Investment Note

Market Insights 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.

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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. 

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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.

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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.

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Welcome to Florida

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.

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Clinton: Off the hook... or is she?

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...

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Playing the endgame

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.

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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.

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No time for gambling on red or black

When Michael Gove, co-convenor of Vote Leave, was woken in the small hours by his wife to be informed that the UK had voted to leave the EU, he apparently said “Gosh. I suppose I had better get up”. Indeed he did.  To say the result was unexpected is as understated as his waking words.

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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...

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Osborne sets the record straight

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. 

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OUT!

If it was yesterday’s rain that stopped people voting then God is a Brexiteer. The turnout at 72% was high but questions are being asked about the impact of heavy rain in key areas in London where some polling stations had to relocate. 

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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. 

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Blue on blue, red on red and the man on the Clapham omnibus

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.

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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...

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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.

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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.

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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...

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When all think alike, no one thinks very much

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.

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Universally Challenged: Who is smarter?

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”.

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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. 

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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. 

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