
We spotlight what impact the coronavirus might have on inflation over the next ten years and what this means for your money.
And Chief, the US social network dedicated exclusively to women in professional leadership positions, has raised $15m in their most recent round of funding.
Overall, the pandemic is having a greater impact on women. More women are exposed to the coronavirus because they work in the healthcare and social care sector, more women have lost their job, and more women continue to shoulder the household, childcare and homeschooling burden.
Listen to the podcast by NPR in the Have You Seen This? section about how couples can balance household chores with Bridget Schulte, the director of the Better Life Lab.
Some good news: for the first time there are 37 female CEOs of Fortune 500 companies (US). Studies have shown that public companies with female CEOs or CFOs tend to be more profitable.
And if you have time, check out the TED talk about how to rebuild the global economy after the coronavirus.
Stay safe, take care of yourself and your loved ones.
I hope you enjoy this week’s newsletter. And until next week!
Jana
The Big Picture
Global markets and economy news, trends and indicators
The Coronavirus Effect:
Germany and France have joined forces to push for a €500bn EU recovery fund.
The fund would be raised by the European Commission borrowing on capital markets and would be used to support EU spending rather than loans to national governments.
The member states currently do not agree on how the money should be made available ie as a grant or as a loan.
US congress are divided over a second $3tn stimulus package as unemployment rises
This includes another round of $1,200 means-tested “economic impact payments” for US adults earning up to $75,000 a year.
Unemployment rose last week by 2.4m Americans; total unemployment is now 38.6m.
Pandemic spending: Britain posted the largest budget deficit since records began. The deficit was at £62.1bn in April. Central government spending has increased 57% while revenue plunged 27%.
UK inflation has nearly halved to 0.8%. In the Eurozone, the drop was from 0.7% to 0.3% last month
In both cases inflation fell due to the decline in the price of petrol and discounting of certain items, not food.
UK suffers a record fall in the month of April
According to the Office of National Statistics, retail sales fell by 18.1% (compared to last month) and 22.6% (compared to last year).
However online sales rose by 18% compared to last month; increasing the proportion spent online to 30.7%.
The slow recovering and shift to online spending is likely to put a lot of high street shops at risk.
UK’s unemployment benefit claimants rise by 69% in April
According to the Office of National Statistics (ONS), 2.1m are now claiming Jobseeker's Allowance and Universal Credit.
Labour market experts expect to see the unemployment rate to rise to 8% in the next few months.
However, without the wage subsidies covering 8m workers who have been furloughed, unemployment could jump to 20%.
UK 5 year bond yields turned negative. The rally sent the yield to a record low
This means that investors who hold the bond to maturity will get slightly less than they paid. Investors pay to lend to Britain.
Borrowing at negative interest rates is also a sign investors expect further economic stimulus from the Bank of England (BoE).
This was also described as a ‘symbolic moment’ as investors become accustomed to negative yields on bonds around the world.
Negative interest rates and quantitative easing (printing money) could weaken the pound/currency.
Bitcoin price drop to $8.9K raising fear of a new bear market trend
Since the second week of March, the price of Bitcoin recovered strongly from $3,600 to over $10,000.
Looking Ahead in 2020
Central banks have deployed a total of around $4 trillion of asset purchases over the past eight weeks and the global equity market cap has surged by $15 trillion.
Fake markets: the government and corporate bond prices have been fixed by central banks. Why would you expect to see stock prices rise rationally?
Instead of looking at the $15 trillion market-cap growth, the global stock market rally should be viewed in context of the $30 trillion collapse between February and March.
Most global stocks remain in bear market ie 20% or more below their all-time highs.
The current rally is polarised: it is highly concentrated in growth-focused US technology stocks and "FAAMG" (Facebook, Apple, Amazon, Microsoft, and Google).
Investors are positioned bearish as most expect a ‘U’ or ‘W’ recovery.
Policymakers are causing an ‘immoral hazard’ forcing investors to buy, banks to lend, and corporate zombies to issue debt this year.
UK angels are still investing during lockdown, but startup founders have to be quick
According to a survey the pandemic has reduced angels’ total capital to invest in 2020 by just over 61%.
Just under 60% think the effects of COVID-19 will negatively affect their ability to invest for the rest of 2020.
JK Rowling, the author of Harry Potter, dives into the world of crypto and bitcoin and the Twitter community respond, including Elon Musk:
Coronavirus Impact: Your Money
Insights, trends and what this means for you and your money
Taking an investment risk can be rewarding (and how to start)
Companies to Watch: winners & losers
Companies to watch and share price movements
Moderna is one of the early forerunners to develop a vaccine for Covid-19. It produces neutralising antibodies that bind to the virus and disable it.
Its share price surged 30% on Monday after the biotech company announced promising early results from its coronavirus vaccine.
However senior execs at the firm subsequently sold close to $30m of stock. These were legal trades but ‘the optics look terrible because it shows you have a better place to put your money’. However it’s not unusual for execs to capitalise on the share price.
By Thursday the share price had fallen by 16%.
The deal values the Marston’s Brewing Business at up to £580m and the Carlsberg UK Brewing Business at £200m.
Marton’s share price jumped 102% to 66p.
In the Spotlight
Is there a topic you'd like us to Spotlight? Please tweet @jointhepurse
What is likely to happen to inflation as a result of Covid-19? And why does it matter?
Inflation is the rate at which the prices for goods and services increase. It affects everything from mortgages to the cost of shopping and public transport.
It is one of the key measures of financial wellbeing as it affects how much you can buy with your money.
In April, inflation in the UK was at its lowest since April 2016 at 0.8%.
According to a white paper published by Pete Comley, author of a book called Inflation Matters, the coronavirus crash could lead to a wave of inflation in the latter half of the decade.
In the short term the government has been absorbing the cost of Covid-19 but in the long term the burden is likely to shift to ordinary people: inflation will start to rise.
The Bank of England (BoE) is predicting inflation will drop to near zero in the coming year, however as the world recovers from Covid-19, inflation could well push past its target rate at 2% to the 3%-5% range for the rest of the decade.
The government is likely to let inflation rise as an ‘inflation tax’ in order to reduce the real value of the country’s debts and make interest repayments more affordable.
The interest base rate is also likely to be held close to zero to make their interest repayments more affordable.
For private investors, inflation will erode returns on bonds and there is a risk of capital loss when interest rates do rise: some businesses may default on their loans.
For higher returns, it makes sense to invest in shares. However higher inflation will mean lower returns. Longer term, as inflation rises standards of living may be gradually eroded.
The latest inflation wave has just 16 years to go before it reaches its end-of-cycle maximum of 140 years.
Have You Seen This?
Female-focused news, reports, research, campaigns
Why the coronavirus is fuelling an economic crisis that will hit women the hardest: (UK)
The sectors most impacted by the lockdown due to the pandemic-such as social care, retail and hospitality, are mostly staffed by women.
According to the Institute of Fiscal Studies (IFS), women were about one third more likely to work in a sector that is now shut down than men ie one in six (17% of) female employees were in such sectors, compared to one in seven (13% of) male employees.
Women under the age of 25 have been most impacted (this excludes workers who are in full-time education: we are not talking, for example, about students who had part-time jobs in bars and restaurants).
Women also continue to take on the lion’s share of unpaid work (more than three times as much as men): household chores, childcare and now homeschooling which is having an impact on their work and career.
Pandemic makes evident the grotesque inequality in the household (a podcast interview):
Brigid Schulte, who is director of the Better Life Lab, says that our culture operates according to an outdated ‘breadwinner/homemaker’ model.
Schulte argues that families are not monolithic and should not be treated as such.
She says the pandemic has created an opportunity to start a dialogue about the distribution of household tasks.
Female Fortune 500 CEOs reach an all-time high
For the first time, there are 37 female CEOs of Fortune 500 companies (US).
This represents an increase of only 7.4%, according to Fortune magazine which compiles this list every year.
Studies show that public companies with female CEOs or CFOs tend to be more profitable and have better share price.
VC funding for women has plummeted during the pandemic. Here’s what to do about it:
Bootstrap your business: grow slowly and retain full ownership.
Pursue equity crowdfunding via platforms: give up small amounts of equity to small investors.
What We’re Tracking
Female-focused products or services, crowdfunding campaigns, start-ups and businesses led by female entrepreneurs & investment, research
Chief: (US)- a social network dedicated exclusively to women in professional leadership positions, has raised $15 million from its existing investors. This brings the total funding to $40 million (since 2018).
Founded by Carolyn Childers and Lindsay Kaplan, the startup is a highly vetted network of women who are leaders in their business.
The company has more than 2,000 members in New York, Los Angeles and Chicago, from companies like Google, IBM and HBO.
The start-up has fast-tracked the launch of its hiring board.
And the funding will be used to accelerate growth in the US and support the build-out of technology infrastructure.
Money Habits of the Week
Do you have a money habit you would like to share with us? Tweet @jointhepurse
Review the asset allocation of your pension or investment portfolio.
If you have a company pension or a SIPP (self-invested pension fund), find out how it is invested. For example, what is the mix of bonds vs equities vs commodities, in developed markets vs emerging markets.
Use this as a learning exercise to study your investments and understand them better.
And if you need to, contact an independent financial adviser.
What We’re Watching
Watch this recent TED talk interview with Kristalina Georgieva, the Managing Director for the International Monetary Fund (IMF) discussing how we can rebuild the global economy after the pandemic crisis.
Coffee Break? Read This
Uncomfortable conversations women should be having about their money right now (Aus)
Will Covid-19 worsen gender equality at home for working mothers?
Women’s research plummets during lockdown-but articles from men increase
How 10 founders landed great advice, investment and support from other successful women
We’d love to hear from you. Do you have feedback? Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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