Eating for two?

We’re all craving the end of lockdown and a bit of freedom. But Craig Brown, our multi-asset investment specialist, wonders just how many of us will be in the position to spend up large.

Open sign on a door

My wife, Amy, and I seem to be running out of good shows on Netflix as we tick closer to a full year since the WHO declared COVID-19 a pandemic. I shudder to think how many weeks of those 52 have been spent in front of the box …

A few nights ago we found ourselves dredging the depths of the hundreds of TV channels on Sky and settled for a rerun of Ramsey’s Kitchen Nightmares. As Gordon Ramsey threw a few more expletives towards a couple of hapless restaurateurs, my mind wandered back to those hedonistic days of being able to go out to eat. In that moment I would have leapt at the chance to venture into one of these Kitchen Nightmares for a spot of grub, for the simple pleasure of eating a meal I haven’t had to prepare myself!

I’m sure I’m not alone in this, of course. We all can’t wait for Boris to give us the green light to head back to the welcoming embrace our favourite haunt for a drink and our favourite dish. We see it all around us, comments about this pent-up demand that’s going to make everyone rush out and spend all that money saved by being cloistered in our homes. Whether it’s restaurants, holidays, concerts or the theatre, there is this notion that the country is awash with cash and will finally have something to do with it.

The rub here, though, is that while we all can’t wait to be free, some of us may not be in the position to spend up large. In short, thinking everyone has cash piling up that they’re itching to shop seems very much like ivory tower thinking to us.

The expectation of excited masses clamouring to throw their cash at businesses like Fry in Futurama needs to be tempered by the fact that for many the pandemic and lockdowns have been a hellish ordeal. Many have lost their jobs, or have struggled to get by on reduced hours; others are at significant risk of losing their livelihood in the near future. It seems to us that, in reality, we are more likely to see a two-tier reopening recovery. Those who have been able to work from home and benefit from savings will have the means to spend, but for those who have not had it so good the struggle will continue. This second group won’t be rushing out to their nearest eatery as soon as they can. And as much as they may want to try, the first group can still only eat one dinner a night –   they can’t eat for two! 

This two-tier reopening would likely temper those exuberant expectations of spending and GDP recovery. This slightly more balanced expectation for GDP growth is why we’re continuing to focus on durable companies that produce high cash flows, rather than being tempted to rush headlong into very beaten-up consumer businesses. 

We’ll be keeping the Kitchen Nightmares on the screen and not in the portfolios.

Important legal information

This area of the site is for professional advisers

Please read this page before proceeding, it explains certain legal and regulatory restrictions applicable to the distribution of this information. It is your responsibility to inform yourselves of and to observe all applicable laws and regulations of the relevant jurisdiction.

This section of the website is directed only at investment advisers and other financial intermediaries who are authorised and regulated by the Financial Conduct Authority (FCA).

The information provided in this site is directed at UK investment advisers only and must not be circulated to private clients or to the general public. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

I confirm that I am an investment intermediary authorised and regulated by the Financial Conduct Authority. I have read and understood the legal information and risk warnings below:

Important Information (Terms and Conditions)

The information contained on this site is believed to be accurate at the date of publication but no warranty of accuracy is given and the information is subject to change without notice. Any opinions or estimates included herein constitute a judgement as of the date of publication and are subject to change without notice. Furthermore, no responsibility is accepted for the accuracy of any information contained within sites provided by third parties that may have links to or from our pages.

Rathbone Investment Management Limited ("RIM") is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered Office: Port of Liverpool Building, Pier Head, Liverpool L3 1NW. Registered in England No 01448919.

In accordance with regulations, all electronic communications and telephone calls between Rathbones and its clients are recorded and stored for a minimum period of six months.

The information provided in this site is directed at UK investors only. It does not constitute an offer to sell, or solicit an offer to purchase any investments by anyone in any jurisdiction in which such offer or solicitation is not authorised or in which a member of the Rathbone Group is not authorised to do so.

In particular, the information herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in France and the United States of America to or for the benefit of United States persons (being resident in the United States of America or partnerships or corporations organised under the laws of the United States of America or any state, territory or possession thereof).

In order to comply with money laundering and other regulations, additional documentation for identification purposes may be required.

Rathbones shall have no liability for any data transmission errors such as data loss, damage or alteration of any kind including, but not limited to, any direct, indirect or consequential damage arising out of the use of services provided or referred to in this website.

Past performance should not be seen as an indication of future performance.

The value of investments and the income from them can fall as well as rise and you may not get back the amount originally invested, particularly if your client does not continue with the investment over the longer term.

Changes in the rate of exchange between currencies may cause the value of an investment to go up or down.

Interest rate fluctuations are likely to affect the capital value of investments within bond funds. When long term interest rates rise the capital value of units is likely to fall and vice versa. The effect will be more apparent on funds that invest significantly in long dated securities. The value of capital and income will fluctuate as interest rates and credit ratings of the issuing companies change.

Tax levels and reliefs are those currently applicable and may change and the value of any tax advantage will depend on individual circumstances.

Investing in emerging markets or small companies may be potentially volatile, as these investments are high risk.

The design, text and images are owned, except as expressly stated by members of the Rathbone Group. They may not be copied, transmitted, displayed, performed, distributed, licensed, altered, framed, stored or otherwise used in whole or in part or in any manner without the written consent of Rathbones except to the extent permitted and under the procedures specified in the copyright Designs and Patents Act 1988, as amended and then only with notices of Rathbones' rights.

Rate this page:
Average: 5 (5 votes)

Subscribe to the In the KNOW blog email