The global economy faces a $5 trillion hit, why are companies in the UK axing dividend payouts, what does Ray Dalio have to say about the global economy and check out our podcast about angel investing
Weekly newsletter for women who want to be smart about money: financial news, personal finance and investing
Welcome to our #15 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: Andrea Piacquado
From The Purse…
Editorial from the Founder
There is a gradual realisation that the global economy will not recover as rapidly as was initially expected (or hoped) due to the coronavirus outbreak.
The imposed lockdowns on cities and countries around the world mean that the global economy has sharply declined.
According to JP Morgan the world economy faces a $5 trillion hit and output may not return to pre-coronavirus times until 2022.
Unemployment continues to rise in the US to more than 16 million in 3 weeks and companies and start-ups are having to rethink how to ‘do business’ under extreme circumstances where people have to ‘stay home’ to ‘save lives’.
The IMF are warning that the standard of living will drop as a result of the worst recession since the 1930s. Low wage earners will be most affected.
As an investor it’s important to track the markets and the economy to understand why and how this is effecting your savings, pension and any current or future investments.
Whilst we are seeing some deeply affected sectors and companies struggling during these unprecedented times, we are seeing others continue to thrive including retail supermarkets, consumer goods, healthcare, health-tech and remote technology.
Use this time to observe and study.
I recently recorded a podcast interview with Sarah Turner, CEO & Co-Founder at Angel Academe-an angel network aimed at women and women founders.
Women entrepreneurs need access to capital to grow their businesses especially during these challenging times.
Women investors can put their money to work, and help build out the ecosystem of female founders and their businesses.
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 world economy faces a $5trillion hit. Global output might not return to pre-coronavirus levels until 2022:
EU: agreed an economic stimulus package worth €500bn (£440bn). The core elements of the package are:
Revised credit lines from the European Stability Mechanism (ESM)
A boost to the lending capacity of the European Investment Bank
A new €100bn unemployment insurance scheme proposed by the European Commission.
US: The Federal Reserve introduced an additional $2.3tn stimulus package aimed at small businesses and municipalities.
According to the Fed chair Jerome Powell ‘this should help the US economy with its robust recovery’.
Opec and Russia have agreed to make cuts in oil production
This has ended the weeks long war for market share.
It was agreed to cut 10m barrels a day of production or approximately 10% of global oil supply.
But oil prices fell sharply as traders doubted the cuts would make up for the fall in demand because of the coronavirus.
US: Unemployment continues to rise:
US: More than 6m people signed up for unemployment benefits.
This brings the total unemployment benefits claims to 16m for the last 3 weeks.
The stocks markets performed well this week:
Wall Street recorded the biggest weekly gain since 1974: the S&P 500 gained 12.2%
The FTSE 100 recorded strongest weekly gain of 7.8% since the global financial crisis ten years ago in 2009.
UK: global investors look for a safe haven in UK government bonds
Investor appetite for UK government bonds has hit a three-year high.
The Treasury raised £6.1bn with the highest demand since 2017.
Investors were willing to accept a yield on a three-year loan of just 0.204%.
UK: dividends could halve as coronavirus puts £52bn at risk
Almost half of British companies have scrapped dividends in response to coronavirus.
Over 40% of British companies have axed their dividends, representing cuts of £28.2bn.
Looking Ahead in 2020
Coronavirus putting world on track for new Great Depression, says WTO
The World Trade Organisation (WTO) confirmed that international trade has dried up due to the pandemic.
Trade could contract by as much as 32%, which is comparable to the Great Depression 1929-1932.
The International Monetary Fund (IMF) warns the standard of living will fall as a result of the worst recession since the 1930s.
IMF’s forecasts for the global economy released next week will be ‘grim’. Global growth for the economy was forecast at 3.3% in January. The head of IMF, Kristalina Georgieva said:
Covid-19 has disrupted our social and economic order at lightning speed and on a scale that we have not seen in living memory.
UK: The NIESR report is predicting a contraction of the UK GDP by 15%-25% in the second quarter, and a 5% contraction in the first quarter: The lockdown is causing the largest contraction in economic activity since 1921.
Coronavirus Impact: Your Money
Insights, trends and what this means for you and your money
Coronavirus: what if I can’t pay my rent, my bills or council tax? (UK)
Coronavirus: what it means for mortgages, credit cards and savings (UK)
These investors are hanging on whilst they wait for better times (US)
Valuing money over family and friends leads to misery, study finds
The University at Buffalo and Harvard Business School published a study which found that investing all your identity in wealth makes you unhappy and is exacerbated by quarantine.
Companies to Watch: winners & losers
Companies to watch and share price movements
ASOS shares surged 40% in 40mins
The online retailer set out plans to withstand the pandemic.
The £249m funding round was four times oversubscribed by existing institutional investors.
Confidence was compounded by strong interim results which showed strong sales leading up to the coronavirus outbreak.
ASOS can successfully scale its business within a 6-12 week time frame.
UK retailers brace for a shake-up as clothing piles up in warehouses
Retailer Cath Kidston is on the verge of collapse.
60 stores in the UK and a further 180 overseas.
The company employs 941 people in the UK, 820 of whom were furloughed on 22 March under the government scheme.
In the Spotlight
Is there a topic you'd like us to Spotlight? Please email jana@jointhepurse.com or tweet @jointhepurse
Why are companies axing dividend payouts?
More than £52bn in company dividends is at risk in the UK this year in response to the coronavirus.
Dividend payouts from UK companies will fall up to 53% in 2020 to £46.5bn according to Link Group.
Dividends which are a source of income for savers and investors have come under scrutiny during the coronavirus outbreak.
Businesses are under pressure to protect their cashflow against the backdrop of a contracting global economy.
It is difficult to know how long the global economy will take to recover and it is important that companies are prudent and cautious.
Several insurers such as Aviva and Direct Line said they would postpone their dividend payments whilst British banks have scrapped their payouts.
According to the Link Group, they expect ‘defensive sectors’ such as healthcare, consumer goods and food retailers to continue paying their dividends.
Have You Seen This?
Female-focused news, reports, research, campaigns
Coronavirus lockdown to hit low-paid, young and women hardest warns IFS
The low-paid, young people and women are likely to be the hardest hit by the coronavirus shutdown of businesses including restaurants, hotels, pubs, retailers and transport services.
According to the Institute of Fiscal Studies, low earners are seven times as likely as high earners to work in a business sector that has closed down.
Women were about one-third more likely than men to work in a sector that has been closed down, as they make up the majority of retail and hospitality workers.
The UK’s small business owners face disaster during Covid19 – and most will be women
Controlling lives, controlling money: how to tackle financial abuse
What We’re Tracking
Female-focused products or services, crowdfunding campaigns, start-ups and businesses led by female entrepreneurs & investment, research
Maven: (US)-has extended its healthcare platform offering to a tele-health service in response to Covid-19. Check it out here.
Blossom Capital launches a £5m angel investment programme (UK/EU)
Founding partner Ophelia Brown is enlisting 30 angels.
They are founders or executives from European unicorns, to mentor the early-stage founders on the programme.
Blossom Capital will invest $250,000 per start-up and the angels will decide which founders will receive it.
BuildHer (UK): co-founded by female entrepreneur DamiLola and is an exclusive community & movement set to empower women.
It is crowdfunding & freelancer platform aimed at raising money and funding through rewards based contributions for underfunded women of ‘Black Origin’.
Money Habits of the Week
Do you have a money habit you would like to share with us? Tweet @jointhepurse
Use this time to develop a new money habit.
Decide to incorporate learning about money and investing into your day.
Set aside time every day and commit to it. 10minutes is enough to start with.
You may decide to start a money journal to track what you are learning.
For example, you can decide to use this newsletter to guide you to new concepts-you can read up about dividends or learn about angel investing.
Look up terms or concepts which are unfamiliar.
And don’t forget to make it fun!
Caught Our Eye
Digital tools for managing your money and investing
Lumio (UK)-provides clarity to your financial life.
All of your accounts are in one place and the mobile app shows you where your savings and earnings ought to be growing.
What We’re Watching
Ray Dalio, is an American hedge fund manager and philanthropist who has served as co-chief investment officer of Bridgewater Associates since 1985.
He talks about what the coronavirus means for the global economy:
Coffee Break? Read This
Female CEOs can lead the coronavirus response if government gets out of their way (US)
How my conversation with my grandmother made me rethink my pension
5 online workouts to boost your mood if you are anxious or lethargic
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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