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April Market Commentary

Archive for the ‘Commentary’ Category

April Market Commentary

Wednesday, April 3rd, 2019

Introduction

We have commented before on the difficulty of ‘hitting a moving target.’ Sometimes in writing this commentary you run the risk of what you write being overtaken by events, and that has never been more true than this month. In the short time between us publishing notes and you reading them it is possible that the Brexit section will be different.

Given the fact that Brexit continues to dominate the news headlines it’s tempting to think it is the only important story. Nothing could be further from the truth. There were clear signs that the US/China trade dispute might be moving to an end, and it was an interesting month in the US with clear pointers to a sea-change in the car industry – something that has worldwide implications.

In the UK we had Chancellor Philip Hammond’s Spring Statement, the usual gloom from the high street and continuing good news on employment.

World stock markets had a reasonably good month, buoyed by hopes of an agreement between the US and China. We have also taken a look at the performance of all the major markets in the first quarter of 2019. Let’s look at all the detail…

UK

There was, of course, the usual round of gloom from the UK retail sector. Debenhams issued a profit warning – failing to meet forecasts it made just two months ago – and Sports Direct boss Mike Ashley duly contemplated a £61m bid for the company. As of April 1st, the Debenhams board appears to have secured refinancing to fend off Mr Ashley’s amorous advances, but you suspect it is only a matter of time…

More widely the high street suffered its worst February for ten years with sales down 3.7% and John Lewis paid its lowest bonus to staff since the 1950s. What was once Staples and is now Office Outlet went into administration. There was also a very clear sign of things to come from the traditional high street travel agent as Thomas Cook announced plans to close 21 shops and cut 300 jobs.

Elsewhere in the UK there was the usual mixture of good and bad news…

Chancellor Philip Hammond delivered his Spring Statement: he made his opposition to a ‘no deal’ Brexit very clear, promising a £26bn ‘deal dividend’ if agreement was reached with the EU.

But despite the undeniable uncertainty, the UK economy continued to turn in some impressive figures as unemployment fell to its lowest level for 45 years and 32.7m people were in work. Figures from the Office for National Statistics showed that the economy had grown by 0.5% during January – more than double economists’ predictions of 0.2% – with the important services sector up by 0.3%.

Toyota announced that it would build its new hybrid car in Derbyshire – a welcome shot-in-the-arm for the UK car industry which saw manufacturing fall for the 9th month in a row. The BBC also reported that UK manufacturers were cutting jobs at a ‘record pace thanks to Brexit uncertainty’ as companies stockpiled raw materials ‘at a record pace’.

There was also bad news in the housing market, with prices in England falling by 0.7% in the first three months of the year, compared to the same period last year. This was the first fall since 2012, but Nationwide’s survey showed that rises in Northern Ireland, Wales and Scotland meant that the average price of a house across the whole UK was still increasing. UK inflation in February inched backed up to 1.9%, with increases in the cost of food and wine contributing.

What did the UK’s FTSE 100 index of leading shares make of all this confusion? It had a good month, rising by 3% to 7,279 where it is up by 8% for the first quarter of 2019. The pound fell slightly, ending March 2% down at $1.3036 – however, it is up by 2% for the first quarter of the year.

Brexit

Yet again, all the really important news regarding Brexit came at the end of the month as Theresa May brought her Withdrawal Agreement back to Parliament for a third time on 29th March – the day on which the UK should have left the EU – only to see it defeated yet again. The margin this time was 58 votes, with the DUP once again refusing to support it.

There were plenty of high profile Brexit supporters, such as Boris Johnson and Jacob Rees-Mogg, who did support the WA. They feared the only option left was to accept a bad deal or risk losing Brexit altogether – but in truth the Prime Minister never looked likely to do enough to convince either the DUP or 25 die-hard Brexit MPs.

So where does that leave us now? On Monday 1st April there will be another series of indicative votes as MPs look for something they can agree on. The Prime Minister has no control over this and – having promised to stand down if her deal passed – she will face plenty more calls for her immediate resignation as her deal lies in ruins.

If nothing is agreed – such as a further extension to Brexit – then the UK will leave the EU on 12th April. Depending on your point of view we will ‘crash out’ with no deal, or we will move to trading on World Trade Organisation terms. The situation is further complicated by European elections, due to be held in late May: if the UK is still in the EU then it must send MEPs to Brussels.

Europe

The news in Europe was not good. March began with the revelation that EU manufacturing was facing its worst downturn for six years. The European Central Bank was once again forced to act, offering banks cheap loans to try and revive the Eurozone economy.

But will it get any better? For decades there have been three basic facts of life about cars: cars were driven by people, they were owned by people (or the companies that employed those people) and they were powered by internal combustion engines. Now all of those are under threat and the implications are serious and wide-ranging. The German economy has been the engine powering Europe for the last 10 to 20 years. As countries like Italy have had a decade of virtually no growth, Germany has produced a remorseless balance of payments surplus.

The German car industry employs more than 800,000 people: it accounts for around 20% of the country’s exports. If car production switches to driverless cars made in the Far East and/or California, then the implications for Europe are severe.

So, given their less than cordial relationship with the EU of late, it was no surprise to see Italy roll out the red carpet for Chinese Premier Xi Jinping. We have written previously about China’s ‘Belt and Road’ initiative and – with worries about the German car industry and the French economy stagnating – why wouldn’t the populist government in Italy look to closer ties with China? Despite the concerns of her European neighbours the upside for Italy is clear – a flood of Chinese investment and greater access to Chinese markets and raw materials.

Meanwhile in the Netherlands a new populist, anti-immigration party led by Thierry Baudet – inevitably dubbed the ‘Dutch Donald Trump’ – became the largest party in the Dutch Senate. With European elections due in May we can certainly expect to see far more Eurosceptic MEPs returned – which perhaps explains why the EU would prefer the UK not to take part in those elections…

On European stock markets the German DAX index had a very quiet month, rising just 10 points to 11,526. The French market did better, rising 2% in March to 5,351 where it is up by an impressive 13% for the year to date. The German index is up by 9% for the first three months of 2019.

US

It’s interesting to note that as the German car industry faces its biggest-ever threat, most of my notes for the US section of the Bulletin also concern their car industry. But it is not the traditional players like Ford and Chrysler – rather it’s the new kids on the block: Tesla, Uber and Lyft.

March got off to a bad start in the US as figures showed that the US had created just 20,000 jobs in February, well below expectations of 180,000 and the lowest figure since September 2017 when employment was impacted by Hurricanes Harvey and Irma. It was therefore little surprise later in the month when the Federal Reserve announced that it does not expect to raise interest rates for the rest of this year, voting unanimously to keep the US interest rate range between 2.25% and 2.5%.

Facebook suffered its longest ‘down’ time for more than ten years as the company’s main social network plus Instagram and message-sharing were all down for 14 hours. Meanwhile Levi’s – a company that has been around for rather longer than Facebook – returned to the US stock market and saw its shares leap by 32% on the first day of trading.

But the really interesting news was in the car industry as ride-sharing app Lyft made its stock market debut valued at $24bn (£18.5bn), making it the biggest IPO since China’s Alibaba. However, that figure will be dwarfed when Uber comes to the market, with early indications that the ride-sharing company – which is still losing billions of dollars – will be valued at around $120bn (£92bn). With the news that Tesla is also on course to outsell BMW and Mercedes in the US, there are very clear warning signs for the traditional car industry – and for the places it is based and the people it employs.

On Wall Street the Dow Jones index had a quiet month: it finished March up just 13 points at 25,929. It is, though, another market which has done really well in the first three months of the year, rising by 11% since 1st January.

Far East

March ended with real optimism about the US/China trade talks, so it was no surprise to see China’s stock market up by 5% in the month.

At the beginning of March there was much less optimism, and some continuing tension as China temporarily stopped customs clearance for Tesla’s new M3 car.

The trade dispute had certainly taken its toll as figures revealed that Chinese exports in February suffered their biggest fall for three years – down nearly 21% on the previous year.

Unsurprisingly, the Chinese government looked to domestic demand to counter this, unveiling a raft of tax cuts. China’s de facto number two, Li Keqiang, warned that the country faced “a tough struggle” as he laid out plans to bolster the economy. Opening the annual session of China’s parliament, he forecast slower growth of 6% to 6.5% this year, down from the 2018 target of 6.5%. He duly unveiled plans to boost spending with tax cuts totally $298bn (£229bn).

Meanwhile the soap opera around Chinese telecoms company Huawei rumbled on as the US told Germany to drop the company, warning that any deal to let Huawei participate in the German 5G network could ‘harm intelligence sharing.’ Huawei continued to deny that their products posed any security threat, and had the last laugh as figures for 2018 showed that their sales had passed $100bn. Total revenues were 720bn yuan ($107bn £82bn) with profits up by 25%.

The Shanghai Composite Index’s 5% rise meant that it closed March at 3,091 where it is up by an impressive 24% for the year to date. The Hong Kong Market was only up 1% in the month to 29,051 but is up by 12% for the first quarter of the year. The Japanese and South Korean markets turned in much more subdued performances, falling by 1% and 2% to end the month at 21,206 and 2,141 respectively. For the first three months of the year Japan is up by 6% and South Korea by 5%.

Emerging Markets

March was a relatively quiet month for the Emerging Markets section of the Bulletin with two of the major markets we cover unchanged in percentage terms. The Brazilian stock market closed the month down just 169 points at 95,415 while the Russian market managed a gain of just 12 points to 2,497. However both markets have done well in the first quarter of the year, with the Brazilian market up by 9% and Russia up by 5%.

It was a much better month for the Indian stock market, which rose 8% to close March at 38,673. It is up by 7% for the first quarter of the year.

And finally…

Gloucestershire pensioner Stephen Mckears was baffled. Every night he left a few things out on his workbench (in his garden shed, where else) and every morning they were neatly back in their plastic tub.

It wasn’t Mrs Mckears doing some late night cleaning and neither was it a friendly neighbourhood ghost. So what was it? Questioning his own sanity, Stephen set up a camera in his garden shed with the help of a neighbour.

He discovered that a mouse was tidying his workbench. Whatever Stephen left out, the mouse duly tidied away in the plastic tub. “I’ve started calling him Brexit Mouse,” quipped Stephen, “As he’s stockpiling things for Brexit!”

Sadly, all too many of us are addicted to the occasional McDonald’s and, to help us with our choice, the chain has just spent $300m (£227m) on an Israeli technology company that specialises in artificial intelligence. According to McDonald’s CEO Steve Easterbrook “It [the AI] can know the time of day and it can know the weather” thereby helping the chain serve the right food for both the time of day and the weather.

Now call us old-fashioned but we wonder whether you really need to spend over £200m to know that you should take the breakfast menu off at three in the afternoon.

Maybe we’re wrong…

4 Key takeaways from the Spring Statement

Wednesday, March 20th, 2019

The Spring Statement is an opportunity to hear the latest updates on the state of the UK economy and what to expect of its growth over the coming months and years. With most people setting their focus firmly on the amorphous hokey-cokey of Brexit negotiations, it’s something of a breath of fresh air to take a moment to look at concrete upcoming strategies and measurable realities.

With that in mind, here are 4 key points you can hang your hat on while what’s on or off the table continues to be debated in the background.

1) Taxes, Taxes, Taxes

Employment is up and that means more tax receipts for the Government’s coffers. 2018 ended with 440,000 more people in work than 12 months prior, with 60,000 fewer people relying solely on zero-hours contracts. Government borrowing fell in January to the lowest we’ve seen since 2001 and £21bn of income and corporation tax was raised, leaving a healthy monthly surplus of £14.9bn.

2) Even more taxes

The Making Tax Digital scheme is set to come into effect on April 1st 2019. Looking at it broadly, it’s an effort to modernise the tax system. The first step comes in the form of mandatory digital record keeping for VAT, for those businesses which find themselves above the VAT threshold. It’s undoubtedly a strong example of intent for the future.

3) You guessed it… taxes

No Safe Havens is an initiative that was introduced in 2013 to crack down on those who seek to evade their tax through hiding their income and assets overseas, and those who advise them on how to do so. The Spring Statement brought with it a declaration of further commitment to this cause by investing in the latest technology and enforcing tough new penalties while, at the same time, making sure it’s easy for law abiding taxpayers to handle their tax correctly.

4) Growth is good

Okay, it’s not all about taxes. The Office for National Statistics’ January figures demonstrate the UK Economy has grown to the tune of 0.5%, blowing the economists’ predictions of 0.2% out of the water with the biggest monthly increase we’ve seen since 2016. Construction saw notable growth of 2.8%, with the service sector up 0.3% and manufacturing up 0.8%. We saw inflation fall to 1.8% in January and the general consensus is that we can expect to see UK growth of between 1.3% and 1.4% this year.

That’s your breath of fresh air over. You can get back to talking about Brexit now. If you have any questions surrounding any of these topics or the Spring Statement in general, please feel free to get in touch with us directly.

Tips on how to avoid ‘FOMO’ investing

Wednesday, February 20th, 2019

We’ve all experienced FOMO at one point in our lives, or to give it its full name; fear of missing out. It’s the feeling you get when there’s an event taking place that you can’t attend. It’s the “But, what if?” when considering whether to turn down an opportunity. It’s the anxiety that is all too common when we want to agree to something but are over-committed.

In an age of social media and 24 hour news cycles, where there’s a missed opportunity or the promise of ‘the next big thing’ right under our noses, it’s impossible to avoid FOMO without becoming a hermit. (We’d hazard a guess that even the most ascetic cave-dwelling philosophers wonder what they’re missing out on!)

There’s no shame in experiencing a fear of missing out, it’s how you act on that feeling that makes all the difference. How often do we step out of our slow-moving supermarket queue to join what seems to be the fast-track only for it to grind to a halt as we watch our old queue fly past us? The same is often true when we switch lanes in the motorway. Getting your shopping home a few minutes later is hardly the end of the world, but when we apply the same principles to investing, the results can be much more severe.

Chasing a star performing fund is always going to be a risk. Trying to perfectly time your moves in and out of markets is extremely difficult, and even the greatest investors out there get it wrong more often than they get it right. The temptation that comes from FOMO is to make knee-jerk reactions and focus on the volatility of the markets, looking at the daily ups and downs. This can lead to irrational decisions. Your returns are not going to be a perfectly straight line from the bottom left to the top right of a graph, but that doesn’t mean you should jump ship and change lane at every inevitable up and down along the way. Patience is key to a sound investment philosophy and although it can be very tempting to try the quick-fix, if it sounds too good to be true, it usually is.

One way to counter any FOMO concerns is to have a properly diversified multi-asset fund. In the words of Harry Markowitz, pioneer economist, “diversification is the only free lunch in finance”, so don’t put all your eggs in one basket.

How will equity release affect my family?

Thursday, January 3rd, 2019

The choice of whether or not to release equity from your home ultimately rests with you. However, the decision will have wide reaching consequences for your family. It’s sensible, before releasing equity, to see a financial adviser who will explain the ramifications.

There are two main forms of equity release – lifetime mortgages and home reversion plans.

Most commonly, people choose lifetime mortgage schemes. These mean that you take out a mortgage secured against your house which lets you release some of the wealth tied up in it.

Home reversion plans mean you sell a portion or all of your house at less than market value, in return for a tax-free lump sum.

If you’re married or in a civil partnership, you can take out a policy with your partner. In the event of one of you dying or going into residential care, the other can stay in the home under the terms of the policy.

Your spouse aside, equity release can affect your children and other relatives in a variety of ways.

In the short term, equity release could help your family, provided you spend the money on them. Parents and grandparents are sometimes releasing equity on their home so they can lend it to their children or grandchildren, helping them get on the property ladder. This is sometimes referred to as a ‘living inheritance’.

This said, it will diminish the value of your home, which your children might see as part of their inheritance. Because of regulatory requirements, all equity release products have a ‘no negative equity’ guarantee, as long as they are sold by a member of the Equity Release Council. As a result, you’ll never owe a lender more than the value of your house.

Some equity release products could lead to you repaying a huge amount, leaving your children with a far smaller inheritance than they may have expected. With some plans it’s possible to protect an element of equity as an inheritance plan. Otherwise, you could decide on an interest payment plan, preventing the loan from building up.

It’s best to keep your children in the loop if you decide to release equity. This will avoid any sudden shocks down the line and give them a chance to understand the process. In addition, you should consult an expert to make sure you take out an equity release plan that’s right for you and your family.

December Market Commentary

Thursday, December 6th, 2018

Introduction

It is always difficult writing a report like this, as you are always trying to ‘hit a moving target.’ While you can record the stock market levels at the close of business on, say,  30th November, there is always the risk that the commentary is overtaken by events.

That has never been more true than this month: we wrote these notes on Monday 3rd December and, of course, you have to press ‘publish’ at some stage. However, we are very conscious that the situation regarding Brexit – and perhaps also the civil unrest in France – may have moved on by the time you read this.

That said, on to business, and the majority of the stock markets on which we report in this commentary enjoyed a good, if unspectacular, November. There were also some signs at the end of the month that the trade war between the US and China might at least be thawing. Following a meeting at the G20 summit in Argentina, the two countries agreed not to impose any further tariffs for 90 days, to allow talks to take place.

Away from stock markets the oil price fell below $70 a barrel for the first time since April – leading to calls for a reduction in the price of petrol – and those of you who keep an eye on the performance of cryptocurrencies will have seen that Bitcoin had a disastrous month. The price of the virtual currency fell by 37% in the month, and – when we checked the price over the weekend – stood at £3,107.

UK

Despite the political chaos in the UK there was plenty of good news for the economy in November with figures for the third quarter (July to September) confirming that it had grown at 0.6%, three times faster than the equivalent rate in Europe.

There was more good news as figures showed that wages rose by 3.2% in the same three month period, the fastest rate of wage growth for almost a decade. However, people did not appear to be spending the money on the high street, which once again lost out to online shopping in the Black Friday/Cyber Monday bonanza. And there was more gloom for town centres as Thomas Cook issued its second profit warning in two months, blaming the record-breaking summer.

The retail picture did not improve when Marks and Spencer reported falling sales for food and clothing, and a report from management consultants PwC said that retailers were facing their ‘toughest trading conditions for five years’ with 14 shops closing every day.

New car sales were also down and 850 jobs were lost as Michelin closed its factory in Dundee.

But against that, profits at the UK’s publicly listed companies jumped nearly 14% in the third quarter of the year, pushing total profits over the last 12 months to a record £217.9bn.

Sadly, the FT-SE 100 index of leading shares sided with shop closures not record profits and closed November down 2% at 6,980. The pound had a relatively quiet month – despite the continuing uncertainty over Brexit – and ended the month trading at $1.2748.

Brexit

In 1942, as the tide of World War II finally began to turn in the Allies’ favour, Winston Churchill said, “It is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”

Is that where we are now with Brexit? Theresa May has done a deal with the European Union. According to the campaign group Leave Means Leave, it is ‘the worst deal in history’ seeing the UK paying £39bn and getting nothing in return.

According to Downing Street, it is the best possible deal and a triumph for the Prime Minister’s dogged diplomacy. It is vastly superior to a Canada or Norway-style deal,  the dreaded ‘no deal,’ or staying in the EU. It is a deal that ‘delivers on the result of the referendum’ and the full Government publicity machine has been wheeled out to support it.

Well, we shall see next week, when the MPs vote on the deal. At the moment it looks likely to be defeated, as Conservative MPs and ex-ministers line up to criticise it.

Quite possibly it will be heavily defeated and the Opposition will table a motion of no confidence in the government, leading to a General Election. Quite possibly there will be more late night meetings and trips to Brussels and a new deal will come back to parliament. Quite possibly Theresa May will be replaced as Prime Minister. Quite possibly we could have a second referendum – the so-called ‘People’s Vote.’

So no, it does not look like we have reached the beginning of the end, or even the end of the beginning. The picture may be a little less murky by the end of December, if only because some options – almost certainly the current deal – will have been ruled out.

At the moment, we are still due to leave the European Union on 29th March next year: We have written previously that we could see that date being pushed back to allow ‘more time for constructive talks with our European partners.’

Europe

The big story in Europe came at the end of the month as the worst civil unrest since 1968 broke out in France.

The headlines had French President Emmanuel Macron threatening to impose a state of emergency and demanding new police powers as he struggled to contain the unrest, with 75,000 people estimated to have taken part in the action over the weekend.

The Gilet Jaunes (Yellow Jackets/Vests) movement began three weeks ago as a protest against Macron’s climate change inspired fuel tax rises. But in reality it goes deeper than that as protesters claim that Macron is a ‘president of the rich’ who does not care about the concerns of ordinary French people and the higher living costs they are facing.

A recent poll showed that Macron had broken new ground by becoming the most unpopular French President ever at this stage of a Presidency – he is roughly 1½ years into a five-year term – with populist leader Marine le Pen (whom he beat in the Presidential election) now more popular.

Quite where Macron goes from here is anyone’s guess. It is not just the fuel protests: growth in the Eurozone has slowed to a four year low, and France still has a high level of unemployment – 9.3% in August, which is far closer to the 9.7% of Italy than it is to the 3.4% in Germany.

In other news, the government in Italy continued to defy the EU over its proposed Budget – although there were no such budgetary worries for France and Germany as they agreed a new budget for the whole Eurozone.

In company news, Volkswagen became the latest company to plough huge sums of money into electric cars as it committed to spending $50bn (£39bn) and announced plans to become the world’s most profitable manufacturer of electric vehicles. Given that the emissions scandal is reported to have cost the company $30bn (£23.6bn), it probably has some catching up to do…

Neither of Europe’s major stock markets enjoyed a good month. The German DAX index was down by 2% to 11,257 and the French index fell by a similar amount, ending November at 5,004.

US

Barely two months ago Apple won the race to be the first company valued at a trillion dollars (£780bn), but throughout November the shares slid as investors worried about declining iPhone sales and the company’s vulnerability to a protracted dispute between the US and China.

As we have written elsewhere, those fears may now be receding but Apple has now been overtaken by Huawei as the world’s second largest manufacturer of smart phones (and by Microsoft as the world’s most valuable company). There are mutterings that the innovation and attention to detail of former CEO Steve Jobs is being missed.

There was better news for the wider US economy, which added 250,000 new jobs in October, saw wages rise by 3.1% and unemployment down to 3.7%. “Wow! Incredible numbers. Keep it going,” tweeted the Commander-in-Chief.

But there was less good news for Donald Trump as the US mid-term elections saw the Democrats gain 40 seats in Congress and regain a measure of control. Previously, the President had benefited from Republican control of both the Senate and Congress, and this may make it more difficult to get some of his more contentious proposals approved.

In other company news, Amazon finally announced the location of its second HQ – and went for both New York and Virginia. Uber may be struggling to afford even one HQ: it lost a cool $1.07bn (£821m) in the three months to September, as it prepares for a public share offering next year.

Fortunately, the Dow Jones index does contain some companies that cling to the hopelessly outdated notion that the profit and loss account should be in the black, and rose 2% in November to end the month at 25,538.

Far East

The month began with Chinese leader Xi Jinping promising to cut import tariffs and open up the Chinese economy, amid continuing criticism that its trade practices are ‘unfair.’ Xi was speaking at a Shanghai trade expo and also made a robust defence of the global free trade system, widely seen as an attack on the US as the tariff war continued.

However, there was perhaps a glimmer of light at the end of the tunnel by the end of the month following the G20 summit in Argentina: as we noted in the introduction, the two countries agreed not to increase tariffs any further for 90 days to allow time for talks.

A week after Xi’s speech and China turned its attention to the annual shopping bonanza which is Singles Day (on 11th November) which far outstrips Black Friday and Cyber Monday. Once again all online records were broken as Alibaba – roughly China’s equivalent of Amazon – took $1bn (£780m) in just 85 seconds of trading.

Over in Japan, it was a very different picture as the economy contracted by an annualised rate of 1.2% in the third quarter, with the blame placed on natural disasters. Japan has been hit by both a typhoon and an earthquake this year, which have significantly impacted the economy.

Also ‘significantly impacted’ were the shares of Nissan which slumped after boss Carlos Ghosn was arrested, for under-reporting his income by the small matter of £34.5m over the last five years.

There were also problems for Huawei, as New Zealand became the latest country to ban purchases of mobile networks from the company, as it expressed security concerns, following similar action in Australia.

It was a better month on the region’s stock markets, with only China’s Shanghai Composite Index falling in November. That was down by 1% to 2,588, but the other three major markets in the region all rose. Hong Kong led the way with a rise of 6% to 26,507 whilst South Korea was up 3% to 2,097. Despite the gloomy news on the economy the Japanese market also rose, finishing November up 2% at 22,351.

Emerging Markets

It was a quiet month for the emerging markets which we cover, with no major news stories, although clearly the continuing tension between Russia and the Ukraine looks as though it has the potential to flare up at any moment.

On the stock markets India led the way with a rise of 5% in the month, ending November at 36,194. The markets in Russia and Brazil both rose by 2%, to close at 2,392 and 89,504 respectively.

And finally…

The month kicked off in good style as Bradley Stoke Town FC of the Bristol and District League signed a player called… Bradley Stokes. It would certainly make it easier for the fans if teams only signed players with a similar name…

Meanwhile in Holland, Emile Ratelband – presumably unable to find a team called FC Ratelband – contented himself with bringing a lawsuit to lower his age. “We live in an age where you can change your name and change your gender,” said 69 year old Emile, “So why can’t I change my age?” Being 69 is, apparently, harming Emile’s chances on the dating app Tinder.

Still young, but clearly with plenty to worry about, are the students of Leeds Trinity University. Lecturers there have been told to avoid capital letters in their handouts as they can ALARM STUDENTS and ‘scare them into failure.’

Fortunately, the students do not live in North Korea where they would be alarmed to find that only fifteen haircuts for men and women are approved by the state. And no, you are not allowed to sit in the chair and say “I’ll have a trim Jong-un, please.” No-one is allowed to have a haircut like the beloved leader…

Finally, a nod of acknowledgement to the state broadcasting corporation in China which has introduced virtual reality newsreaders powered by artificial intelligence. Our sources tell us that the BBC will not be following suit. We can understand that: after all, there’d be no-one left to appear on Strictly…

November Markets in brief

Thursday, December 6th, 2018

November was an average, if unspectacular, month for global markets. This will be welcome news for many investors – it followed an October that investors described using language ranging from ‘slightly worrying’ to ‘catastrophic’ depending on where their money was invested, and events were interpreted on a scale of ‘massive fall’ to ‘temporary speed bump’ or a ‘natural rebalancing of markets’.

UK

In spite of the political turmoil around Brexit, there was some good news for the British economy, with figures for the third quarter (July to September) confirming that it had grown at 0.6%, three times faster than the equivalent rate in Europe. Over the same period, wages rose by 3.2%. Great news for now. However, as political events around Brexit run their course, the potential for widespread economic disruption remains.

The FTSE 100 fell by 2%, to close November down at 6,980, with anxiety about the ability of the US and China to end their trade dispute at the G20 summit hanging over the market like a dark cloud.

Europe

France suffered its worst period of civil unrest since 1968, with widespread protests against Macron’s heavy taxation of fuel gripping the country. He is currently the most unpopular president at this early stage of his presidency; just 18 months into a 5 year term.

Elsewhere on the continent, Italy’s right-wing government continue to defy the EU over their proposed budget. This saw an iffy month for Europe’s major markets. The German DAX and the French index both fell by 2%, down to 11,256 and 5,004 respectively.

US

There was good news for the US economy, which added 250,000 new jobs in October, saw wages rise by 3.1% and unemployment down to 3.7%. A strong showing to say the least.

The stock markets performed intermediately with the Dow Jones rising 2% in November to 25,538 and the NASDAQ fell slightly to 7,330.

Far East

There is possibly a glimpse of light at the end of the tunnel in the US-China trade war. At the G20 summit, the two nations agreed not to increase tariffs for 90 days to allow time for talks. Supported by a retail boost on Singles Day, the Chinese annual shopping bonanza, the country’s stock markets had a ‘less bad’ month than the last few, with the Shanghai Composite Index falling just 1% to 2,588.

Elsewhere in the region, Hong Kong led the way with a rise of 6% to 26,507 whilst South Korea was up 3% to 2,097. Japan also rose, despite its economy contracting by 1.2% in the last quarter, finishing the month at 22,351, up 2%.

The next month looks to be unsettled, with Brexit chaos likely to crescendo over the next few weeks.

Returnships: helping mums return to work

Wednesday, November 14th, 2018

For women returning to the job market after a long career break, getting back on track can seem daunting. Many are reduced to applying for graduate-level and admin work, far below their level of experience. They feel that their skills are outdated or they will have lost their touch. Others find that recruiters have a high level of bias against people who don’t have recent experience, especially in fast-changing sectors like tech.

Returnships are aimed at helping experienced professionals return to a role at mid to senior level. While they’re open to men, the majority of applicants are women who have taken a career break to raise children and who are returning to work in their late 30s or early 40s when their youngest child starts school.

There is an established culture of bias against mothers who have taken a long career break. Mothers who return to work can end up earning a third less than men. Although the fact that women tend to work less hours than their male colleagues is a large factor, women also have less chance of getting pay rises and promotions.

Despite returnships being a relatively recent arrival – they were first introduced in the UK in 2014 – they’re catching on fast and can count established names such as Morgan Stanley, J.P. Morgan and Allianz among their benefactors.

Highly-qualified women can find it hard to get a role again and can find themselves applying for jobs they’re overqualified for, thinking it’s their only route back in. Returnships allow women to bypass this prejudice and gain the much needed experience they need to find their way back into jobs. They allow women to rejoin the world of work at the right level, paid the right amount.

Many returning mothers are highly educated and offer a level of maturity that can boost employers at a mid/senior level. The level of bias they face is cited by Labour MP Jess Philips as a major cause of the UK’s catastrophic productivity gap which is 35% below Germany’s and 30% below that of the US.

Returnships are paid and typically last up to 6 months. They aim to brush up participants’ technology skills, boost their confidence through coaching and reacclimatise them to the corporate landscape, often with the help of a mentor. They usually result in the offer of a permanent contract at the end, although this is not guaranteed and depends on the returner’s performance.

Post-GDPR: What you may have noticed

Wednesday, November 14th, 2018

Since its introduction in May, the GDPR regulation has massively reduced the number of trackers that companies place on the internet and how our data is stored. After the flurry of emails we received in May, seemingly from every company we’ve ever had contact with, all seems to have gone silent. The reality, however, has been different. Behind the scenes, plenty has been going on.

Trackers include cookies and pixels – pieces of code in websites that follow internet users around online to try to get them to click on personalised advertising.

Small trackers have lost between 18 and 31% of their reach and the overall number of trackers on pages reduced by 4% for firms in the EU. You might have noticed a slight drop in the number of targeted ads you’ve seen, but this is likely to have been a negligible change.

For people who work in companies that use customers’ data, GDPR is likely to be remembered for creating a massive workload by forcing them to rapidly assess how it collects and stores data. GDPR compliance means that consumer data has to be kept securely. It must be safe from hackers and thieves, and non-compliant firms risk fines from the EU of up to 4% of global turnover if a breach is found to have taken place. This understandably caused a headache for IT departments across the country.

Despite smaller firms’ loss in reach, tech giants have still managed to track plenty about what their users do. Since the legislation came into force, Facebook’s trackers declined just 7% and Google actually managed to increase its reach by 1%.

The fact of the matter is that GDPR has done little to prevent tracking by the tech giants. The likes of Google and Facebook have the money to invest in the most experienced lawyers and ensure that they can still collect as much data as possible. This data is what they use to generate much of their revenue.

It has hit smaller digital advertising firms the hardest; those who don’t have the budget to ensure they can keep their trackers deep into users’ lives without the risk of violating GDPR legislation – unlike tech giants.

Google, which has entire departments purely working on GDPR and started preparing 18 months before its implementation, has been challenged by data privacy campaigners and could potentially face a so-called “mega fine”.

Its obsessive collection of location could violate GDPR because it prevents users from giving informed consent. They bury their location consent settings deep in their browser and apps – hidden under the ‘location history’ button, in case you’re interested in taking action to stop Google using your location to target ads.

So far in the UK, only one notice has been served under GDPR. This was to a Canadian analytics firm who worked for Vote Leave. AggregateIQ was accused of processing people’s data for “purposes which they would not have expected”. It was paid almost £2.7 by Vote Leave to target ads at potential voters.

Since GDPR, complaints about potential data breaches in the UK have more than doubled and businesses widely report struggling to manage this extra burden. It seems that, so far, GDPR has created a lot of extra work without doing much to prevent the intrusive practices of large firms.

3 pension changes you may have missed in the Budget

Wednesday, November 14th, 2018

There was scarcely a mention of the ‘P’ word in October’s Budget speech (believe us, we were listening closely for it!). Instead, Hammond used the Budget speech as an opportunity to unveil his ‘rabbit in the hat’ changes to income tax thresholds, an increase in NHS mental health funding and a ban on future PFI contracts.

However, we had a good read of the accompanying ‘Red Book’ for any mention of pensions. At 106 pages, this was no mean feat. Fortunately, though, it was time well spent as we found some changes to pensions you may otherwise have missed:

The pension dashboard

HM Treasury confirmed that the Department for Work and Pensions (DWP) would look at designing a pension dashboard which would include your state pension. The pensions dashboard will be an online platform that will let you see all of your pension schemes in a single view. The average worker is nowadays expected to work eleven jobs during their career and keeping track of so many pension pots could prove confusing to say the least.

There was an extra £5 million of funding for the DWP to help make the pension dashboard a reality. Commentators see the dashboard as a welcome sign that the government is committed to helping savers keep track of their funds.

Patient capital funding

The government announced a pensions investment package which should make it easier for direct contribution pension schemes to invest in patient capital. Patient capital refers to investments that forgo immediate returns in anticipation of more substantial returns further down the line.

The government may review the 0.75% charge cap and there is widespread speculation that it will be increased to allow more investment in high growth companies.

Cold calling ban

The government has promised to ban pensions cold calling as part of a drive against pension scammers. Almost two years since the government’s initial proposals to combat pension scams were announced, pensions cold calling will finally be made illegal.

Research by Prudential indicates that one in 10 over 55s fear they have been targeted by pensions scammers since the introduction of pension freedoms in 2015. Cold calls, with offers to unlock or transfer funds, are a frequently used tactic to defraud people of their retirement savings.

As much as these measures go a long way to making people’s pensions more secure, the government will be powerless to enforce cold calls made from abroad and not on behalf of a UK company. It is unclear how and if the government will work with international regulators to mitigate the dangers of such calls.

The longevity challenge and how to tackle it

Thursday, November 8th, 2018

The longevity challenge: In the UK, we are faced with the challenge of an ageing population. Many of us will live longer than we might have expected. Already, 2.4% of the population is aged over 85. Because of improvements in healthcare and nutrition, this figure only looks set to rise.

The Office of National Statistics currently estimates that 10.1% of men and 14.8% of women born in 1981 will live to 100. A demographic shift to an older population brings unprecedented change to the way the country would operate, from the healthcare system to the world of work.

In addition, a long life and subsequently a long retirement, bring challenges of their own from a personal financial planning perspective.

Firstly, it means you have to sustain yourself from your retirement ‘nest egg’ of cash savings, investments and pensions. You need to ensure that you draw from this at a sustainable rate so you don’t run the risk of outliving your money.

Secondly, there’s the question of funding long term care. If we live longer, the chance that we will one day need to fund some sort of care increases. Alzheimer’s Research UK report that the risk of developing dementia rises from one in 14 over the age of 65 to one in six over the age of 80.

Of course, there are many different types of care, ranging from full time care to occasional care at home, with a variety of cost levels. All require some level of personal funding.

The amount you pay depends on the level of need and the amount of assets you have, with your local council funding the rest. This means that it’s definitely something that you need to take into account in your financial planning.

Having the income in later life to sustain long term care really does require detailed planning. Because of the widespread shift from annuities to drawdown, working out a sustainable rate at which to withdraw from your ‘nest egg’ is essential.

There is no ‘one-size-fits-all’ sustainable rate at which to draw from your pensions and savings. Every person has their own requirements, savings, liabilities and views on what risks are acceptable.

There are some things which you will be able to more accurately plan when working out the sustainable rate to draw from your pension. These include your portfolio asset allocation, the impact of fees and charges and the risk level of your investments. Speaking with your financial adviser will help you on your way to working out the right withdrawal rate for you.

There are, however, some unknowns. These include the chance of developing a health condition later in life and exactly how long you’ll live. It is best to withdraw leaving plenty of room for these to change unexpectedly, improving your chances of having a financial cushion to cope with what life throws at you.