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noun: bootcamp

  • a military training camp for new recruits, with very harsh discipline.
  • a prison for young offenders, run on military lines.
  • a short, intensive, and rigorous course of training.

Neither ‘harsh’ nor ‘militaristic’ (we hope), our recent software development bootcamps mark a major step towards instilling a new legendary technology culture at Capital.

Innovation is essential, not just to our business but any business. Those who fail to innovate have a management culture that is happy to kick the can down the road and forego the opportunity to unlock future efficiencies because they perceive the short-term disruption as too inconvenient. For technology companies, this kind of ‘better the devil you know’ approach guarantees one thing: failure.

How to encourage innovation

Accepting that ‘thinking outside the box’ is key to innovation, how do you foster this within a delivery team?

With plans to open the Isle of Man’s first ever digital bank, the stakes are high and deadlines tight for our tech teams, but our innovation culture demands that we do things differently.

Instead of pressing harder on the management of deadlines, we decided to call a halt to ‘business as usual’ for a full 2-week sprint which included a series of ‘bootcamp’ events. These short, intensive, and rigorous sessions forced everyone involved with the delivery, including third party partners, to take time to reflect on and consider new ways of working which will be tested in the second half of the year.

Our bootcamp sessions covered a mix of topics from across the delivery lifecycle and were designed to get people to take stock of where we are and challenge how we can improve moving forward. The sessions covered:

  • Change Requests: Reviewing all upcoming project change requests.
  • Tech Scoping: Predetermining the work involved in a project and the associated timescales.
  • Dev Stack 101: Developing our applications (docker fundamentals, databases, files, VPN, API services).
  • Debugging 101: Finding and resolving bugs in the frontend, backend, logs and tools.
  • Workflow Deep Dive: Discussing the value of workflows, workflow designs, navigation and storage.
  • Lessons Learned: Opportunity to feedback on what is and isn’t working.
  • What’s Left to Do: Reassessment workshop and tech debt discussion.
  • Release Roadmap: Setting out priorities & proposed “Plan of Attack”.
  • Voice of the Customer: How we will utilise customer feedback to continually improve our customer experience?
  • Testing strategy: Reviewing test types (exploratory, edge-cases), automation, unit testing and how to improve our coding.

The sessions proved to be an extremely worthwhile exercise for us but what are the key benefits of this way of working?

Avoiding Technical Debt

As with all forms of innovation, the critical thing is to embrace the fact that there is a cost to breaking away from normal behaviours. Companies that take the easy route, and churn out quick-fix code that isn’t scalable, risk building up ‘technical debt’. This terminology refers to the inevitable consequences these companies will face further down the line for their shortcuts and makeshift solutions. The cost of rectifying a botch job in the future is inevitably greater than if the job was done properly in the first place. Our desire to get things right first time, based as much as possible on frameworks that promote reuse and thereby minimise technical debt, was one of the key drivers behind our bootcamps.

A Chance to Speak up

Problems were raised in an open culture without blame. This has helped us to identify solutions that will unlock efficiencies, reduce project risks and ultimately improve product quality. It’s amazing that ‘the devil you know’ isn’t even seen as being a problem until you deliberately force people to rethink how they function and give them time to experiment.

Building Stronger Teams

Relieved of their usual day to day responsibilities, our teams had the time to work closely with our technology partners to dissect, discuss and work through issues together. The bootcamps left us feeling united. We came away energised and our process improvements have already started to be rolled out. This positive action has helped build confidence with business stakeholders, reassuring them that, despite the break, the ultimate bank launch date has not been put at risk.

How to Run a Bootcamp

  • Plan on there being a disruption to business as usual and communicate this to business stakeholders.
  • Prepare for a negative impact on future sprints as changes are implemented.
  • Get as many outside or independent perspectives as possible and be inclusive with whom you invite.
  • Give presenters adequate time to prepare.
  • Follow meeting best practises and be respectful of people’s time by publishing an agenda and sticking to it.
  • Record the sessions as these provide a valuable resource.
  • Document and share the list of recommendations.
  • Reinforce that there are no stupid questions and every idea is welcome.
  • Be quick to implement the easy improvements, showing stakeholders just how worthwhile a bootcamp can be.
  • Make it fun - use it as an opportunity for people to get to know each other outside of the usual work routines.

There’s no quick fix to creating great development organisations. For leaders, the only advice is to be committed to doing things differently and, no matter how high the stakes, accept that there has to be short-term pain to deliver long-term gain. Breaking teams out of their daily grind to reflect on the lessons learnt is a ‘must have’ at the end of every release, but doing this on a larger scale with more stakeholders present is a valuable exercise.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

The end of July saw the simultaneous release of results from four of the US’s tech titans.

Facebook, Apple, Amazon and Alphabet (formerly known as Google) all came out on Thursday with what were – in the context of the massive contraction in the US and world economy – spectacular second quarter figures, leading the Financial Times’s Lex column in which they were referred to as the ‘Fearsome Foursome.’

It is most unusual for the four to report on the same day. Usually, they would be spread across the week, but all of them were forced to appear before a US Congressional hearing the day before and needed to prepare for that.

The hearing was to address concerns that they’ve become too dominant in their respective industries. The hearing struck some blows, but whether it amounts to anything that will lead to structural break-ups looks unlikely at this stage.

The FT summed it up well when it said the outcome was ‘growing political and regulatory pressure for action, but a shaky legal foundation on which to seriously challenge Big Tech’s dominance.’

Perhaps the most damaging revelation was an internal communication that revealed how Facebook’s Mark Zuckerberg saw acquisitions as an effective way to neutralise potential competitors.

Surely Instagram could have emerged as an alternative platform to Facebook, if Facebook had not bought it – and managed the different age groups between the platforms rather than having them dispersed across rivals.

But this email was one of 1.3 million, and there wasn’t a great deal else in terms of evidence of collusion or anti-competitive practice. As the FT concluded, ‘Big Tech probably doesn’t have too much to fear.’

Are these monopolistic businesses? Do they stifle innovation that would otherwise emerge from new entrants? Or, are they brilliant businesses whose consumers still love them, and which have displaced often second-rate competitors that produce poorer quality products at higher prices.

In truth, there has been ongoing discussion along these lines for several years, but no consensus on what to do has yet emerged.

But the exceptional financial results in difficult circumstances, when many others are struggling, suggest that there may be something in the criticisms.

The arguments are finely balanced. The Democrats may put the heat on further if Joe Biden gets elected, but at the same time there is a case for saying, ‘These are great US companies producing great results – what’s not to like?’

The ‘Fearsome Foursome’, of course, are more commonly referred to as the ‘FAANGs’ (using the term coined by CNBC’s Jim Cramer in 2013, based on the initials of the constituents when Alphabet was still known as Google).

The fifth member of the team, Netflix, reported its Q2 figures two weeks before – and disappointed after guiding to lower subscriber numbers in the third quarter. But Netflix too has benefited from lockdown and produced good investment returns in the year to date as people have subscribed to online entertainment whilst being cooped up at home.

The way this select band of stocks has kept performing over the past decade has been amazing.

During the 1950s, stock market returns were focused around a relatively small group of stocks which became known as the ‘Nifty Fifty’ – many of them still around, including Procter & Gamble, Pepsi, Pfizer, Eli Lilly, Coca Cola, IBM, Wal-Mart and Disney.

But the FAANGs are even more select. What should we call them? The ‘Nifty Five’? Or should that be the ‘Famous Five’?

The one stock that has often been linked with the FAANGs and shown similar returns, but never formally included with them, is Microsoft.

Perhaps that was because it would have disrupted the potency of the acronym ‘FAANG’, although Microsoft was a bit later in demonstrating supernormal stock market returns. ‘MFAANG’, or ‘FAMANG’ doesn’t have quite the same ring to it.

Microsoft reported good figures for Q2, without quite blowing away expectations in the way the ‘Fearsome Foursome’ did.

But perhaps there is good reason for Microsoft not to be part of the FAANG gang, on the basis it is not so much a genuine disrupter and more of an ‘enabler’ – benefiting many other companies, including rivals, in terms of improving productivity, rather than just brushing them aside in the way that the FAANGs have done.

The FAANG gang may have elbowed many existing companies and competitors aside in their rise to prominence and may represent a high water mark in terms of their stock market performance, but it would still be brave, or even dangerous, to bet against them at this stage.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

My wife, Kate, bought me a 1,000 piece Where’s Wally jigsaw puzzle from Amazon in March to keep us occupied during the height of the lockdown. We poured the pieces onto the counter unit in our kitchen and would spend 5 or 10 minutes here and there after lunch or with a glass of wine in the evening, following the minute details of the picture on the box to identify the patterns, find the corners and the edges and over the course of a couple of weeks, we finally put the final pieces in their rightful places to complete the picture.

When you look at successful people, they have a formula for success. Can you copy the best chefs in the world? What would it take? You need the right ingredients, you need the right quantities, you need the right equipment and you need the recipe to guide the way. Is that all it takes? Inevitably not. The best chefs in the world also bring experience and expertise. You can paint by numbers to mimic the greatest artists, but those great artists didn’t have something to copy when they first picked up a paint brush and started what would ultimately become a masterpiece.

And so it brings me to the new digital corporate bank that is in the final stages of development, CIB Limited. However challenging it was to complete the 1,000 piece jigsaw, I had the benefit of all of the necessary ingredients (the pieces) as well as the photo on the box to serve as the recipe. When we started our journey to set up a new digital bank early in 2017, not only were we missing most of the pieces, but those pieces didn’t come neatly packaged in a box with a picture on the front showing us what it should look like in the end.

Over the course of the past three years, we’ve been guided by a vision to create a new digital bank to serve qualifying high net-worth individuals and corporate clients that have been woefully under-served by some of the incumbent banks in the offshore markets. Whilst the vision has always shone clearly, the road to get there has at times taken us into darkness and unfamiliar and challenging territory. However, what has never been in question is the absolute determination to achieve our vision. We’ve had set-back after set-back, challenges that we could never have imagined, but also some fortuitous moments of good luck, particularly when I consider the group of people that we’ve assembled to help us achieve this vision. Whatever the challenge, my team have always found a way, and never have they ever doubted that we would complete what we set out to achieve when we started the journey in 2017.

All being well, we’re about 6 months away from being able to transition the clients in our Treasury business that qualify under our Class 1(2) licence and wish to move to our new bank. Following that transition during the first half of 2021, we aim to be in a position to open the doors of the bank to new clients.

The final pieces of the bank’s jigsaw puzzle are nearly in place. We’re now in the testing phase, and once the Isle of Man FSA has given us the green light to start taking deposits, we will proudly open the door to the island’s first new bank in over 30 years and its first ever digital-only bank. That moment will not be the end of the journey but the start. Just as Apple deliver continuous product enhancements to their devices via IOS updates, CIB will add new products, services and features in the months and years following the launch. These are exciting times for all at Capital International Group and I am grateful to all the people that have helped on this epic journey.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

What happened with Boohoo?

Shareholders have been saying ‘Boohoo’ after the Sunday Times alleged that the company’s products were effectively being sourced from a modern slavery factory in Leicester.

That is a trite statement, but it does succinctly highlight an issue of importance to the company, the fashion industry in the UK, and more widely to the new range of ‘ESG’ funds, which have emerged in recent years to invest monies on an ethical basis.

Cunningly, the Sunday Times introduced an undercover reporter into a factory allegedly supplying Boohoo. He was paid £3.50 per hour, which is half the legal minimum wage in Britain.

It also emerged from the Sunday Times report that employees in the Leicester factories were working in cramped conditions, breaking social distancing guidelines, and helping to spread COVID-19 in the city.

Boohoo has said that the supplier was trading under the name of a previous compliant supplier and has launched an independent investigation into its supply chain. But this hasn’t yet helped to resolve the issue.

Standard Life Aberdeen (SLA), the investment company, last week ditched their shares in Boohoo, saying that Boohoo’s response to the allegations was ‘inadequate in scope, timeliness and gravity.’

This is a significant move from one of the UK’s biggest managers. Other shareholders have said they are placing faith in management, pending its review of supply lines.

What is ESG?

ESG, or Environmental, Social, and Governance funds are supposed to put ethical considerations above purely financial ones.

‘Environmental’ denotes concern for the environment and sustainability; ‘Social’ deals with the treatment of workforce; and ‘Governance’ covers matters like how the Board operates, Audit and Remuneration Committees, and other areas of corporate responsibility.

ESG and the Fashion Industry

The Financial Times said in a leader column last week that, ‘It should not have taken a global pandemic to force ESG funds to get wise to the perils of fast fashion.’

Fast fashion is surely the inverse of sustainability, with its insistence on cheapness, faddishness, fast delivery, ‘throwaway-ability’ and the use of social media.

The FT has shown foresight over fast fashion, with an investigation into Leicester factories not paying the minimum wage back in May 2018 (just as it showed with Wirecard, the German payments operator that collapsed after a fraud a few weeks ago – but that’s another matter).

That article focused on a Boohoo dress being retailed for £6, which one UK supplier said he couldn’t produce for less than £6.45. It also quoted the CEO of retailer Esprit as saying, ‘I’d rather manufacture in Bangladesh than Leicester because they’re far further advanced’ in terms of issues of labour protection.

The FT’s exposé followed a Channel 4 investigation into Leicester factories not paying minimum wage in 2010 and 2017, and a University of Leicester study that found two thirds of the city’s garment staff were not receiving the minimum wage.

Putting this together with the fact that Boohoo sourced a third of its product from the UK (which means Leicester), these latest allegations should not have come as a surprise.

All this comes after controversy at Boohoo’s AGM in June, where a proposed bonus scheme was put forward that could pay senior management £150m dependent on future share price performance.

Behind the ESG Badge

At Capital International, when researching stocks, we assess and score companies for their ESG characteristics as part of our selection process. It is now common for most fund managers to use ESG metrics to shape investment decisions. It is likely that Boohoo would have scored poorly under most ESG metrics, so this begs the question of how this stock has found its way into ESG badged or focussed funds.

The irony of ESG funds is that they don’t just put consciences at ease, but have actually performed better than standard, or non-ethical, funds in recent years.

Part of this may be due to a ‘self-fulfilling prophecy’, whereby huge amounts of money flow into a select group of ESG accredited stocks. This drives their share price up, while at the same time money flows out of ‘non-ethical’ investments, like oil, tobacco and mining stocks, driving their share prices down.

Wirecard too was held in many ‘ESG’ portfolios.

It is clear that funds badging themselves as ESG need to demonstrate that their selection process is rigorous, with no potential for criticism that they are merely masquerading under the ‘ESG banner’.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

How has property performed?

Equities have bounced back following the March sell off over COVID concerns, but there is one ‘risk asset’ that has not performed particularly well since then.

Property, as well as the real estate investment trust sector, has been a relatively poor performer over the last three months, with many stocks demonstrating a meagre rebound at best, and at worst still bumping along the bottom.

The UK REIT sector has bounced by 15% since mid-March, but this has lagged the broader market by 7%, and this underperformance is replicated throughout the world.

This is not surprising, given newly emerged concerns about office use; the difficulty of applying social distancing in retail stores, restaurants, hotels and leisure sites; and the fact that many tenants have stopped paying the rent, given all the cashflow constraints they currently face, in a Dario Foesque attitude of ‘Can’t Pay, Won’t Pay’.

This is alongside the headwinds to the retail sector presented by the growth of online shipping, which have been a concern for the past ten years or more.

Government Support for Tenants

The real killer for the property companies on this occasion is that the UK government has effectively ganged up against them on the side of the tenants, preventing any evictions for non-payment in the quarter to June, and recently extending this to September.

With companies and their employees suffering, and the government eager to cut them as much slack as possible, the buck – it seems – now stops with the ‘rentier’ class. This is perhaps not surprising, given landlords have traditionally been blamed for many things throughout history.

The government recently issued a voluntary code of practice for property, which asks tenants to ‘continue to pay their rent in full if they are in a position to do so’ while others should ‘pay what they can’. But this is fairly opaque, and there is little, in effect, that a property owner can do if they believe their tenant can pay the rent but is taking advantage of the current environment.

Landlords are losing out  

UK retailers paid only 14% of the rent due in late June for the third quarter, while property tenants as a whole, including office and other industrial premises, paid just 18% of rents, according to commercial property management platform, Re-Leased. This represents a record low in rent collection.

As a result, landlords are waiting for more than £2bn in rent for Q3. This will likely creep up a little over the next few months, and some of it has been deferred. Due to the scale of the crisis, the British Property Federation believes that only a quarter of the rent roll may eventually arrive.

The 18% collection was worse than the 25% seen in March just after the virus had broken out in the UK.  

The payment of rent – formerly strictly enforceable and regarded as a highly visible and certain cashflow – is now beginning to look optional, rather than essential.

One casualty of this has been Intu Properties, owner of 17 shopping centres up and down the UK, and the biggest retail property owner in the country, which went into administration at the end of June. Quite who is going to buy all their centres, assuming they come back onto the market, remains unclear.

Generally, the winners have been companies involved in the provision of health centres (PHP Property) and social housing (Civitas, Triple Point), where the rent roll is effectively guaranteed. Those involved in logistics and online warehousing (London Metric, Tritax Bigbox, Warehouse REIT) also haven’t lost out.

The generalist REITs, and the big blue-chip names like Land Securities and British Land, have suffered due to too much retail and office exposure.

Their fortunes from here are very much tied to what happens with COVID and the broader economy.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

Months of this pandemic have gone by, with our only exposure to the virus being via news channels or social media. Now, we have finally reached the “somebody I know” stage of this pandemic, and for some even the “my family and I” stage. As time goes on, the reality of this virus is hitting home for many. My family and I all tested positive for COVID-19 just over 2 weeks ago, as did one of my colleagues, who I will refer to as “P”. Myself and P have decided to take this opportunity to share our experiences to give some personal insight into what the virus is really like and hopefully take away a lot of the stress and anxiety that surrounds COVID-19.

P’s Story:

For a while I was feeling sick and unwell. I had flu like symptoms and my body was very tired. Every morning I struggled to get up and get out of bed. I decided to go to see my GP and she told me that it was just a bad flu. This didn’t sit right with me and as days passed, I was not getting better. One night I was so cold and my head was so sore; it felt like brain freeze. I closed all the windows and put on a heater, but nothing worked. I decided to go for a COVID-19 test the following week after listening to many people’s advice. The result came back positive. When I heard this news, I genuinely thought I was going to die – the side effect of listening to the news and media. My doctor had advised me on what to take to boost my immune system and the importance of building it up to full strength. I cried a lot and got to a stage where I couldn’t sleep at night. I went back to my GP as I was just feeling terrible. She said that I was suffering from traumatic stress disorder on top of having the virus.

I feel that the panic and stress definitely made matters worse, but these times are so confusing and unpredictable, and we don’t know what will happen. I have been taking medication and building myself up, and I can finally say that I am starting to feel better. If I could give any advice, it would be to please stay at home, wash your hands, wear your face masks and boost your immune system! I am okay now, but I didn’t think I would be. I’d like to thank Capital and my family for the incredible support I have received.

My Story:

It has been a roller-coaster to say the least. The first question many people ask is:

“How and where did you contract the virus in the first place? You and your family have always been so cautious!”

My grandparents live in a retirement village where they receive full-time care and assistance. The home locked completely for 3 months. Residents were not allowed to leave the village, or have any visitors. They had to have their shopping dropped off and left with the security guards outside. Throughout this period, the only people they had come into contact with were the people that worked at the home. Contracting COVID-19 at this point seemed completely out of the question, until news spread that one of the carers that had been looking after my grandparents tested positive for the virus.

A full two weeks had gone by, and my grandparents were still fine. No fever, no cough, no headaches, but one day my grandfather suddenly became extremely out of breath to the point where he couldn’t even walk from the bedroom to the bathroom. We sent him to get tested immediately, however the test results came back negative. We were so relieved, and completely trusted the reliability of the test. Suffering from a heart condition, my grandfather ended up in hospital anyway. We can’t take any risks with him. They admitted him via casualty and told us that he had pneumonia in his left lung but that his heart was fine. They treated him for pneumonia in a normal non-COVID ward and after a two sets of antibiotics they released him from the hospital. Even though he was still unwell, he would be able to recover at home. We brought him and my gran back to my house so that we could nurse him back to health. My mom was the one who took him to the hospital and fetched him to bring him home.

About one week later, my mom woke up in the early hours of the morning with flu-like symptoms:  shivering, fevers, body aches, nausea and headaches. She could hardly get out of bed. She went to the family GP and he sent her to get tested. 2 days later she received news that she had tested positive. We were shocked and confused and just overall very stressed. We had been so cautious and followed all the lockdown rules better than most. The reality sunk in that my grandpa had most likely been positive the whole time. His test was in fact a false negative. He was still bed ridden and not very well at all. It was scary for us all.

Now it was just a waiting game for the rest of the family. Just like that, 3 days later, my dad and I started having body aches, fatigue and headaches. My gran had nothing other than extreme nausea. At this stage my mom had every symptom and was still completely out of action. My grandparents and I decided to go get tested just for clarity. We finally got the news that we tested positive too, including my grandpa who initially tested negative.

From a house of 4 healthy and fit people, it turned into a house of 6 people (including my domestic and her daughter) sick with COVID-19. Luckily body aches and fatigue were the worst it got for me, and I was able to help the household function. After about a week, I had lost my sense of taste and smell, which was horrible since eating is my hobby!

Every day there was a new challenge, or a new symptom we had to deal with. Each and every person got hit in a completely different way, which emphasises the complexity and unpredictability of the virus. My mom who is a 50-year-old fit and healthy Pilates instructor with no underlying health conditions was hit worse than my 84-year-old grandmother who has a long list of health conditions. My grandfather, who was hit the worst, is also 84 years old, has had cancer and lives with a heart condition. He went from being fine to being in hospital in the space of 24 hours. Thankfully, he is finally on the road to recovery. On top of all this confusion, not once did my grandpa or myself have a fever. This unpredictability alone is a huge a reason everyone should stay vigilant and stick to following the rules as best they can.

My mom is still struggling, and it has been 21 days since she first showed symptoms. Thankfully the rest of us have almost fully recovered. We are all still extremely low on energy and are unable to go a day without napping. My symptoms were so mild I thought I would be back to my running again within 2 weeks; however, I still can’t even get up the stairs without panting and sweating. The reality has hit us, and it has been an extremely stressful time. The isolation away from everyone is what makes it even more difficult.

What to take away:

The number of infections are rising by the minute, while restrictions are being eased. Symptoms are less obvious than one would think, and test results not always accurate. The virus is extremely contagious and it’s in these times that prioritising your loved ones becomes more important than ever. Although this may not seem real to many, it is. BUT it is not something to panic about. Staying calm is vital for your immune system. All of us have recovered and we are all okay and got through it, including my grandparents who are in their 80s with underlying health conditions. Most people will be okay but the fear element of this is understandable.

Wear your masks, wash your hands, sanitise, and keep the gatherings to a minimum. Boost your immune system and keep your body moving. These are strange times and we are all going to have our down days and days where we won’t know how to concentrate. We just have to ride the wave, stick together and support each other.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

The Leaders Council of Great Britain and Northern Ireland is currently in the process of talking to leadership figures from across the nation in an attempt to understand this universal trait and what it means in Britain and Northern Ireland today.

Group CEO, Greg Ellison, was invited onto an episode of the podcast, which also included an interview with Sir Andrew Strauss. Host Matthew O'Neill asked both guests a series of questions about leadership and the role it has played in their careers to date.

Lord Blunkett, chairman of The Leaders Council of Great Britain and Northern Ireland, said, ‘I think the most informative element of each episode is the first part, where Matthew O'Neill is able to sit down with someone who really gets how their industry works and knows how to make their organisation tick. Someone who’s there day in day out working hard and inspiring others. That's what leadership is all about.’

To listen to other podcasts from this series, click here.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.

Three months on from the outbreak of the COVID-19 crisis, and the bills are finally starting to arrive.

The figures for UK government borrowing in May, released last week, are truly shocking. The deficit hit £55bn in one month, nine times bigger than in May the previous year.

Debt as a proportion of GDP has reached 100% - in other words the amount of debt is the same size as the entire economy, something that hasn’t been experienced since 1963 when the country was still paying off debts accumulated during the Second World War.

That debt, of course, is still rising – we are far from the peak, and the UK debt to GDP ratio will likely hit at least 120% in the next two years.

Back in 2009, just after the financial crisis, two well-known economists, Carmen Reinhart and Ken Rogoff, wrote a book called ‘This Time is Different: A Panoramic View of Eight Centuries of Financial Crises’, which argued that countries with a debt to GDP ratio of over 100% grew at a lower rate than countries with better (or lower) ratios.

Some of the data which informed the opinion was subsequently found to be faulty, which undermined the conclusions. But their warnings about high debt levels probably had something to do with the commitment of many governments to ‘austerity’ which informed the last decade.

Whether their prediction comes true this time, when debt to GDP ratios are much higher than in 2009, remains to be seen. The consensus at present is that governments can do pretty much whatever they want, borrowing up to conceivably unlimited levels.

Interviewed on May 18th, Ken Rogoff said that this time (i.e. now) really was different, given this was ‘the first global recession crisis really since the Great Depression’.

While the 2008 crash affected the developed world, emerging markets escaped relatively lightly. This time every nation has been caught up in the pandemic pandemonium.

Central banks are buying government bonds in large amounts, meaning there is a buyer of last resort, and an underwriter of any new government debt issues.

Last week the Bank of England committed to buying another £100bn of government bonds until the end of this year, taking the cumulative total held by the Bank to £750bn since the quantitative easing process started in 2009.

The Bank of England was surprisingly upbeat about the UK economy, and thought that the outlook had improved since it last spoke in May. It also reduced the pace at which it buys bonds from £13bn per week to £4bn. Gilt yields rose a little as a result.

After the dramatic rebound we have seen in equity markets, with the S&P up 42% from its March lows, investors could be forgiven for saying, in the words of former Prime Minister Jim Callaghan (when the UK government was forced to borrow money from the International Money Fund), ‘Crisis? What crisis?’

As a result the US stock market is now almost as expensive as it was during the Dot Com bubble in 2000, with tech stocks leading the charge once again.

The rally has been fuelled by the huge amounts of stimulus, both fiscal and monetary, as well as those familiar acronyms, FOMO (Fear of Missing Out) and TINA (There is No Alternative – to equities as a source of return, that is).

Where the market goes from here is anyone’s guess. We had two contrasting views from US investment banks last week.

On the one hand, Citigroup argued that European stocks will be trading at the same level in 12 months’ time. Earnings will drop -50% in 2020, but rebound only 30% in 2021, leaving the market’s valuation at 22x forward earnings (and so expensive), rather than the 15x PE ratio it appears to be trading at on current analysts’ forecasts.

On the other hand, Morgan Stanley argued that the cycle is ‘more normal than appreciated’, and that the world will experience a sharp recovery.

They think the global economy will roar back to pre-pandemic levels by the fourth quarter and fuel a strong stock-market bounce into 2021. ‘We have greater confidence in our call for a V-shaped recovery, given recent upside surprises in growth data and policy action.’

At this point one can’t say much other than that – either of them could be right.

Disclaimer: The views, thoughts and opinions expressed within this article are those of the author, and not those of any company within the Capital International Group (CIG) and as such are neither given nor endorsed by CIG. Information in this article does not constitute investment advice or an offer or an invitation by or on behalf of any company within the Capital International Group of companies to buy or sell any product or security.