The coronavirus effect: how are governments responding? Why is there a risk of a global credit crunch, a rising number of UK mothers are falling into debt and check out start-up Bimble
Weekly newsletter for women who want to be smart about money: financial news, personal finance and investing
Welcome to our #12 weekly newsletter in 2020.
Every week we curate key articles and content so you can stay informed and inspired about money and investing without the boring bits!
This is your weekly go-to place to read up on all things money-related.
We spend hours sifting through content every week and apply a female-lens to news and content about money and investing so that it is meaningful to you.
Ultimately we want to support you in making well-informed financial decisions, grow your net worth and ensure your financial security.
Photo by Loe Moshkovska
From The Purse…
Editorial from the Founder
Unprecedented times calls for unprecedented measures.
The economic impact of the coronavirus is fast becoming entrenched, as cities and countries around the world shutdown to safeguard and prevent further coronavirus cases.
Global economies are contracting as people are required to work less or not at all in industries hard hit such as retail, hospitality, airlines and entertainment.
However this week we have seen the US and UK government offer more than a change in monetary (eg cut in interest rates) and fiscal policy (eg VAT holiday) in order to cushion the blow.
The coronavirus will collapse growth in a way we have not experienced before: people can not go to work or eat out and gather nor use public transport in order to protect them from contracting the virus.
Capitalism which is built on reward and incentive of the workforce does not make sense where people are unable to work, go out and spend their money.
People’s health and well-being has become a priority but one that can not be orchestrated by a free market economy.
Instead, governments around the world must step in and organise society in such a way that people will be supported and looked after. A reduction in interest rates to 0.1% is unlikely to save a life.
This calls for an entirely new way of thinking and a radical approach.
And we are already seeing the UK Chancellor promising to fund up to 80% of employees pay who become ‘workless’-positive signs that the government recognises that we can not continue to do things the way we have always done them.
Stay safe, take care of yourself and your loved ones.
I hope you enjoy this week’s newsletter. Until next week,
Jana
The Big Picture
Global markets and economy news, trends and indicators
The Coronavirus Effect:
The S&P 500 is down 15% for the week.
The Dow fell over 900 points on Friday after a brief morning rally
The Nasdaq lost 12% over the week.
Gold and oil fell too as investors moved to cash
The FTSE 100 had its lowest end of the week close since 2011.
The value of bonds has plunged by $5trillion to $55.5trillion in the past 2 weeks.
Investors fear an influx of new debt as governments gear up to release massive fiscal stimulus plans:
The Federal Reserve cut interest rate to 0% last Sunday.
The UK government introduced a series of interventions this week to minimise the coronavirus impact on the economy (including):
The UK Chancellor unveiled a £350bn package to help cushion the coronavirus impact on the economy: It includes £330bn in loans, £20bn in other aid, a business rates holiday, and grants for retailers and pubs.
On Thursday, the Chancellor introduced a £200bn bond buying scheme (which sent the pound soaring more than 0.5%) and up to 80% pay (to £2,500 a month) for employees who are ‘workless’ because of the coronavirus.
The Bank of England (BoE) cut interest rates to 0.1%.
Looking Ahead in 2020
Angus Coote, of Jamieson Coote Bonds in Melbourne, said the crisis could soon explode the massive debt bubble inflated by years of low interest rates and cheap money.
The EU now sees a risk of recession as deep as 2009:
Goldman Sachs predicts unprecedented economic slump (US economy):
Predicts that Covid-19 will trigger a 6% decline in the first quarter and a 24% decline in the second quarter in the US economy.
In the third quarter, they predict a 12% bounce back and 10% growth in the fourth quarter.
Unemployment will increase to 9%.
It points to data in China: there has been a sharp contraction relative to last year in retail sales (-20.5%), industrial production (-13.5%) and fixed-asset investment (-24.5%).
Madhavi Bokil, a Moody’s senior credit office, said:
The short-term economic costs are likely to be steep, the world over.
While the shock could disrupt many sectors, the burden will weigh disproportionately on the transportation sector, the energy industry, hospitality, healthcare and consumer services, especially hotels, restaurants and leisure.
In the worst case, entire industries could be destroyed.
US economist warns ‘first services recession’ could eclipse 1929
Gabriel Mathy, a specialist in macroeconomics and the Great Depression, argues the coronavirus pandemic has the potential to cause ‘one of the biggest economic shocks ever experienced, eclipsing the shocks of 1929 and even 9/11.’
Coronavirus Impact: Your Money
Insights, trends and what this means for you and your money
Suffering Through Your First Financial Crisis? Read This to Relax
4 easy things to do now to protect your finances from economic uncertainty
In the Spotlight
Is there a topic you'd like us to Spotlight? Please email jana@jointhepurse.com or tweet @jointhepurse
Why is there a risk of a global credit crunch?
The world’s most advanced economies are entering a shutdown which could last a few months.
And for the last ten years, companies have been able to get cheap credit.
However, as the cost of borrowing goes up on international money markets, the ability to pay back corporate loans becomes difficult.
Couple that with a reduction or loss of revenue, like say in the airlines industry or retail, and this spells trouble for businesses.
The massive debt bubble inflated by cheap borrowing could be ready to burst.
Many companies may struggle to refinance because of the sudden change in credit conditions and access to money will no longer be available.
This will lead to bankruptcies as businesses can not pay their debt and run out of cashflow.
Have You Seen This?
Female-focused news, reports, research, campaigns
State pension changes boost number of women over 60 in work
The number of women aged between 60 and 64 in work has increased by 51% in the 10 years since the state pension age was increased, official data has shown.
Clare Moffat, head of business development at Royal London, said: “The increase of women working further into retirement age is good news for the economy and great news for women’s pension wealth.
Study reveals the investing habits and challenges of single women
Single women show outsized interest in less conventional investments.
Many take early retirement withdrawals.
They show pronounced interest in emerging benefits.
Rising number of UK mothers are falling into debt-report
“While older mothers are not a homogenous group, many have spent their lives in low-paid jobs and juggling debts, usually as a result of trying to provide for their families,” said Dr Kingsley Purdam, the co-author of the paper, which will appear in the journal Ageing and Society.
What We’re Tracking
Female-focused products or services, crowdfunding campaigns, start-ups and businesses led by female entrepreneurs & investment, research
Bimble (UK): a British-born app for saving and sharing favourite locations, is co-founded by Francesca Howland.
The company has launched with £1.3 million in funding from angel investors across the travel, retail, and fashion sectors.
Oxford-based startup has already built a community of 60,000 users and been selected for the Google Digital Accelerator Programme.
A third of the investment comes from female angels committed to backing other female entrepreneurs.
Money Habits of the Week
Do you have a money habit you would like to share with us? Tweet @jointhepurse
You are in control of what enters your mind.
During so much uncertainty and volatility, be mindful of everything you read, watch and listen to.
Remember you decide what information you let in or not. And what you do with that information.
Your mental, emotional and physical health is a priority.
Find time every day to breathe, meditate, walk and let go of any fear or worry.
Caught Our Eye
Digital tools for managing your money and investing
Suprafin (UK): a a wealth tech platform for crypto assets with a focus on financial inclusion. This is an early stage start-up breaking new ground in the crypto asset investment space.
The platform is not yet live, but you can sign up for early access.
Disclaimer: this is for informational purposes only. Please talk to your financial advisor before you consider investing in high-risk assets.
What We’re Reading
In this revelatory book, Ha-Joon Chang destroys the biggest myths of our times and shows us an alternative view of the world, including: globalisation isn't making the world richer, poor countries are more entrepreneurial than rich ones and higher paid managers don't produce better results.
Coffee Break? Read This
If Bitcoin is a ‘safe haven’ why does it tank in times of trouble?
All the rage: Why we need angry girls in children’s books more than ever
We’d love to hear from you. Do you have feedback? Have we missed anything? What would you like to see more of? Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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