Markets Now Bored

Markets shrugged off news of a six-month delay to the UK’s deadline to depart from the European Union, with markets now “bored of the constant drama” associated with Brexit, although asset managers warn the country’s economy will continue to suffer as the process is dragged out.

The UK has been set a 31 October deadline for its departure from the EU, after talks in Brussels on 10 April left the country on course to take part in May’s European elections or risk leaving with no deal on 1 June.

Brexit can happen earlier than either date if Parliament is able to ratify the withdrawal agreement, which has already been heavily defeated three times.

The FTSE 100 was down by just over 0.1% and the FTSE 250 was up by 0.5% at the end of the day following the agreement (11 April). Meanwhile sterling was flat against the dollar and the euro, as it moved up 0.4% against the Japanese yen.

Head of flexible bonds at Vontobel Asset Management Ludovic Colin said the limp reaction reflected the fact that “markets are bored of the constant drama and the fact that Brexit keeps getting pushed back via successive extensions”.

He added: “The price of insurance against a bad scenario has collapsed, meaning markets do not feel the need to protect themselves against an impending storm.

“The market has worried a lot on a hard Brexit, and now that solution has been removed in the short term, the sector may now focus its attention on other immediate risks.

However, Colin also warned that “the cost to the UK economy will continue [and] for businesses, this added period of uncertainty is very negative”, while “the direct impact on the UK economy and the fact the global environment is deteriorating will probably make investors very cautious about investing in UK assets over the coming months”.

Colin added that while predicting which assets are set to be most impacted over the coming months was “too hard”, an “even more aggressive political game in Westminster” will weigh on sterling and UK assets compared to the rest of the world”.

Schroders senior European economist and strategist Azad Zangana said the impact of the “ongoing uncertainty” could result in the Bank of England (BoE) keeping interest rates on hold until “November or beyond”.

Zangana explained: “The BoE has been keen to raise interest rates to more normal levels, only to be held back by Brexit-related downside risks to the economy. 

“There is now a possibility that, with a longer delay, the BoE decides to hike in May, but it is more likely to wait until after Brexit has been settled.

“This suggests that our forecast of a rise in August will now need to be pushed back further, potentially to November, or even later given our view of the possibility of yet another extension beyond October.”

UK economist at UBS Global Wealth Management Dean Turner said “sluggish economic growth is likely to continue until the [political] impasse is broken”, adding that removing the initial 12 April Brexit deadline “will be welcomed by the markets but any excitement is likely to be short-lived”.

Do you Network – Need help -Some ideas for you.

Ah, networking – the joys of talking to loads of strangers…

I thought this week that those of you who are new to Networking or who are considering starting, it might benefit from a few ideas.

It is daunting.  But here are four things to say, to make it easier:

#1 – “Mind if I join you?” This is the easiest way to start a conversation  Approach someone, and ask it – they’ll welcome you in. Trust me nobody will say “I do mind – go away!”

#2 – “What are you responsible for?” When you ask this question, their reply tells you their main focus – “To generate sales”, “To keep our clients happy” etc. Once you know this, it’s easier to say things you know they’ll find interesting and useful. 

#3 – “That sounds hard!” This one’s a belter. You’ll meet people who do things that you’ve no idea about. And when you say “that sounds hard”, they (1) feel flattered and (2) talk more about what they do.  Two great outcomes!

#4 – “Tell me more?” The more they speak, the easier it is. So, when they tell you something, ask this – and they’ll tell you more!


Action Point
To get more from your next networking event and to reduce your nerves – use some of these phrases. 

Obviously, the more you prepare before you go in, the more you’ll get out after it.

Westerton Male Voice Choir

Just to prove that there is life beyond Financial Services, I thought I would share with you one of my hobbies namely being a member of Westerton Male Voice Choir.

That’s me in the Back Row 2nd from the left and we’re performing “Highland Cathedral”. The clip comes from one of our practice nights. Please click on the Link below and have a listen. A really stirring piece I’m sure you will agree.

Hope you enjoyed it.

Five things Investors should not fear this year

Terence Moll is a chief strategist at Seven Investment Management and a well respected voice in financial circles.

In an Article he wrote recently in New Model Adviser, he muses over why investors should not be worried? He thinks fears are exaggerated – and they actually have plenty to be cheerful about. Here are five things he says investors should not fear this year.

A US recession

The big question for global growth is the US. It is the developed world’s growth engine at the moment, and US recessions have often been associated with equity crashes in the past.

Although some commentators fear a recession in 2019, he is not overly worried.

The US is currently growing at around 2.5%. From these levels, it normally takes at least two years for growth to turn negative.

Moreover, the usual imbalances associated with recession – soaring inflation, a housing crunch or a commodity price shock – are largely absent. He thinks a US recession is unlikely before late 2020, at the earliest.

Trade wars

So far, tariffs have been implemented on around 2.5% of world imports, corresponding to less than 0.6% of world output. They are certainly a negative for growth, but on a tiny scale to date.

Although they could get much worse, the US and China will reach a compromise that will not harm their economies (and their people) too much.

The UK

Brexit is a shambles and investors are worried the UK could end up exiting with no deal in place, which would be a really terrible deal, in March.

But it is in the interests of both the UK and the EU to reach a broadly sensible outcome. He thinks a deal that is not too painful for the UK will materialise.

A Corbyn government

Jeremy Corbyn’s bark is worse than his bite. If he came to power he would be so constrained by the range of views within his Labour party, and by business pressures and economic restraints, he would not be able to do much that would derail the UK’s financial market.

Volatility

Markets are volatile. They move up and down. Whenever markets fall, commentators concoct stories to explain why they have fallen – stories that are often alarming and are frequently complete inventions, with no basis in fact. It is best to ignore the headlines.

Markets were exceptionally quiet in 2017. Volatility returned to more normal levels in 2018, and he expects more of the same in 2019. He says this is not something investors should worry about because it is simply how the financial world works.

Computers are wonderful. Or are they?

“The computer is incredibly fast, accurate and stupid.  Man is unbelievably slow, inaccurate and brilliant.  The marriage of the two is a force beyond calculation” .

So said Leo Cherne, an American economist.  A great quote.

And there are lots of examples of this ‘marriage’ achieving phenomenal things.

But sadly, from a communication angle, computers/tech often cause bad things too:

  • Too impersonal. Tech makes it so easy to communicate, that we often email when we should be phoning, have headphones in when we should be listening, etc
  • Too controlling. We often say “I don’t have time”. But that’s because we’re slaves to our computer diary – we do what it says. And if it’s full, we say there’s no time to do other stuff
  • Too addictive. We check our phones too often – prioritising people who are not in the room, over the people who are. We see this at work, at home, in the bedroom…

But as Leo Cherne says, we are the brilliant ones; not computers. So be in charge:

  • Call people – don’t email them
  • Diarise your priorities (family time, important meetings etc) and make everything else fit round them
  • Leave your smartphone in your bag

Are you in charge of your technology?

Or is it the other way round? If so…

The Perils of Offensive Tweets

Nothing to do with finance but…

Here’s something we all know, but is important to be reminded about…

Two of the most successful films in the past few years are Disney’s ‘Guardians of the Galaxy’ films.

Both have made a lot of money, been widely praised, and have turned the actors into household names.

But the films’ creator/director James Gunn was sacked from making the next sequel – because of offensive tweets he sent 10+ years ago.

And this reminded me…  if someone like him – who’s made his employer £billions – can be sacked for this sort of thing, anyone can.

I’ve spoken with my kids about this, and how essential it is to remember that anyone can see what they post – not just the people it’s intended for.

I’ve told them about the times when my company has interviewed people and been impressed by them, only to check their social media pages and realise they aren’t professional or appropriate enough for us.

So this Tip is just flagging something we all know. But it’s worth reminding ourselves about. And/or telling our children and newer colleagues. As I said to my kids…

… assume the ‘Person You Most Want To Impress’ read everything you’ve posted – would there be anything you wished they hadn’t seen?

… assume your biggest ‘enemy’ read it, is there anything there they could use to hurt you?

If so…

Action Point

… remove it now!

 

(With acknowledgement to Andy Bounds who reminded me of this maxim.  See andybounds.com)