Cambridge Weekly – 1st February 2021

A fraying of nerves

In the middle stages of the pandemic, when things had the potential for going very, very badly, there was a
sense of global solidarity and unity among people and politicians. Maybe China received opprobrium – it
was certainly demonised by many in the US – and the iconoclast in the White House enjoyed being different.
Here in Europe, although Brexit rumbled in the background, the alien enemy created allegiance and a
concerted defence effort.

Internet traders take on hedge funds at their own game

As widely reported in the media, the past week in equity markets has been a wild ride through the depths
of the internet. GameStop, a consumer electronics store that looked destined to be another retail casualty,
saw its stock price propelled to unthinkable heights over the last five days, after retail traders turned the
company into an online sensation. At the end of last year, GameStop traded at around $10 a share. Last
week, it stood at $42. On Thursday, the share price hit $469 at its peak, but then fell sharply to close at
$193.

Unemployment figures aren’t reporting unemployment

The labour market will be at the heart of a post-pandemic economic recovery. We are in the middle of
Britain’s sharpest recession in hundreds of years, but this is not any normal downturn. The virus and
repeated lockdowns have reduced demand and, once restrictions are substantially eased, activity will
certainly rebound. But the induced recession can easily turn into a ‘classic’ recession, with its hallmark of
low consumer demand, defaults and deflation and especially high unemployment. The UK Government is
spending billions on furlough payments and other subsidies to prevent unemployment from spiralling.

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