We live in an age where there is a constant danger of information overload and as you will recall from some of my earlier News and Views comments, I am always suspicious of headline grabbing news items, with a preference to try to identify the core elements of any story
We are continually bombarded with commentaries and presentations from across the industry and it’s fair to say I’m quite choosy about those I decide to read in any detail.
One such summary though came this week from Investec, who are one of the groups we work with and the author of that newsletter, John Wyn-Evans, who is Head of Investment Strategy at Investec, could well be moving house because he’s having a clear out of his loft and as he said, sorting through the accumulated memorabilia and family heirlooms, or “junk” as others might see it, he unpacked a box that had been packed many years ago and rather than bubble wrap, back in the day it was old newspapers that were used to protect things. He referred to a copy of the Sunday Telegraph dated 8th March 1970 and an article that had been written by Ludovic Kennedy, which was about a book that had been written about Richard Nixon’s presidential campaign. One quote from that article struck me, which was ‘There’s nothing new in the notion of a Politician putting himself in the best possible light, adjusting his tie and clearing his throat and telling half truths and concealing what is awkward. It’s what Politicians do everywhere all the time.’
Fifty One Years later, I think it’s fair to say, nothing has changed in this regard!
I think that arguably, over the last week, we have seen evidence of this with all 3 of the main party leaders in the UK and in Scotland, displaying varying degrees of this phenomenon.
Boris Johnson is riding high in the polls overall following success in the Hartlepool by- election and local council elections and although lockdown rules are being eased in the UK, the fact that his key advisers are telling him that the rate of easing of lockdown should be accelerated, which he is choosing to ignore, is politically driven to ride the feel good factor from the Covid vaccination programme for as long as possible – ignoring the fact that the early days of managing the Covid crisis was shambolic at best, which is now long forgotten in political circles.
Looking across the House of Commons, Sir Keir Starmer has had a Shadow Cabinet reshuffle following the disastrous election results, which I heard described by one commentator as having little more effect than rearranging the furniture in the living room!
Sir Keir was quoted as saying he takes full responsibility for the results and yet, appears to do anything but. Don’t get me wrong, I think he seems a genuinely nice person, however he has a mountain to climb to reshape the Labour Party if they are to provide meaningful and effective opposition.
North of the border, Nicola Sturgeon was saying prior to the Election that if the Scottish National Party achieved an overall majority, she would take that as a mandate for a second independence referendum. They didn’t get the clear majority, falling in fact, just one short, but nonetheless, she said that this still gives her a clear mandate in any event and points to the UK leaving the European Union as being against the wishes of the majority of Scottish voters, with the implication that re-joining the EU for an independent Scotland would be a natural outcome, but is virtually silent when it comes to the tricky questions as to exactly how the books will be balanced and what post-independence implications there might be for the Scottish people. No mention of the fact the EU may not actually welcome Scotland in any event!
To my mind without doubt, we are still witnessing half-truths and concealment of what is awkward across the political divide.
(Hopefully, in expressing those views, I have not offended anyone, because I do not have any strong political views other than a mistrust of politicians in general and their self interest.)
It is pleasing to see how the vaccination roll out continues apace in the UK, with over 53 million vaccine doses now having been delivered, with over 1/3rd of those being second doses.
Clearly, this is being reflected in all the other statistics with only 4 deaths in the UK being recorded on Sunday, all of which were in Wales, meaning that Scotland, Northern Ireland and England had zero deaths that day. I read one article the other day that said technically, the pandemic has come to an end in the UK, albeit that it remains prevalent globally of course.
There is still quite a large proportion of the UK population for the 18 – 40 age group to receive their first jabs, but hopefully, we will see the trend continue with the Government stated target of all adults being vaccinated by the end of July.
I think there was a lot of disappointment expressed in the “green list countries” for overseas travel from the UK that was announced at the end of last week, with Portugal being the only main holiday destination for UK holidaymakers making the list. It’s hardly surprising that there has been a stampede of people trying to book travel to Portugal. In theory, it will be another 3 weeks before any other countries are added to the green list, but of course, that may change.
Turning now to the markets and we have seen over the last few days some volatility with big reductions in market values, which have been largely driven by the concerns over the re-emergence of inflation. This tends to demonstrate the sensitivities that can affect markets and as I read in one article, 12 months ago, we had an oil price that had gone into negative territory and as so much of the economy relies on transport, it is little wonder that an inflationary impact would be felt 12 months on, when oil prices have largely recovered. The traditional method of controlling inflation is manipulation of interest rates and if inflation was to become a factor, then increasing interest rates may well follow at some point, but no time soon in my opinion.
The world often looks to the US for trend setting and the latest inflation figures in the US were announced yesterday with quite a jump, more so than had been expected. Last week, the former Chair of the Federal Reserve in the US, Janet Yellen, suggested in an interview that interest rates might have to rise if growth and inflation started to accelerate too quickly. In itself, that was quite a natural and logical comment and yet it sent shock waves through the markets until she then executed a rapid U turn by saying that it was actually none of her business and said that the independence of the Federal Reserve should be respected. The main view seems to be that the impact of inflation is not a new trend, but rather a relatively short term blip, but nonetheless, one to be kept on the radar.
In fact, Jerome Powell, current chair of the Federal Reserve kept US rates at 0.25% and commented that he is not even thinking about, thinking about interest rate increases at the moment.
Whilst this all manifests in short term market volatility and reduced values, above all else, the medium and longer term views remain unaltered that we should see sustained economic recovery in most global areas, although there will be on-going uncertainty as far as China and India in particular, are concerned.
As always, stay safe and we will keep in touch.
Richard, Chris and Lesley