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Head of Equities, Stephen Dover, on what the continued business shutdown could mean.
Stephen H. Dover, CFAHead of Equities
Our Head of Equities Stephen Dover gives his take on what the continued business shutdown due to the COVID-19 pandemic could mean for US workers, particularly those who are not currently earning a paycheck. He also shares why oil prices could remain subdued for a bit longer, and why he thinks tech companies could come to the rescue of tech startups.
The path and severity of the COVID-19 pandemic and the economic consequences are still unknowns. Fiscal stimulus has not been fully implemented, and we have not reached the peak impacts of business slowdowns.
Against this backdrop, I wanted to share some thoughts on how the work-from-home (WFH) response to the pandemic could continue to affect different groups, particularly US workers, global oil producers and small businesses.
Most people cannot WFH. According to the US Bureau of Labor Statistics, only 29% of Americans can work from home, including only one in 20 service workers.
Oil prices to remain subdued. The deal between Saudi Arabia, Russia and other countries is a modest output cut. The big surprise might be that the United States may agree to output cuts as well.
A small business hope: tech companies to the rescue? The American Small Business Association (SBA) has about a $350 billion emergency fund to provide some relief to small businesses hurt by the coronavirus. A possible alternative source of funding for cash-strapped tech startups could be the technology giants, which, according to our analysis, have much more cash between them than the SBA.
For the reasons outlined above, we will continue to monitor the health of the US consumer—which represents about 70% of US gross domestic product—as the COVID-19 pandemic continues to unfold.
All investments involve risks, including possible loss of principal. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Investments in foreign securities involve special risks including currency fluctuations, economic instability and political developments. Investments in emerging market countries involve heightened risks related to the same factors, in addition to those associated with these markets’ smaller size, lesser liquidity and lack of established legal, political, business and social frameworks to support securities markets. Such investments could experience significant price volatility in any given year.
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. All investments involve risks, including possible loss of principal.
Data from third party sources may have been used in the preparation of this material and Franklin Templeton ("FT") has not independently verified, validated or audited such data. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments opinions and analyses in the material is at the sole discretion of the user.
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