December 2016
Message from the CEO
A year is a long time in financial markets. It seems just yesterday it was January 1st 2016, yet here we are preparing for another Christmas period in the midst of a “Santa rally”, and possibly the most bizarre year on record. At the beginning of 2016, after an initial Fed rate hike (the first in 10 years!), we were set for a worrying year. What was not to concern us? • The dollar was very strong already (and that was pre Brexit!) • Economists and pundits were torn between calling a global contraction or small expansion • Oil had...
Read the Full Note
December 2016
Trick Question - Yes or No?
It’s the start of a new month so it must be time for one of the world’s top G7 countries to throw the public yet another destabilising and uncertain vote threatening to undermine capitalism, end western civilisation and unleash a plague of locusts. Forgive the sarcasm but we are, of course, talking about Italy or, to give this latest referendum its popular name in the market, Exitaly. In a nutshell, Italian voters are being asked by the Italian Prime Minister in this Sunday’s referendum to give a straightforward yes or no answer to this simple question: "Do you approve a...
Read the Full Note
November 216
The markets aren’t having it
Capital is a coward. At the first sign of trouble (everyone calls it “uncertainty” these days) it bolts for the door. It’s what the majority of the media and politicians warned us would happen if Trump won. It sounded plausible and all appeared to be going to their script in the small hours of last Wednesday morning when it became apparent that Trump’s victory was nailed on. But the markets weren’t having it. Asian stock markets were the first to open. Entering stage left, Japan stepped forward to fulfil its familiar role as the nervous stock market prepared to sell...
Read the Full Note
November 2016
Trumped by the state of Florida
The US electorate have spoken and the world is a more volatile place this morning. Is it the dawn of Mad Max.....or simply the dawn of a new era in politics? For the second time in 2016, and after the shock of the Brexit vote, an electorate has overturned the establishment and made it clear (well by a simple majority) that the road ahead needs to be considered differently. It lay ultimately with the state of Florida to give the Free World its new leader – who would have thought that? What does that mean for TAM investors? Is it...
Read the Full Note
November 2016
Welcome to Florida
“Good morning. I’m Al Gore and I’m the former next President of the United States.” - Al Gore, Tokyo, 2006 As ice-breakers go, I can’t ever think of a better one as we took our seats at a breakfast meeting with Al Gore. It was six years after he lost the 2000 US election to George W. Bush in a controversial and dramatic climax but the joke was still not lost on those assembled. The result could not have been much closer. The election essentially came down to the Florida vote count. Of the 270 electoral votes needed to win,...
Read the Full Note
November 2016
Clinton - Off the hook?
After the dust had settled on the third presidential debate, Hillary Clinton had secured herself a comfortable 8% lead in the polls and global markets broadly relaxed any thoughts about Donald Trump taking residence in the White House. However, as is often the way, the story didn’t end there. FBI director James Comey, in what appears to be contravention of the US justice department, decided to surprise markets by announcing the FBI would re-launch its investigation into Clinton’s use of her private email server. All this, with just 10 days to go before polling. Just two days before the election,...
Read the Full Note
October 2016
Playing the endgame
"The problem with political suicide is that you live to regret it" - Winston Churchill Just as investors of a nervous disposition were gearing up to hedge themselves for a Trump victory, it seems his prospects have waned somewhat following the release of the Access Hollywood tapes in which Donald Trump made lewd comments about women. His subsequent appearance in the second presidential debate with Hillary Clinton started well enough with an apology from Mr. Trump but soon descended into an aggressive war of words culminating in even more controversy when he suggested that if he were president, Hillary would...
Read the Full Note
August 2016
Riding high under a clear blue sky
This time last year, the UK’s stock market was at a similar level to today and pretty much where it had been sitting calmly for over a year. International bond and currency markets were relatively sanguine; all playing along nicely to the script written by the US Federal Reserve. Improving economic data, supportive central banks and some temporary relief from eurozone woes, courtesy of the sacrosanct European Commission holidays, added to the general feeling of a classic stock market summer daze. All that ended with the unexpected Chinese currency devaluation which shook markets out of their slumber, sending stock markets...
Read the Full Note
July 2016
Property funds - The gate escape
We received news yesterday of the suspension of trading in the M&G Property and the Standard Life Ignis UK Property funds. The managers of both of these funds have taken the decision to close, or “gate”, the funds in order to stop redemptions depleting the cash in the funds to a point where they would become forced sellers of property assets; the real bricks and mortar properties in which they are invested around the UK. This is the most direct action that a fund manager can take to protect a property fund and comes on top of a move to...
Read the Full Note
June 2016
Osborne sets the record straight
“I should think it hardly possible to state the opposite of the truth with more precision” - Winston Churchill. They say economists add a decimal point to show they have a sense of humour and so maybe they had a hand in George Osborne’s forecast that, within two years, the UK would face a recession and minus -3.6% contraction in GDP. Given this precision, it’s surprising that the figure has already been withdrawn, along with Project Fear, and that we should instead raise our eyes to the sunlit uplands befitting the world’s fifth largest economy. From the moment George Osborne...
Read the Full Note
June 2016
OUT!
“Look, I think it’s entirely sensible for David Cameron to stay on. But as long as he’s gone by 10am, I’m happy.” - Nigel Farage 7am, 24th June 2016. “I will do everything I can as Prime Minister to steady the ship over the coming weeks and months but I do not think it would be right for me to try to be the captain that steers our country to its next destination. This is not a decision I've taken lightly but I do believe it's in the national interest to have a period of stability and then the new...
Read the Full Note
June 2016
Echoes of a proper crisis
When I heard on the radio yesterday morning that a “famous currency trader” had warned that if Britain voted to leave the EU, Sterling would suffer a fate even worse than Black Wednesday in 1992, I did wonder how old this trader must be. Almost everyone I knew who was trading anything back then has long since hung up their red braces for an easier life. I pondered a list of likely suspects while I waited for the story to come around but it turned out they were talking about none other than George Soros and, at 85, they don’t...
Read the Full Note
June 2016
Blue on blue, red on red and the man on the Clapham omnibus
“Brexit camp in turmoil as leading Tory defects” – Front page headline, The Times, first edition, 20th June 2016. “Brexit camp divided as senior Tory walks out” – Front page headline, The Times, second edition, same day. It seems there might have been a little confusion over at The Times at the weekend following their headline announcement of Baroness Warsi’s defection from the Leave to Remain campaign. Some prominent members of Leave said they were unaware that she was a Brexit supporter in the first place although George Osborne seems to think she was. It wouldn’t be surprising if he...
Read the Full Note
June 2016
Playing it safe
It’s often the case that some of the most thought provoking comments come from unexpected sources. It was actually the director of bonds at Rathbones, who also sits on the Bank of England’s Debt Management Office consultation committee, who reminded me the other day of the simple fact that in every year since the Global Financial Crisis (GFC) of 2008, the FTSE 100 Index has fallen once at least 10%. That’s a sobering thought but closer examination of the data is more unsettling. From 2008 to 2011, there were losses during the year of between minus -17% and minus -33%....
Read the Full Note
June 2016
Bremain
The last day of May has usually been a time to sharpen one’s pencil to write a review of whatever what was to blame for the often recurring stock market phenomenon of sell-in-May-and-go-away. Not this year. There’s almost nothing at all in the newswires for markets to get excited about. Indeed, even the keenest cricket fan might’ve been surprised to see the front cover of Tuesday’s FT leading with England captain Alistair Cook becoming the youngest player to score 10,000 runs in test cricket. This takes nothing away from overtaking Indian batting legend Sachin Tendulkar, a mere five months older...
Read the Full Note
May 2016
Mixed emotions
In short, there’s a lot going on. From an international perspective, a lot of what’s happened is down to the reversal in the strength of the US dollar resulting from a U-turn in Federal Reserve interest rate policy. This was borne of an overly hawkish Fed outlook not shared by the bond markets. Something had to give one way or another. The turn in the dollar immediately alleviated the pressure on US dollar indebted emerging and Asian markets, which had struggled last year, but shifted the problem to Europe and Japan, both of whom seek a weaker currency to stimulate...
Read the Full Note
April 2016
Review of Q1 2016
The year started with a number of new statistical records, not least of which was the US stock market suffering its worst start to the year since 2001. Of course, as is almost always the case in today’s globalised world, the concerns stretched further afield and, in this case, China was held up as the culprit with their central bank being accused of indulging in the new cold war of currency manipulation. Coming so soon after the admission of the Renminbi to the global SDR basket of trading currencies, this was an unsettling time for stock and bond markets and...
Read the Full Note
Message from the CEO
“When all think alike, no one thinks very much” - Albert Einstein. With 2015-2016 leaving nowhere to hide for fund managers accused of being index trackers, and following on from my recent missive on the failures of index trackers in today’s market environment, one hopes that clients are quickly wising up to what they are paying for, and what that service truly represents. Index trackers have their place as I mused previously, but after the recent research on construction of portfolios was presented by Lang Cat Consultancy and CWC Research, featured in Investment Week last month, one might be forgiven...
Read the Full Note
February 2016
Universally Challenged - Who is smarter?
"[Central Banks] think they are smarter than the market" – Jim Rogers, February 2016. From ZIRP to NIRP – (From zero to negative interest rate policy). It seems scarcely believable now but after the Federal Reserve finally raised interest rates back in December, following years of speculation about the timing of the hike, we now have more central banks than ever running a negative interest rate policy, or “NIRP”. This is unsettling for a number of reasons. First and foremost, as an experiment, this has never been tried by central banks before and opinions on the consequences range from a...
Read the Full Note
5th February 2016
In for a penny, in for a pound
2015 was all about the US dollar strengthening ahead of an anticipated interest rate hike which eventually came in December. All the major currencies weakened against the US dollar as a result and I had very few discussions about Sterling in particular, by which I mean from a Sterling perspective. This was because it didn’t really lose that much ground. Firstly, the main economic indicators were either similar to the US or moving in the same direction and secondly, there was a consensus view that the Bank of England would not be far behind the Federal Reserve in hiking rates...
Read the Full Note
January 2016
So far, so bad
It’s a good week for top drawer statistics and there are so many, it’s hard to know where to start. Sterling has hit a 5 ½ year low against the US Dollar. The Eurostoxx 600 Index has had its worst week in four years. The FTSE has posted its worst first week since the year 2000. The Japanese stock market has had its worst opening week since 1949. And trumping them all, the New York’s S&P500 has put in the worst 5-day start to the year…ever. All very interesting, but to put some perspective on the moves, and because things...
Read the Full Note
12th January 2016
Message from the CEO
Flat is the new up, and why the ‘pursuit of mediocrity’is getting you absolutely nowhere. A Happy New Year to one and all. You may be forgiven for thinking that 2015 has just been another one of those interminably drab years for investment - like 2013 and 2014? It may be for some, but in 2015, TAM portfolios were broadly up 5% on Balanced accounts and nearly 7% on Adventurous Growth. The FTSE 100 indices are lower, the FTSE All Share is lower, the fixed interest markets are lower, and corporate Bonds have had a sticky year with doom and...
Read the Full Note
January 2016
TAM's Outlook for 2016
It would be easy to convince anyone that 2016 is going to be more difficult than last year. The list of dreads threatening to derail stock and bond markets is pretty much the same as before but we are at least closer to understanding the end game of the post 2008 “Great Financial Crisis” as the US Federal Reserve start what they believe to be a year of interest rate hikes. The economic backdrop is more challenging than a year ago and more difficult to predict. In recent years, we have grown used to the intervention of central banks and...
Read the Full Note