Should I stay or should I go (out)? The Clash here is the interminable quandary between stemming the spread of COVID-19 and resuscitating economies. Decisions have to be made without full clarity of the potential outcomes and are typically counter-productive to each other; what is good for the economy is not necessarily good for controlling COVID-19.
Chairman of the US Federal Reserve, Jerome Powell, has indicated that the central bank will be more explicit in its intentions, in order to help facilitate a better recovery. However, while the reopening of the US economy is underway, a full economic revival would require curbing COVID-19’s current trajectory. This warning was echoed by the World Health Organisation as COVID-19 cases passed 10 million globally. Over a quarter of those were from the US, which was particularly evident this week as California, Texas and Arizona all reported an increase in the number of cases. This has meant several states slowing down their plans for an easing of lockdown measures.
The UK seems to be following the US, with isolated spikes in particular areas requiring a reinstatement of localised lockdowns. The path towards normalisation will be volatile and until a vaccine is found, investors will have to become accustomed to a strategy that is two steps forward and one step back.