Good morning, it's Paul here with the SCVR for Weds.

This post is initially a "placeholder" - i.e. just an introduction, put up at 7am, so that readers can add your comments below, whilst I spend the rest of the morning & early afternoon writing up the main sections.

It's Budget Day today in the UK, which starts at around 12:30.

Estimated timings - I'll need to get the main report done by 12:30, so that we can then focus on what the Chancellor, Rishi Sunak, has been told to say by Dominic Cummings!
Update at 12:30 - today's report is now finished.


Volatility continues, with another huge rally in the US markets last night, which has almost completely dissipated in the futures overnight.

I went on a shopping spree yesterday, buying smallish new long positions in small caps, and increasing my existing small cap positions, but then got cold feet last night and decided to re-open my short on the Dow, as a hedge. Probably like everyone else, I really haven't got the foggiest idea where markets are heading. It seems to me that the headlines now are far worse than I'd been expecting - e.g. talk of Italy needing a large-scale financial bailout. Also the trajectory of new coronavirus cases in Europe, and USA, means this looks like the start of a wide-scale outbreak here. I just cannot imagine markets are likely to shrug off a wave of imminent terrible newsflow. Hence I'm now worried about another possible lurch downwards. Bottom line is - I have no idea what's going to happen next.

Breaking news - the Bank of England has cut base rate from 0.75% to 0.25%. It's also announced a package of measures to support SMEs. It looks like policy-makers want to be seen to be doing something to combat the economic impact of coronavirus, and of course trying to further prop up asset prices with ultra-cheap money.

Trying to prevent the banks from pulling essential credit lines to SMEs seems very sensible to me, given that this is a temporary factor - the last thing I would want to see is fundamentally sound businesses being put into administration due to short term cashflow problems.

As for interest rates, it seems increasingly likely that ultra-cheap money is now a permanent thing - markets are addicted to it, and it can't be withdrawn without…

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