News and Updates

April was another interesting month, with gains across almost all global stock markets led by the United States, but closely followed by the U.K. and Europe. Whilst the former two were significantly aided by continued COVID-19 vaccine progress and associated national reopening, Europe has started to make some progress too.

Sixty years ago, Marshall Nirenberg and Henrich Matthaei began the process of cracking the genetic code. Thanks to their persistence and resilience, today’s scientists developed effective mRNA-based vaccines in record time – saving millions of lives from COVID-19. With the darkest days of the pandemic behind us, investors can also appreciate the resilience of the economy and financial markets and the hopeful prospect of brighter days ahead.

It is less than a year since Rishi Sunak presented his first Budget, after having been in the role of Chancellor for less than a month. His despatch box première featured an allocation of £12bn towards mitigating the impact of the Covid-19. Ironically, on the same day as Mr Sunak revealed that boost to spending, the World Health Organisation declared the outbreak a pandemic. Total expenditure in the U.K. on dealing with the pandemic is now estimated to be around £300bn.

From a northern hemisphere perspective, Spring 2021 formally begins on Saturday 20 March however – for both recent weather and economic watchers – February showed some real progress that boosted signs of optimism for the rest of the year.

The first month of a new year ended as a disappointment for the average U.K. investor, especially as a contrast to the widespread excitable returns seen in the last two months of 2020. However, the month of January alone rarely gives us every answer and the unique nature of both the U.K. market alone and collectively the entire world has a wide range of potential outcomes.

We wish you a safe, healthy, and prosperous New Year! These words are even more meaningful given the most deadly and economically crippling ‘Black Swan’ event that we have experienced in the last century—COVID-19. After unprecedented fiscal and monetary stimulus, the record-setting development of multiple effective vaccines has elevated optimism that we will experience the ‘thrill of victory’ over this nemesis in the upcoming year.

I wasn’t going to mention COVID in this latest newsletter, but given the news on Monday about a possible vaccine that could prove to be successful, I can’t help but sit here and feel that 2020 is going to end on a much more positive note than expected.

The curtain is slowly coming down on 2020. Not before time! After what has been a tumultuous period for most, and a tragedy for many, the time to turn the page and move on is slowly arriving. Centre stage, the principal actors are going through their closing lines. Following the US elections, the leading actor refuses to go quietly into the night. Legal actions lie strewn about like discarded party poppers…

After a rough, tough performance month in the pan-European equity markets, the instinct is always to look away from the detailed data and conclude in a world of tightening pandemic restrictions and an imminent (and hotly contested) American presidential election, that uncertainty must induce investment caution.

This October marks 80 years since the opening of the Pennsylvania Turnpike, America’s first highway. Highways have been a critical driver of economic growth due to the connectivity, speed, and efficiency they provide. As Confucius so appropriately stated, “roads were made for journeys, not destinations.”

The traditional early September think piece centres on the natural reset that a generalised return to work (and for the younger generation, school) brings after the typically languid summer holiday period. As 2020 is clearly a very different style of year, let us rip up the normal script and ask the simpler question of ‘does the world feel lucky?’

Financial markets are always a three-dimensional jigsaw, with new pieces being added and deleted at whim every business day. But the signals from the last month have been especially difficult to discern. In contrast to the bounce back second quarter, July was a negative month for pan-European markets with the U.K. continuing to lag.

We maintain our belief in the ‘American Dream’ as described by James Truslow Adams, that “life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement,” regardless of social class or circumstances of birth. We not only acknowledge but embrace that we have work to do as a society, and hope that this year will serve as an inflection point as we advance toward a stronger and more united world.

At any other time, a three percent bounce during May in the pan- European (including the U.K.) equity markets and the driest fifth month of the year in large swathes of the country since 1929, would represent an ideal entry into the summer months. However – despite recent lockdown liberalisations – these are far from normal times.

Over three hundred and fifty years ago, back in 1665, Isaac Newton socially distanced himself from the horrors of the then rampant bubonic plague and – away from his burgeoning academic career at Trinity College in Cambridge – enjoyed a ‘year of wonders’ at his childhood home. During this period he formulated a theory of universal gravitation, explored optics and discovered differential and integral calculus.

As the COVID-19 situation develops at home and abroad we have taken responsible measures in accordance with Government guidelines to protect clients and family alike. We have therefore suspended face to face client meetings until further notice. We will of course be contacting clients to arrange a telephone or video call as a suitable alternative to continue with our scheduled ongoing reviews.

The COVID-19 outbreak has led to unprecedented volatility and tremendous declines in wealth, but we have faith that once the pandemic is defeated, the wild swings in the financial markets will abate and prosperity will return. But what cannot be so easily recovered is the loss of a job, the loss of a business, or, worst of all, the loss of a loved one. While it is our duty to provide timely market insights, please know that now, more than ever, the health and safety of you and your families is at the forefront of our minds.

It can be unsettling for investors when their portfolios and the markets start heading into the red. Here are six investing basics to keep in mind during volatile times.

A successful investor faces many hurdles, some of which are external and some internal. Monday’s dramatic fall on the global markets – the worst in a single day for two years, or four years, depending on which major European or American equity index you wished to cite – could not fail to capture attention.

I am not going to ask you about how your New Year resolutions are shaping up, but the observation above about the tenuous nature of many of them is a not unusual occurrence for many of us. Naturally, the same can happen with financial market predictions. Thoughts that appeared valid and respectful considerations about the upcoming twelve months, can seem by the end of January  tarnished and facile. Such is the nature of financial markets.

(Duncan) recently made my first ever trip out of Europe during November (I know and I’m 54 years of age!) on a visit to Raymond James Head Offices in St Petersburg, Florida.

As someone who needs glasses, I know firsthand that 20/20 vision and the ability to experience the beauty and clarity of life is amazing. As we embark on the start of a new year, clarity and foresight is exactly what investors are seeking, especially with the daily dose of unprecedented headlines we receive. In hindsight, the guidance our team of economists, strategists, and portfolio managers gave last year proved prescient as ~90% of our ten themes for 2019 were accurate.

Judging by the preponderance of retail sales offers throughout November in my email inbox, the rise and rise of ‘Black Friday’ should completely randomise the precise timing of this year’s Christmas retail spending. Similarly for those who think about financial markets, the three percent rise in pan-European indices during the eleventh month of this year – particularly when mated with the very low levels of volatility seen across the prices of many asset classes during the month – appears to have also pulled forward the traditional ‘Santa rally’.

October historically has always been a big month for investors. In my formative years back in the 1980s during one October, there was a major market crash (and weirdly simultaneously in the U.K. an extreme weather event in southern England), meanwhile those interested in older historical events will recall the events of October 1929 and the infamous capital market events back then. A lot has happened in the month of October that has just passed and whilst it is unlikely the history books will remember the tenth month of 2019 assertively, for investors thinking about prospects over the next year, it may have been critical.

Despite the hyperbole, insults and reporting of the Brexit debates where the most extreme views of each side are highlighted and the poor behaviour of some provides us with depressing entertainment, I have found evidence that the world of business is continuing.

The “Wizard of Oz” celebrated a magical milestone in August, returning to the town of its original screening to commemorate its eightieth anniversary. Decades after its release, many of the movie’s characters and themes provide parallels to today’s economy and financial markets.

I hope you enjoyed a good break over the summer holiday period, because there is a lot to think about over the final four months of 2019 and beyond.

The above is not a Presidential tweet but a musing from Donald rump’s time as a property baron and television personality. An experienced investor would undoubtedly agree – sometimes you have to walk away, take a loss or change a strategy.

Snack manufacturers are enjoying a boost in sales in American states that have decriminalised marijuana.

We Wealth Managers and of course you, our clients, don’t know about these things; however, scientific research suggests that tetrahydrocannabinol, the psychoactive ingredient in Marijuana releases a hormone that triggers hunger pangs and a neurotransmitter that increases appetite! I believe in some circles this phenomenon is known as “The Munchies”.

Celebrating the 25-year anniversary of the Academy Award-winning movie Forrest Gump, we revisit many of the movie’s themes which remain relevant in today’s world. Forrest Gump’s mother always said that “Life was like a box of chocolates.” This memorable observation could just as easily be applied to the financial markets, as you never know what volatility-inducing headline you’re going to get next.

With ‘fast fashion’ being so prevalent in today’s world, perhaps we should not be surprised that Oscar Wilde’s dictum looks a little slow as the world only racked up four successively positive months before a reversal. May 2019 will not go down in the financial market almanacs as anything other than a shabby month, with the regional pan-European share index falling around 5% and more than reversing any gains seen earlier in the quarter. Broadly speaking, this performance pattern in May – supplemented by the compression of sovereign bond yields – was repeated all over the world.

Thinking about everyone’s favourite subject, it was striking to read that a well-known UK consumer confidence index indicator released in the last few days was flat for the third month in a row, with an accompanying write-up that included the comment that ‘despite political carry-on in the Westminster bubble with the clock ticking on Britain’s eventual departure from the EU, consumers are holding firm and remain unshaken by the daily headlines of turmoil and intrigue’. Too right that there is a real and breathing UK economy still out there… and that the ongoing Brexit debate does not need to exclusively define the UK economy and its prospects.

Mother’s day is the most important date in the calendar for Britain’s Daffodil growers, yet much of the crop is still in the ground thanks to a shortage of migrant pickers from Europe!

Despite numerous headwinds, 2019 is gearing up to be a celebratory year with record-breaking achievements on many financial and economic fronts. In particular, in the United States we just toasted the S&P 500 as it celebrated the ten-year anniversary of the secular bull market in March.

The Spring Statement is not meant to be a major event. In announcing the date of the Statement this year, the Treasury emphasised that “there will now only be one major fiscal event each year”, i.e. the Autumn Budget. However, on the day after a 149 vote government Brexit defeat, the Chancellor’s view on the UK’s financial and economic situation could hardly be classed as a routine report.

Welcome to March, a time in the past when I have gone all Shakespearean in my written musings and quoted the famous words imagined uttered to Julius Caesar before his assassination. It looks as if the Ides of March (typically regarded as the fifteenth day of the month) will be just after a series of further Brexit related votes which could provide the greater clarity consumers, industrialists, politicians and investors seem to desire. As one economic survey, focused on the view of UK manufacturers, strikingly put it recently: ‘The march of the makers has turned into a painful crawl, where only certainty about the Brexit way forward can ease the sector’s pain’.

If anyone out there was predicting that January 2019 would be the strongest performance month for global equity markets in over seven years, I would be grateful if they could be pointed out to me as I would like to shake their hand.

About a year ago UK and US markets reached record highs with President Trump declaring “The reason our stock market is so successful is because of me”.

Now he is blaming Jerome Powell, Chairman of the US Federal Reserve (a man he appointed).

I realise the title above sounds a little like a famous advert from the 1990s (other telecoms operators are available) but, at least during the last month, the world’s political and economic leaders have continued to talk. And talking is just what they need to do. Of course making a few decisions is even better… so thank goodness the season of perpetual hope is almost upon us. More on the global financial markets Christmas presents wish list later.

A Budget in October is unusual, but there are two main reasons why the Chancellor’s performance marginally pre-empted Halloween this year. The first is that we are now in the new cycle of Autumn Budgets and Spring Statements, the première of the latter having been made on 13 March.

For a number of months now, the world’s largest survey of fund managers has observed that, when asked for their greatest financial market fear, the most cited response has been a ‘trade war’. There is a significant slug of rationality for this.

As the intensity of fears of a no deal Brexit rise, it is clear that businesses are quietly going about their business and taking the necessary steps to keep trading. From steel to chocolate, from drugs to vinyl material, companies are putting plans in place to build up stocks of materials in case there is unrest at the ports.

In the global investment strategy calendar there is only one period of time that can compare with the turn of the year in terms of importance… and that is the back to school period.

Despite the usual weather downers such as the tennis at Wimbledon or the start of the school holidays, July was a warm month pretty much anywhere you looked in the northern hemisphere. Global stock markets were hot too, led by the out-of-favour emerging markets and Continental Europe. Funny how all throughout June and July the aggregate investment flow data was profoundly negative for both regions…

We have been busy rebalancing your portfolios and where possible sweeping up and ensuring we have taken advantage of Capital Gains Tax allowances for the financial year 2017/18 just ending to keep your investments as tax efficient as we can.

Attached are our quarterly valuations to the end of September. Across the board the portfolios have delivered performance in line with expectations with values falling back a little during September primarily on the back of Donald Trump, North Korea and what one might call slight confusion on the strategy for Brexit!

Taking the media (including social media) as a whole, one could be forgiven for believing that the end of the UK as we know it is upon us and that a seismic shift will start to take place.

We attach our European strategist Chris Bailey’s commentary and our summary and strategy is as follows; The forthcoming General Election will bring political change whatever the outcome.

Whilst ‘Brenda from Bristol’ captivated the British public with her displeasure about the upcoming UK election, investors elsewhere in Europe were celebrating as the first round of the French Presidential contest appeared to continue the trend started by the Dutch vote in March of stepping away from the populist brink.