Coronavirus: You Asked, We Answered - Part 2
FT writers Katie Martin, Peter Spiegel and Hannah Kuchler answer your questions about the impact of Covid-19 on financial markets, the US presidential election, and public health policy
Produced and edited by James Sandy; motion graphics by Victor Diaconescu and Russell Birkett; additional footage from Reuters
You can enable subtitles (captions) in the video player
1, 2, 1, 2, 1, 2.
We asked our Instagram followers to ask us their questions about coronavirus. Fatiha asked, what will financial markets look like after the virus? First of all, let's have a look at where we are. Markets obviously got in a lot of trouble in March. The scale of the pandemic became clear, the lockdowns kicked in, and stock markets tanked.
That's when central banks really got serious about this. There were some very large interest rate cuts, and there was lots of liquidity pumped into the system.
The result of that is that stock markets have rebounded really quite a long way, so that leaves us in a standoff. We've got quite upbeat stock markets while the rest of the world is pretty miserable.
This is a very odd situation. The problem now really is that investors are pretty much unshockable. They know the economic data is going to be awful. They know that companies are in a lot of trouble. So every time you get new information about that it's difficult to push the markets either way. That misery, if you like, is already baked in.
So what happens next? Well, companies and countries have taken on a lot of debt to get them through this extremely challenging period. Normally, that's something that investors don't like to see. The question is whether they will consider that this time is different, and that actually, you've got to do whatever it takes to get through this incredibly tough time.
What investors are going be looking for is not just that companies can grow quickly. They want to see resilience. They want to see that they've got sensible levels of debt, that they can withstand shocks. This has been a big wake-up call that you need to treasure that kind of stability.
As I've said before, we can't protect every business and every household.
The other big thing to bear in mind is that at some point, all of the support that central banks have thrown into markets over the past few weeks is going to have to stop. Now, we've seen markets respond very badly in the past when central banks have withdrawn support, but we've never seen anything like the scale of support that we've got now. When that is pulled back, do we know what's going to happen next? The answer, I'm afraid, is no, so buckle up.
I'm Peter Spiegel, US managing editor of the Financial Times here in New York City. I have a question here from Theoclay, who asked us, how has the coronavirus outbreak affected the US presidential race, and is Trump now the underdog, as some have predicted? Well, the fact of the matter is, early in the crisis, what we saw is an uptick, actually, in Trump's approval ratings, sort of a rally around the flag sentiment where the American people really, as traditionally happens during a crisis, rally around the president and his approval ratings went up above 50 per cent for the first time in a long tim -- in months, actually.
So reopening of our country. Who would have ever thought we were going to be saying that? A reopening, reopening.
But since then, and as more and more details come out about his perceived mishandling of the crisis, we've seen a real drop-off, back to pre-crisis levels. We've also seen a lot of these battleground states - Florida, Michigan, Wisconsin, Pennsylvania - we've seen Biden, the presumptive Democratic nominee Joe Biden - his approval ratings and his margin of lead in those states really begin to widen. In Michigan, for instance, it's almost near double digits at this point.
So I guess to say he's an underdog is probably too strong a word, but it's certainly the case that we've seen Joe Biden, who frankly has been almost invisible over the last month or two since he secured the nomination over Bernie Sanders, really begin to gain on Trump and to widen that lead in these crucial states. I think it's going to be close, but clearly, the perception that Trump has mishandled the crisis is beginning to affect him in the polling nationwide.
Shariz500 asked: "How do we prevent a second wave from happening once lockdowns are removed between now and when we get an effective vaccine? Is there a near-term solution for this?"
So first of all, unfortunately to be the bearer of bad news, it's going to be a while until we get an effective vaccine. The optimistic timeline is early 2021, but it is optimistic. That is assuming that every stage of the development and manufacturing process goes well and we get one that works. Unfortunately, I think that some kind of second wave may be inevitable, but it's all about trying to contain it and track it as much as possible.
And so the first thing to do is to make sure there's enough diagnostic testing. So this isn't to see whether you've had an immune response, this is to see whether you've got it right now.
Then once someone has a test, if they get a positive result, the really important thing is to work out who they might have spread the virus to. So they do this by what's called contact tracing. People talking to people, asking who did you meet, and how close in contact were you? And then all those people may end up being quarantined. So the idea is to just contain each outbreak of the virus to a very small group of people and isolate them while they recover.
And then after that you obviously need to think about space. When offices go back, can we expect everyone to go back at once? Probably not. We need people to be spaced out in these offices. The same in restaurants. Let's talk about whether you can run them half-full, even less than that.
I've been fairly negative, unfortunately, on the prospects for a vaccine, so I want to end on a little bit more of a positive note, which is that drugs could really make a difference here because if it gets to a point where we know how to treat it, so we minimise the number of deaths, minimise the number of hospitalisations, and people basically will become much more scared of the disease.
People will say, OK. I don't want to get this disease. But if I do, there are things that we can do about it. There are treatments available. And they are likely to be available far before a vaccine.