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Macron emerged with the largest share of the votes - 23.9% compared to 21.4% for Le Pen - in the first round of voting and markets took this as a strong indication that he would now go on to win in the final vote next month.
24 April 2017
Despite all this, continental European stock markets made modest progress in Euro terms in 2016 (while delivering strong gains in sterling terms) and have continued to rally in the first quarter of 2017.
21 April 2017
That said, it makes complete sense from her point of view for a few reasons. First, it will allow her to negotiate the terms of Brexit without the distraction of an election within a year of the talks concluding. A decisive win would allow Mrs May to neutralise pressure groups on both wings of the party who might otherwise use the current slim parliamentary majority to force her hand. A bigger majority and a five year timetable before she needs to go back to the country will help her push for a smoother transition and, everyone will hope, a better outcome.
20 April 2017
Yet the President’s comments to the Wall Street Journal last week centred not on the currency weakness of others but what he sees as an overly strong dollar¹. The timing may be significant. If the US could defrost relations with China, that might pave the way to a deal on North Korea.
After an encouraging run of quarterly results from Citigroup, JPM Chase and Bank of America, Goldman Sachs yesterday announced a rise in first-quarter profits which fell considerably short of analysts’ expectations.
19 April 2017
Are we at full employment?
18 April 2017
Prime Minister Theresa May announced this morning that she will table a motion in parliament this week to bypass the Fixed-Term Parliament Act that would otherwise bar an election until 2020. A two-thirds majority is needed in parliament to secure a new General Election.
April is not always cruel. A year ago it paid investors to look through the looming uncertainty of the EU referendum and remain fully invested. Many of us can reflect on an unexpectedly good year in the markets. The spring of 2015, however, was less forgiving. It would have been an excellent time to take an extended break as stocks fell for the rest of the year. It’s not unusual for Easter to trigger a change of direction.
We might call these the myths of passive management which appear to go against active investors’ instincts. They are supported by some fairly heavyweight academic work, not all of which has real practical value. Outside academia, there is a commonly peddled argument that given that statistical analysis shows that the average fund over previous periods does not on average outperform the broader market (after fees), therefore any given fund cannot be expected to outperform in future. This is simply incorrect logic.
13 April 2017
It’s not until he points out quite how well diversified the fund is in terms of its global reach that the response is more encouraging of the manager’s evident enthusiasm for “eating [his] own cooking.”
As well as my usual 10 minute round-up of the outlook for the main asset classes, geographical areas and investment themes, we got through 16 questions during last night’s broadcast. You can watch the programme for my full answers, but here’s a taster of half a dozen of them.
12 April 2017
Unsettling news may seem at odds with a relative calm in stock markets. World stocks are pretty much unchanged compared with a month ago1. However, we’re told that stock markets don’t like uncertainty, so should investors be more worried about the future? If so, is there anything they can do about it?
The temporary respite in price rises is largely down to this year’s Easter break falling later in the year compared to 2016. Airline tickets, sea transport, package holidays and hotel deals all tend to rise around Easter time. But the so-called ‘Easter effect’ will show up in April’s numbers, so expect an uptick in prices when inflation figures are published next month.
11 April 2017
Whether that’s by luck or judgement is an open question, but the direst economic predictions made after Britain’s vote to leave the European Union and then the election of Donald Trump as US President have not yet materialised.
10 April 2017
1. In the long-run higher ‘quality’ trumps its rivals, but the quality style tends to underperform in a rapidly rising market.
7 April 2017
With the title ‘Shaken not stirred’ it promised to be more Bond than bond, but in this instance the two converge and in the process paint a revealing portrait of today’s fixed income market environment.
IHS Markit, the data analyst, yesterday published its estimate for shareholder pay-outs in the first quarter, suggesting the total paid by companies in the FTSE 350 - comprising those companies that make up the FTSE 100 and FTSE 250 combined - will reach £20.7billion.
5 April 2017
No such training will be needed when the new 12-sided pound coin is introduced this autumn or when the polymer £10 bank note arrives in 2018. We know what our new, reduced-in-size currency will do, and that is buy a bit less than it did a year ago.
Cyclical stocks are closely linked to the performance of the overall economy, sectors like materials, consumer discretionary, financial services and real estate. Defensive stocks, on the other hand - in areas such as energy, industrials and technology - experience profits regardless of economic gyrations.
As we close out the first quarter of 2017, financial markets have once again shown their capacity to wrong-foot investors. During the first three months of the year, contrary to conventional wisdom, the top-performing stock markets have not been in the US, not even in a resurgent Europe, but in the emerging markets.
4 April 2017
Currently, the latter camp appears to be two-nil up in the game following the hard-charging markets in the aftermath of Brexit and the US election. I suggest that neither group is entirely right and perhaps investors should be watching a different match altogether.
All of these things matter. But arguably, the thing that matters the most to your money is the end of the tax year. This happens on the 5th of April. On the 6th, the new tax year kicks in signalling a number of changes that impact your personal finances from rising income tax thresholds, inheritance tax changes to new ISAs allowances and a tax relief tweak or two.
Those changes have made “drawdown” viable for a greater number of people. This is where a pension pot remains invested after retirement, with income taken from it.
On Wednesday, news agency Reuters reported sources “who are in, or close to, the Governing Council” of the ECB as asserting that markets had “over-interpreted” comments from its 9 March meeting. Investors had taken those comments as suggesting that the central bank was becoming more hawkish.
3 April 2017
In the short term there is a risk to sentiment which investors need to be mindful of, they say.
31 March 2017
Having previously declared that global warming was a hoax concocted by the Chinese to stymie American business, without even the caveat that he was referring to the man-made part, his move this week to roll back environmental regulations has surprised few.
30 March 2017
Brexit Secretary David Davis struck the opening chord on Monday, playing down estimates that Britain would have to pay something of the order of £50 billion to leave the EU1. Britain’s exit fee could be one of the first stumbling blocks in the process.
Once Theresa May informs the other 27 member states of the UK’s intention to quit the European Union, we have two years to negotiate the terms of this hugely complex divorce.
29 March 2017
The failure to “repeal and replace” the Affordable Care Act, known as “Obamacare”, with something acceptable to all corners of his own party, despite enjoying a Republican majority in the House of Representatives, was a blow to Donald Trump’s reputation as a deal maker. Furthermore, it has put a question mark over his ability to get other policies promised on the campaign trail enacted.
28 March 2017
The triggering of Article 50 this week and the European elections that resume in four weeks’ time in France are obviously important political events. Both also have significant investment implications. The opportunities they present to investors, however, are diametrically opposed.
The immediate and most visible effect of protectionist policies is higher inflation, as taxes on imports get passed on to consumers. This is particularly true in today’s interconnected world. Production chains span multiple countries, and any one product is usually an assembly of different components made in places like China, Japan, Mexico, Vietnam, and other manufacturing hubs.
Besides your morning alarm clock, the other clock that’s ticking quite loudly is the one that marks the rundown to the end of the current tax year. If fact, today is the ten day deadline, for you to make the most of your annual ISA and Pension allowance, and if you haven’t done so yet, it’s time to get on with it.
27 March 2017
Whether or not that holds for individual middle children (I write as one), there are signs that a whole generation of Britons are feeling “middle child syndrome”, at least when it comes to their retirement.
24 March 2017
Looking ahead to the next three years - and beyond - Nicholls, who joined Fidelity in 1996 as a research analyst, says that the consumption story in China will endure and intensify as a key theme.
Pushing back the state pension age to 68 from 2039 - seven years earlier than the current plan - will save the Government around £100bn. It’s a no-brainer for a cash-strapped country, so it is hard to see that the recommendation will not be implemented.
23 March 2017
The beauty of funds which invest in a range of asset classes like this one is that they should deliver a smoother investment journey than their single asset class counterparts. This fund also benefits from being able to invest in any part of the world.
Perhaps the nature of the latest rally has played its part. The FTSE 100 and, for that matter, the S&P 500 in the US, have both delivered “quiet” rallies to new highs this year, with none of the remarkable one-day climbs that might have driven headlines. By all means, these have been quiet rallies.
22 March 2017
Trump’s plans to repeal Obamacare - the biggest initiative of his presidency - have been scuppered by Republican party divisions, denting market optimism about the US president’s three-pronged promises involving tax cuts, infrastructure spend and deregulation.
One of the remarkable features of the now eight-year-old bull market is how grudging it has been. Share prices have risen to new all-time highs on both sides of the Atlantic despite a persistent belief that all is not well with the world. From an investor’s point of view this is actually helpful because it leaves plenty of buyers on the sidelines, sheltering in bonds or cash but ready to move into the stock market when the mood lightens.
21 March 2017
Inflation measures how quickly goods and services are rising. In the past month a number of factors contributed to the rise in inflation but the main factors include food, petrol, transport costs and recreational goods ranging from books to TVs.
During such periods of market volatility, I believe it is important to keep a clear head and distinguish between what we term a bond proxy and the wider market’s definition as they are very different. In this regard, investors have recently tended to label all secure dividend-paying stocks with defensive, low volatility, quality characteristics as bond proxies. At a broad sector level, this resulted in consumer staples, utilities, telecoms and healthcare all struggling over the second half of last year.
The blue-chip FTSE 100 index eased back this morning but remains above 7,400. This as the world frets about Trump, Brexit, inflation, rising rates and the rest.
20 March 2017
According to the Treasury numbers, the Government has collected almost three times the amount of tax than it had expected to as a result of new pensions freedoms introduced two years ago - £2.6bn versus an original estimate of £920m.
For an investor to find a way to sensibly, and flexibly, tap into all of these themes may seem nigh on impossible. But if you’ve spent almost three decades managing money over changing market conditions, you may find a way that works. Jeremy Podger manager of the Fidelity Global Special Situations Fund has done just this.
17 March 2017
The Federal Reserve, America’s central bank, has in recent times struggled to nudge investors in the right direction. The so-called ‘taper tantrum’ in 2013 resulted from a clumsy hint about future monetary policy tightening. More recently, over the past couple of years, the Fed has pointed to a pace of rate hikes that it has then failed to deliver. Investors have been left to make up their own mind about the trajectory of interest rates and that’s created unnecessary confusion and volatility.
16 March 2017
15 March 2017
It was a long and sad battle that, at last, produced succour for Ms Brewster. She had been living with Lenny McMullan for 10 years before his sudden death, on Boxing Day in 2009.
Peculiarly perhaps, in a world rocked by political upheaval and change, China and India might seem to offer investors some relative calm and stability.
The same might be said of elections of late, with the temptation to pronounce the Netherlands the bellwether of European politics proving hard to resist for some commentators, whatever the realities of the country’s fairly distinctive political culture.
While Prime Minister Theresa May can claim victory as the path was cleared for her to launch the two-year process that will see the UK leave the EU, we know for sure that that is only the start of a process that will certainly result in the end of the European Union as we know it, but will also spark a whole new level of uncertainty in terms of where that leaves Britain.
14 March 2017
To perform as an investor, you have to get a lot of things right at the same time. Picking the right stocks is obviously important. Being bold when others are fearful, and vice versa, matters too, even if ‘time in the market’ tends to trump ‘timing the market’. But perhaps the most important determinant of investment success is making a handful of big calls right - investing in the right country or sector can make all the difference.
In a number of our investor meetings over the last few months, what has come across strongly is concerns about the Trump presidency, elections in Europe and Brexit negotiations. People are also very worried about what will happen if inflation picks up. Our base case is that any pick-up in inflation will be transitory, but the fact remains that the current investment environment is tricky. These structural stresses and strains in Europe, and political upheaval in the US are happening at a time when bond yields are low.
13 March 2017
Brent Crude oil was lower again today at $51.26 and West Texas Intermediate is below $50.
Since the recovery from the financial crisis began in 2009, the US market has enjoyed stellar gains, while Europe has been a perennial underperformer. In the US, political uncertainty seems to have dissipated with the Trump administration’s focus on growth seen as a boon for markets. In Europe, political risk and the rise of populism is casting a long shadow.
10 March 2017
The euro would bear most of the brunt of a Le Pen win, with euro to US dollar easily going to parity (and possibly beyond). French equity indices could be less affected given their global exposure. French government bond spreads should significantly widen, in-turn affecting peripheral European countries, with Italy, struggling under the weight of a banking crisis and leadership vacuum, particularly vulnerable. This would de-rail the European Central Bank’s quantitative easing ‘trimming’ strategy to cut the level of monthly bond purchases but remain in the market, potentially hastening the scrapping of the capital key.
No one knows this better than Philip Hammond who yesterday pledged millions of pounds to develop solutions to high tech challenges including artificial intelligence and robotics, next generation batteries and new techniques for manufacturing medicines.
9 March 2017
8 March 2017
Philip Hammond is dry but self-deprecating and funny. He even poked fun at his nickname, Spreadsheet Phil, as he rattled through the traditional list of financial projections. His sense of humour was just as well, because there was precious little else in this most neutral of budgets.
In the past, mergers and acquisitions were often about buying growth when your own business had matured and growth had begun to wane. It was a way of building market share and growing profits without having to wait for them to come to you organically over the years.
7 March 2017
Asia, like other emerging markets, has historically attracted a significant political and corporate governance discount to developed markets, but is this still justified in 2017? Clearly, the external environment across the developed world has become more uncertain, but what shouldn’t be lost among the headlines on Donald Trump and Brexit is the fact that Asia itself has made important steps to promote a more stable economic and political backdrop.
Finding money for under-pressure health and social care services will be a priority, along with keeping borrowing and growth on track amid Britain’s exit from the European Union.
Which has been the better investment over the past 20 years - the Chinese or the US stock market? Until I looked, I would probably have said Wall Street. It’s human nature to over-weight recent data and, as last week’s new all-time high for the Dow Jones index confirmed, the US has led the pack since the financial crisis. When I conducted a quick straw poll of my colleagues, however, half of them opted for Shanghai. China’s economy has been transformed over the past couple of decades - it’s not unreasonable to assume that this might be reflected in the performance of its stock market.
Tax relief on the money you pay into a pension remains, for the time being, linked to the income tax you pay. So the highest earners are offered the largest potential benefit.
When Philip Hammond opens up the red briefcase on Wednesday he will be facing a unique challenge: delivering a Budget speech with just weeks to go before the likely trigger date for Article 50. This entrepreneur turned bean counter faces a mammoth task: repair the country’s finances while keeping the ship steady.
6 March 2017
Just a few months in to 2017 and it seems corporate M&A activity is back on the boardroom table. It’s too early yet to say whether we’re heading back into the sort of deal-making that we saw in the second-half of 2015, when worldwide global M&A deal values rose to the highest they had been at since 2007. But activity this year already looks set to be higher than the substantial slowdown we saw in 2016. But then the major economic and political uncertainty we saw last year couldn’t help but put a dampener on corporate activity.
In running the Fidelity MoneyBuilder Dividend and Enhanced Income funds, my strategy is very much on investing in high quality cash-generative companies with a strong and growing dividend. This focus on income-generating stocks and sectors has weighed on performance relative to the broad FTSE All Share Index in recent months. However, both funds have continued to generate positive absolute returns for investors and we have also been able to grow the income distribution to shareholders.
3 March 2017
Because according to a new study, a bottom-up approach - picking the most attractive stocks regardless of industry or country - is what delivers the lion’s share of outperformance.
Shares in Snap, the owner of messaging app Snapchat, opened at $24, up from the $17 the group priced on Wednesday evening.
The Resolution Foundation says that stronger tax receipts and a broadly resilient post-Brexit vote economy will deliver the Chancellor a £29bn windfall in his Budget.
2 March 2017
Neil Woodford, manager of wildly popular funds for Invesco Perpetual previously and now the company bearing his name, will take the reins of the brand new Woodford Income Focus Fund later this month.
Reports from the central bank’s regional offices that contribute to the Beige Book suggested a relatively robust state of affairs. There was particular mention of a tightening labour market and shortages of skilled workers, like engineers and IT specialists. All this against a backdrop of “modest to moderate” economic growth1.
That represented progress of sorts. Although it does say something about how low the bar has been set that ‘President avoids gaffe’ is a cause for celebration.
1 March 2017
Since April 2015, the options for how you access your retirement cash has been opened up to more people. We’re talking about “defined contribution” pensions here, the ones that you pay into, perhaps alongside an employer, with tax relief on contributions that are then invested to grow until the money can be accessed from age 55.
The event promises to be as intriguing as the man himself - there’s even an International Newspaper Tossing Challenge with attendees invited to take on the Sage of Omaha, who as a teenager delivered about 500,000 papers. Attended by around 40,000 people, the event significantly boosts hotel and retails sales in Buffett’s hometown Omaha and is watched online by over a million viewers with another 11.5 million catching up later via replays.
28 February 2017
The Queen Elizabeth II Bridge was opened in 1991 to complement the existing tunnels joining Kent and Essex, with drivers paying a toll for each time they crossed. The original contract to build the bridge was granted on the condition that tolls be abolished in 2003 but, as users of the bridge today know, that plan was quietly dropped. The ‘toll’ became a ‘charge’ and drivers have continued to pay ever since.
27 February 2017
Researchers from Imperial College London last week forecast that life expectancy for girls in South Korea would exceed 90 by the year 2030. A 65-year old Korean woman in 2030 will expect to enjoy another 27.5 years of life. They are remarkable predictions, but the most surprising thing about them is that anyone should be surprised. The thing about demographic changes is that they are perhaps the only things, other than death and taxes, that we can really count on.
20 February 2017
15 February 2017
23 December 2016
22 December 2016
21 December 2016
20 December 2016
19 December 2016
15 December 2016