Survey Answers By The Score!

Since our last News & Views, I have issued our client survey and I wanted to say a sincere thank you to everyone who has responded already. The results are already looking quite interesting, and I wanted to let you know that I will leave the survey open until after the Easter Weekend and this will enable me to include summary details of the results in the next News & Views.

I did want to address a couple of questions that have been raised already, one of which was to ask if our intention is to move toward online and technology solutions only and I can confirm this is not the case. We recognise both the importance of face-to-face meetings and the value that these bring to all parties and so, once lockdown is behind us, my plan is to resume face to face meetings where appropriate and I sincerely look forward to being able to do this.

However, there are some aspects of communication that for some, can be better dealt with either virtually or via online services and in those circumstances, we want to make sure that we are employing the most favoured solutions. The last thing we wish is to create any difficulty or frustrations that could undermine our relationship.

Business Continuity/Succession Plans

The other question relates to our continuity or succession planning and as it was tactfully phrased “none of us are getting any younger”. Firstly, let me say that we thoroughly enjoy the work we do and the relationships that we have with our clients. As with all services, there are aspects that we have to “put up with” which are less enjoyable, keeping abreast of the increased reporting the Regulators require for example, but overall, we are very happy. However, the question of continuity is one that I have been mindful of for some while, and one which cannot be ignored.

With this in mind, we do have plans in mind, all of which are designed to ensure continuity of service for clients, maintaining the same professional standards and having a solution in place, just in case “the big man upstairs calls my number” or at some point we wish to consider retiring – but that is not on the radar at the moment.

I am very pleased to confirm that we are taking the first steps this week and can announce that with effect from 1st April 2021, we have another Financial Advisory firm, coming under our regulatory umbrella. Martyn Bates and Lynne Campbell formed their company, Bates Campbell Ltd, just over 10 years ago and prior to that time, they worked for me in my old business, so we have known them for quite a number of years. We have stayed in regular contact throughout, cross referring business where appropriate and now they have become an Appointed Representative of RAFP.

This means we will be taking responsibility for their regulated activities going forwards and this is the first step towards merging our two businesses into one new group structure, which we hope will take place during the next year. We cannot be sure of the timescale because this needs regulatory approval and as such, the turnaround time is currently about 6 months, once we have fired the starting pistol! So, it will take some time yet, but we will keep you appraised as we progress.

Martyn and Lynne have already been appointed as Registered Advisers for RAFP and if you care to look, you will find them on the FCA Register already.

With a huge amount of consolidation going on in the UK financial advisory sector, this has created an opportunity for us to bring our businesses together and the plan is to grow the combined group further. We have a recruitment process underway to add 2 more Advisers this year and so there will be more people to tell you about in due course.

By creating this larger business platform, we are addressing the continuity concerns and with Martyn and Lynne, who subscribe to the same client relationship standards as ourselves, our principles and client service standards are assured for the longer term.

Post Brexit Position

It has been a while since I mentioned the B word, but it is still with us in many ways. In addition to our clients who are located in the UK, around 30% are ex-pat UK nationals who are living overseas, many of whom reside in EU countries. Up until the end of 2020, we had a regulatory cross border passport which extended our permissions to be able to advise clients throughout the EU. That is no longer possible and furthermore, the EU/UK Memorandum of Understanding that has been worked on is not going to result in a practical solution going forward. Whilst it is true to say we are able to provide advice to EU resident clients when they visit the UK, the timing is not always going to be right, and I am sure catching up with family and friends will be the main priority on those visits.

I looked into a number of possibilities and am pleased to say we now have a solution in place. You may have noticed the FEIFA logo on our emails and other stationery and this is a trade association - The Federation of European Independent Financial Advisers, of which we are a member. One of our fellow members, Beacon Global Wealth Management, are based in Europe and I have jumped through the regulatory hoops to the degree that I am now an Appointed Representative of Beacon, with full permissions to advise throughout all EU countries once again. For the individual clients who are affected, I will be writing separately with more details shortly, but I would just stress here, this will not result in any changes to the level of services or costs involved. We in turn, will carry some additional regulatory costs, but otherwise it will be business as usual.

As you will be aware, I do not usually write “all about us” but thought this news was appropriate to share with everyone. Please do come back to me if you have any questions or need clarification and next time, apart from the survey results summary, I will revert to some topical issues to include.

We hope you have an enjoyable Easter holiday and let’s hope we see some sunshine too.

As always, take care and we will keep in touch.

Best wishes.

Richard, Chris and Lesley

Like many professions, we have a requirement to complete at least 35 hours of CPD (Continuing Professional Development) each year and sometime that can be a chore but in many ways, it enforces a discipline which has a benefit beyond “ticking a box” for the Regulator.

This week, I have excelled myself, having completed over 7 hours covering a range of topics. The one I wanted to talk about now is related to the future for investment markets and the question in my title for today – is the technology bubble about to burst and linking in with this, to take a look at what is changing in the investment world as we hear more and more about ESG!

Without a doubt, the technology sector is what has been driving markets in the US to record levels and to a lesser degree, on a global basis. The result has seen the value of some of these Companies increase exponentially and the concern is that they become artificially inflated values, which sooner or later will result in the bubble bursting! However, as a backdrop, we also have to consider some of the factors which have been a driving force behind their success in what has become an ever increasingly changing environment.

The Covid 19 pandemic has played its part as we have seen with Companies like Amazon and other home delivery companies. Names like Deliveroo and Just-Eat finding success in the takeaway delivery sector and so on. These are not fads that are going to pass anytime soon but are rather an indication of how our future shopping and convenience expectations are going to evolve.

So rather than there being concerns about technology bubbles bursting, the sector looks set for further growth and in particular, the UK technology sector is likely to start playing catch up as it has been lagging behind really since 2016 when we had the EU referendum. Brexit is now behind us and although the fallout is only starting to manifest in some areas, other opportunities are being identified and explored.

Once again today, we have Minutes of the Bank of England’s last monetary policy Committee Meeting showing that near-term forecasts for the UK economy had improved further and despite increasing borrowing costs from increasing Gilt yields, they voted unanimously to keep interest rates at their historic low level of 0.1%.

With the increasing focus in many sectors on ESG, Environmental, Social and Corporate Governance, sometimes referred to as sustainability, this is likely to become a norm within quoted companies large and small. With this in mind, Fund Managers are now increasingly turning their focus to impact investing, where they can identify investment opportunities in Companies where they can have a direct impact on the outcomes of those organisations.

I am therefore of the view that a combination of impact investment strategies and technological advances will be key drivers in the markets going forwards.

Turning our thoughts now to the pandemic, what extreme headlines we have seen in the last few days from a number of European countries suspending delivery of the Astra Zeneca vaccine due to blood clot concerns and fear mongering that UK supplies will be severely reduced in April on the one hand, to the 25M+ first vaccinations in the UK which have been successfully delivered. As always, these headlines get exaggerated and as a simple soul, I have to question the logic of suspending a vaccine which potentially could have led to blood clots in a small number of cases; 37 people out of 17 million vaccinations delivered in the UK and Europe versus the infections prevented and lives saved. The World Health Organisation even stated that the actual number of blood clot incidents were statistically lower than would have applied in the same population number in normal times.

Yes, we should question these things, but this would seem to be unnecessary politics taking an extreme position at a time of global crisis – does it really help I ask myself or is this a smoke screen to deflect attention from something else I wonder?

As for the shortfall in doses in the UK, well that would all appear to depend on what starting point you choose! In reality, we are on course to deliver a first vaccination invitation to all over 50s by mid-April and the whole adult population by the end of July. The second doses will now start to accelerate as well, and they too are on track. My observations suggest it is the hoped-for accelerated rate of vaccinations which was being suggested in some circles a week ago which will not now manifest as surmised but otherwise we remain in good shape for an on time roll out.

And finally I say, beware the statistics – as was popularised by Mark Twain in the US, “There are three kinds of lies; lies, damn lies and statistics.” I think that says it all.

And to close, once again, well done the NHS and all the front line workers who have made this possible.

As always, take care and we will keep in touch.

Best wishes

Richard, Chris and Lesley

As the vaccination programme continues to roll out in the UK at an increasingly impressive rate, we also now have details that Boris Johnson has provided in terms of the timescale to apply to his roadmap out of lockdown.

Whilst I appreciate a lot of these aspects, and in particular the timing, are all subject to the statistics continuing to go in the right direction, the general view that I am hearing is a sense of relief that the “end is in sight.”

It is also good to see that the roll out programme is accelerating in the US and I had a message from one of our clients in Chile earlier in the week, saying that the programme there is well ahead of other South American countries in terms of their vaccination programme roll out.

Whilst there are concerns about variants and more aggressive contagion rates, we are in a much better place, but just have to hope that people don’t go too mad too soon!

Yesterday, we also saw the long-awaited Budget from Rishi Sunak, which in itself, was almost unique, but quite unremarkable in many ways!

Unique in the sense that the level of borrowing that has had to be entered into is on a relevant scale that was only equalled during the two World Wars, and therefore, no peace time Chancellor has had to wrestle with the levels of borrowing that have been required as a result of Covid 19. I felt that overall, he delivered a very logical Budget and whilst it left some people crying foul because their sectors were not specifically helped, overall, I think it was very good, given all the circumstances.

One sector that are unhappy is the airline and travel industry and I get the feeling that there is a certain element of presumption that the industry is big enough to sort itself out once the demand comes back from the general public.  In fact following the announcement of the road map, the on-line bookings with travel companies rocketed for travel after May 17th and this is a fair indicator.

I have some sympathy though for the airline industry because there is a similarity here with our own industry when it comes to the post Brexit rules, with Financial services largely being ignored from the trade agreement.  Once again, the belief is that the industry is big enough and robust enough to sort itself out, which it may well be, but it doesn’t make it easy!

Although we know that tax rises are inevitable, the combination of the freezing of personal allowances and tax bands for Income Tax and the introduction of higher Corporation Tax with effect from April 2023, do help to spread the pain that these will bring and certainly from a personal taxes point of view, the pain will grow over time, but as long as inflation remains low, the pain should not be too great.

Although increasing the headline Corporation Tax from 19% to 25% seems like a huge jump and in percentage terms it’s over 30%, it is worth remembering that this will still leave the UK with the lowest Corporation Tax rate of all G7 countries – albeit only just, and I think therefore, the UK remains a competitive environment for business and I am sure this would have been in the Chancellor’s mind because the last thing he wants to do is anything that would dampen business potential going forwards.

There were various other aspects that were frozen in terms of National Insurance and Inheritance Tax, but the one key area dealing with Capital Gains Tax was not addressed, albeit that I think this is a delay rather than the cancellation of a review – more to come on this is suspect in the Autumn.

On the flip side, the extension of the furlough scheme and increasing help for the self-employed has to be a positive thing, albeit that it leads to even more borrowed money that will need to be repaid in due course.

I also think, some of the underlying economic details that we have seen and forecast, suggest that the rate of recovery in the UK, both this year and next, is likely to be much higher than was previously anticipated and that the peak in unemployment numbers is likely to be substantially lower than those that were previously forecast prior to Christmas.

We are a long way from being out of the woods, but I think there are a lot of positive and encouraging signs that we are starting to see – long may that continue.

Acceleration of Technology

As so often happens in times of extreme circumstance, we see a number of things that can be accelerated beyond the pace that they were already following.  We’ve seen this in the High Street for example, with the closure of some very large brands in favour of on-line shopping.  This was a trend that was on the way anyway, but lockdown simply accelerated the process.

In our own industry, a similar influence is being seen with the use of technology. 

Even with our little firm, over the last 12 months, we’ve managed to maintain our meetings with individuals on a personal basis by doing so over the Internet, with our favoured solutions being Zoom or MS Teams.  This is because in addition to being able to see and hear the people you are talking to, we can share our computer screen so that we can share data that we can look at during the meeting, which is all very helpful.  It’s not as good of course as meeting face to face and sharing a cup of tea or coffee, but nonetheless, it is a solution that is becoming much more widely used all round.

I have actually been partly surprised, but delighted, with the take up rate that people have volunteered generally and the willingness to actually embrace technology, which has led to me giving some thoughts as to how we should be embracing more technology solutions to improve the services that we offer and sharing information etc.

With this in mind, I think it would be extremely helpful to obtain some feedback from all of our clients, and therefore, I am proposing to put together a short survey that I will circulate and ask you to consider completing.  This will really be looking at different types of technology that we might use and to again your opinions as to which would work for you and which you would be opposed to.

This will also give us the opportunity to ask one or two additional questions to make sure that we are providing clients with all that they would like to receive.

I appreciate though that surveys can be an absolute pain and therefore, if you would rather not be included in this process, perhaps I could ask you to reply to this e-mail, just simply to say that you would like to be excluded and I will make sure that you’re not bothered with that request when we are ready to process it.

I would anticipate being able to circulate this during the course of the next 4 – 5 weeks.

Market News

Before closing, I’ll just make a few quick comments about markets, which over the last months have shown some volatility, but are largely positive, albeit that we have seen some downward pressure on equity markets as a result of concerns over increasing Bond yields.  What does this mean – it’s an indication that returns on Government debt, like UK Gilts and US Treasuries, are increasing, which leads to the fear of the potential for increased interest rates.  I know savers would welcome the increasing of interest rates, but as far as the economy is concerned, and come to that when considering the mountains of Government debt all round, low interest rates for the time being are going to be maintained and therefore, I view the Bond yield jitters to be of a temporary nature.

It’s actually quite amazing how readily we accept huge amounts of debt and how this has changed over the years – my quote for today comes from Shakespeare in Hamlet ‘neither a borrower nor a lender be, for loan oft loses both itself and friend’ – those were the days!

As always, take care and we will keep in touch.

Best wishes

Richard, Chris and Lesley

It is remarkable to think that this time last year, we had heard about the first few cases of Corona virus in the UK, but little did we know what to expect! In fact, come next month, it’s been a full 12 months since I started writing News and Views and since that time, what a journey we’ve all had.

The feedback that I have been getting from people has been very encouraging and it’s pleasing to know that you enjoy reading my comments. If however, you would prefer not to receive them, do let me know and I can easily take you off the circulation list, because I know it can be frustrating if you’re getting correspondence that you would really rather not receive!

Some of the more recent feedback I have had was to comment that I have been saying a lot less recently about financial implications in favour of more general thoughts and largely, this has been because there’s been little new news to report on the financial scene. That having been said, as it has been a while since I have looked in any details, I will devote a bit more of this newsletter to the financial side of things.

Before doing so, I think I must make a comment about the sterling effort that the NHS are still managing to deliver in the UK and other front line staff and medical practitioners around the world as the roll out of the vaccination programme accelerates. The results being achieved in the UK are nothing short of phenomenal.

It must be disheartening when they hear in the news that the NHS is going to be under extreme pressure for another 6 weeks or so – they really do deserve some respite.

Of course, we are eagerly awaiting the announcements from Boris Johnson on Monday of next week, when he is set to lay out his roadmap for easing the restriction under lockdown, but as he has been encouraged by the professionals, it should be all about the data and not about the dates. It would seem that he has acknowledged this.

Whilst we accept that there are no guarantees, nobody wants to be bounced back into a further lockdown, and therefore, making careful plans for easing restrictions now will go a long way to ensuring this is indeed, the last Covid 19 lockdown – fingers crossed!

Certainly the most recent statistics are very encouraging and when you look at the graphs, these are showing a very good trend.

As you may recall, when we sent out our Christmas greetings in December, I said that we had chosen to do this by e-mail again this year and that we would be making charitable donations for an amount equivalent to what we would otherwise have spent on Christmas cards and postage. We did indeed make donations to both RNLI and the Kent Surrey Sussex Air Ambulance and I am attaching to this e-mail, copies of their letters of thanks that I thought you might be interested to see.

So let’s turn our focus now to the financial world and have a think about what’s been going on there!

The single largest factor that affects your investments is what’s going on in the financial markets and they in turn, do not like uncertainty. Winding the clock back 12 months, there were three main uncertainties that markets were trying to get to grips with, those being the Brexit negotiations, the upcoming US Presidential Election and the soon to become elephant in the room, the Covid 19 epidemic. It was the last of these that saw major markets globally drop dramatically in March last year by as much as 30% or more.

It’s fair to say that most of those uncertainties are now out of the way, with the finalisation of the Brexit transitional agreement and the US Presidential Election now being behind us, markets largely know what they are dealing with in both cases.

The Covid 19 impact is yet to be felt fully, but with the roll out of the vaccination programme, markets are already looking beyond the short term to where the economies may be going next. We even saw the Governor of the Bank of England last week, in an uncharacteristically bullish mood, stating that he felt that the recovery in the UK economy was likely to be significant after the end of the first quarter.

With such a large drop in March last year, and whilst all investments were impacted, why is it that our client’s investments did not drop to anywhere near the same degree and have largely managed to recover their values since?

The answer actually has a number of facets to it. The first of these is that when we look at Stock Market indices quoted in the Press or on the TV, they are typically talking about the larger Companies like the FTSE 100 Share Index looking at the 100 largest Companies in the UK, or perhaps the Dow Jones looking at the top 30 companies in industry in the US. It’s easy to be fooled or mislead by these headlines when in fact, your investments enjoy a much wider spread than simply the Companies reflected in the main indices.

Whilst Fund Managers cannot completely buck the trend of markets overall, it is their expertise in managing portfolios and spreading assets across many different asset classes that gives clients less of a roller coaster ride.

As global economies are beginning to recover, it is clear that we are going to see the evidence of winners and losers following all that has gone before. The obvious examples can be seen in the High Street with the likes of Debenhams and Top Shop disappearing and being snapped up by on-line retailers. It might be easy to say this is because of Covid, but in fact, the writing was already on the wall and the last 12 months has simply accelerated the process. The Companies that are innovative and adapt quickly to change will be those that survive and prosper, whereas those that choose not to, will go the same way as the dinosaurs!

Looking to the future, the general consensus is that we should see a return to sustained growth in markets as economies start to recover. Yes, unemployment is likely to increase, which will have a negative impact, but as some of the pent up savings that have accumulated over the last 12 months start to get spent, whether that’s in the High Street, on-line or on travel and leisure, this will all start to pump more money through the economy, which will help to drive the recovery. Job numbers will then start to increase again, and sentiments will become more optimistic.

Since the Summer of 2016, when the UK Referendum determined that the UK was to leave the European Union, UK Stocks have broadly been out of favour and indeed, we have seen the currency under pressure. Since the beginning of this year however, we have seen Sterling gain in strength against both the US Dollar and the Euro and my personal view is that this trend will continue. Furthermore, Fund Managers are looking forward to the opportunities that will unfold in the UK in particular in Equity markets, where they are expecting the UK to play some significant catch up.

Whilst there is never room for complacency, I sincerely believe that the worst of the recent tribulations are behind us financially and we should be able to look forward to a more positive picture unfolding over coming months and years.

I hope you will find these thoughts to be helpful and I would be pleased to hear from you if you have any specific questions you would like to raise.

Otherwise, it just remains for me to pass on our best wishes as always.

Richard, Chris and Lesley

I am sure you shared our sadness when we heard the news that Captain Tom had died at the age of 100 – (a pity he could not have made it to 101), but what a fantastic last few months he managed to achieve.

This time last year, the vast majority of us had not heard of him and yet today, he has global fame and is a household name to many. What irony that he should contract the coronavirus whilst he was in hospital being treated for pneumonia.

Not only did he raise a huge sum for the NHS, over £32M, but we have no idea how much additional fund raising was achieved by those he inspired. It was really good to see that he thoroughly enjoyed his fame and experiences and why not? So let me close by reminding us of his optimistic approach and to quote him “Tomorrow will be a good day.”

Our thoughts are with his family.

When Donald Trump left office, you might have thought we had seen the last of social media’s influence on financial markets and then last week, we had the GameStop story hit the headlines! This is where through social media, GameStop, which is an American video game retailer, found itself to be the target of would be private investors which saw the value of their shares increase more than 10 fold in just a few days. Great news for anyone who invested and then bailed out early, but what is the story really all about.

You could say that it was “the little man” fighting back against the Hedge Fund world and in particular, funds that were “shorting” GameStop shares. Shorting, is where a Fund Manager is taking a bet on the value of a share and specifically that it will be going down in value. In basic terms, they will agree to sell shares that they don’t yet own at a market price today, and the transaction will be due to complete on a given date. The hope is that the value of the shares will fall, such that they can be purchased at a price which is lower than the amount they have already agreed to sell for, which will net a nice profit for the Fund Manager.

This is something which is common practice in some parts of the investment world and is one way that funds can turn a profit, even in a falling market. The result of GameStop increasing in value so much and so quickly, wrong footed the Fund Managers that were “shorting the stock” who reportedly suffered losses of several billion US$. The Fund Managers cried foul but the regulator in the US, the SEC, said fair game!

The social media focus then turned to the silver market but that was rather more short lived. 1 – 0 to the little guy perhaps!

There were also fun and games last week with the EU trying to invoke Article 16 of the post Brexit trade agreement when they were faced with a shortfall of vaccine supplies. Only to complete one of the fastest U-turns seen for a long time. So what was that all about?

Well, it really comes down to politicising the roll out of the vaccines and perhaps some attempt at diverting attention away from the fact that the EU had failed miserably with its vaccine purchasing programme and roll out to the population at large. Not only were they 3 months behind the UK in placing their orders, they were also a month later in completing the regulatory approval process of the Oxford Astra Zeneca vaccine. The production of vaccines were hitting some issues and not without irony, did we learn that it was the facility in Belgium that was the main culprit. The press were quick to savage those responsible and even the German national newspaper De Zeit ran a headline that said this was “The best advert for Brexit” – certainly a bit of an own goal for sure to say the least.

Whatever criticism there may have been about the overall handling of the pandemic by the British Government, I think their vaccination roll out programme has been exceptional and is well on course to achieve the first objective of all over 70’s having been offered a vaccination by February 15th. 10+ Million and counting! We are also seeing some very encouraging statistics in terms of the numbers of infections and hospitalisations coming down, which should in turn be reflected in the mortality numbers. Long may that continue.

In the financial world, you might say that markets have been treading water over recent days. but as we start to see better than expected earnings results being announced  and the continuing roll out of the vaccination programme, this will, in due course start to reflect in market values and so I remain positive for the medium and longer term as I have been saying for some time.

By way of further endorsement, this morning, Andrew Bailey, Governor of the Bank of England said he believes the vaccination success is “outstandingly good news” and he is predicting a “pronounced economic recovery” for the UK.

As 2021 slowly unfolds, I think we should therefore be able to start planning ahead more and with that in mind, I will close with a quote from John Lennon who said “Life is what happens when you’re busy making other plans.” So let’s start making some plans!

As always take good care

Best wishes

Richard, Chris and Lesley

When I woke up this morning, I remembered it is a rather special day for 3 reasons. Firstly, it is News & Views day and then it’s the inauguration of the 46th president of the United States – oh, and it is Chris’s birthday – I did remember, and my order of priority was not as recited of course! In fact, I really pushed the boat out – a cup of tea in bed, what better way to start the day and earn a few “brownie points” too!

January always seems a month that drags on forever, and with storm Christoph starting to bash the UK as I write, it would be easy to be overtaken by bad weather blues and the general doom and gloom that appears to surround us at the moment.

Without a doubt, there are many challenges to be dealt with but at long last it looks as though the number of new cases in the UK is starting to subside quite dramatically. This will of course take some time to filter through to the number of people being treated in hospital and sadly, we recorded the highest one day total number of deaths this week.

However, there is good news though, and the benefits of this are just around the corner, as the rate of people being vaccinated, now significantly exceeds the number of new cases each day and remarkably, subject to supplies being maintained, we are on course to see the target number of vaccinations being achieved as the next group of over 70’s start to get their invitations through the post and the programme continues full steam ahead.

Our thoughts do go out to the frontline workers though and in particular, those people working in the NHS. I think it speaks volumes that a high percentage of them are now suffering with PTSD, akin to those who have been in the firing line in combat situations. Whilst we see the pictures on the TV, we cannot begin to imagine the levels of stress they must be going through every day as they try to care for the sick and save lives. Simply saying thank you just seems so inadequate somehow!

Whilst opinions differ, we are likely to see lockdown remain in place for a few weeks yet and probably beyond   the next Government review date, which falls mid-February in England, but hopefully, we will also see some details begin to emerge as to how measures will then be eased and I would expect travel restrictions will start to be relaxed progressively, even though travel corridors to and from the UK are temporarily closed at the present time.

Boris Johnson seems to think that by Easter, which is early April this year, we will have a much clearer picture – that combined with a nice bit of Spring weather will be just what we need.

Turning now to the financial markets, they have been unusually quite over recent days, but all major markets are showing an increase since the beginning of the year. As I have said many times before, markets do not like uncertainty, and they are always trying to anticipate where fortunes are heading some months ahead.

They are therefore, already factoring in the positive impact of the vaccination programmes and anticipated outcomes, which is why we can expect to see markets move ahead of the recovery from the pandemic.

Regardless of the media speculating about double dip recessions and trying as always to look for bad news, the general feeling with the investment experts we talk to is that 2021 should be a positive year and that we should see sustainable growth for some time to come.

There is an expectation that the UK in particular will benefit and one commentator went as far as to say “We believe the combination of a Brexit deal and the fact that the UK economy has been one of the harder hit COVID economies, suggests that the UK’s bounce back will be sharper than other markets.” That having been said, they also went on to say that for the time being, they remain cautious and always they “have one eye on the potential for further volatility stemming from factors outside our scope.”

Slowly but surely the days will get longer, and as they do, I think we can become more optimistic on many fronts, but we should also be mindful of those around us who may be suffering more than we are.

Let me close with a couple of quotes from Abraham Lincoln that I think are relevant to today: “Folks are usually about as happy as they make up their minds to be.” and “Whatever you are, be a good one.”

As always take good care

Best wishes.

Richard, Chris and Lesley

So much has happened in the last 2 weeks since I issued my previous News and Views that I’d also almost forgotten that during that period, we have also had Christmas and the New Year celebrations!

So let’s try to make sense of the three big headlines of the Brexit trade agreement, the Covid-19 and new lockdown in the UK and the US Presidential Election.

Whilst the Brexit negotiations have dominated the news in the UK for 4½ years, the actual achievement of a trade agreement at the eleventh hour pales into insignificance when compared to the other two topics, but nonetheless, it’s an important one just to digest a little!

It’s fair to say the majority of the agreement was about trade and travel rather than looking at services, and when you consider that the UK is probably 80% services when it comes to export, it seems remarkable that such a big proportion has kind of been left out from the negotiations.

That having been said, there are on-going negotiations, which are working towards a Memorandum of Understanding, which should be issued sometime in March, which deals with the Financial Services sector.  Sadly, this means that we are still left with some uncertainty with regard to our European based clients, but as they will know, I’ve been communicating with them regularly on a separate basis to keep them appraised of progress.

As you know, I try not to be political in my views, but I would say that despite the fearmongering that went on prior to the Brexit agreement about difficulties for freight at the border and in particular Dover, which as you probably appreciate is in the County of Kent where we live, very few problems have actually materialised.  There had been a small number of trucks that have been turned away from the border due to inappropriate paperwork, but these resulted in small fines and were quickly resolved.  Certainly nothing like the issues that were predicted or indeed, the pictures that we saw of the huge number of lorries being held up due to the border being closed by the French just before Christmas.

In my last Newsletter, I suggested that the border closure might have been a bit of smoke screening to hide a concession on fishing rights from the French to enable agreement to be reached.  We’ll never know whether there was any truth in that in reality, but nonetheless, there was compromise on both sides and that did facilitate the agreement.

By the time the travel restrictions are lifted, such that we can venture onto the continent of Europe once again, I’m sure people will be so pleased to be able to travel, that they will take in their stride any new restrictions or additional paperwork that is required in the post Brexit environment.  We just need to learn a few new disciplines.

Turning now to the Covid situation, the complete lockdown in the UK really should not come as a surprise to anybody as the number of cases were accelerating and particularly with the new strain of the virus, pressure on the Health Service was bound to result and we are now seeing that in the daily numbers that are being released by the Press.  Sadly, we’ve not quite reached that peak as yet, so I think it is a situation that will get worse before it gets better, but nonetheless, the roll out of the vaccines, both in the UK and further afield, has to be good news and as the most vulnerable people in society are vaccinated first, I would hope that this will be reflected in the statistics before too long.  There will of course, be a lag effect, because it takes 2 – 3 weeks for immunity to be achieved, and it can take around the same period for somebody who is infected to show symptoms and to become ill.  It may well be therefore, that we don’t see any significant movement downwards with numbers until the beginning of February, but hopefully, we will start to see them taper off before then – fingers crossed.

Hopefully, this combined with the lockdown and people responding positively to the social distancing, staying at home and other restrictions, will help to defeat the virus once and for all.  Only time will tell.

Turning now to the US, I had some mild interest in the ceremony of counting of the Electoral College seats in Washington DC yesterday, which should have been manly symbolic and the result being to endorse Joe Biden’s Presidency.

Although we knew there were going to be some objections to the results, it was widely accepted that this would just be a bit of sabre rattling, which would soon be dismissed and that the traditions would be observed.

I did express earlier in the day, a concern that I was feeling about the continuing inflammatory statements coming from President Trump and that this could have led to some disturbance, but never in a million years, did I believe that we would see the shambolic scenes in the Capitol Building that were being shown on the TV yesterday evening!

Commentators were saying that if this sort of activity went on in a third world country, then it would be seen as an attempted coup d’état and thankfully even though sadly 4 people lost their lives, there was not further death and destruction.  In fact, when you review some of the video coverage of the actual storming of the Capitol Building, it seemed that once they got inside, the protestors were at a loss as to what they should do once they were there. Maybe they were just surprised that they’d managed to gain entry that far,  but for those involved on the receiving end, it must have been a very frightening experience indeed.

Historically, the last time the US State Capitol Building was breached was in 814, when it was burned down by an invading army – you guessed it – it was the British! Not guilty this time!

At least we can breathe a small sigh of relief today as it has been announced that President Trump has now conceded, but there is some speculation as to ‘did he fall or was he pushed?’

Over the next few days, I think we should get more clarity, but it’s interesting to note that Donald Trump’s Twitter account was closed down and that the video that he had released has also been taken down by a number of the social media sources.  There was comment from some political corners yesterday that the 25th Amendment of the United States Constitution could be invoked, which is where a President is removed from office if they become unable to do their job.  Under these circumstances, the Vice President becomes the President.   I just wonder whether that actually happened yesterday or not?  Whilst I don’t want to appear to be turning into a conspiracy theorist, it is interesting that when the Electoral College count recommenced, that the Vice President, Mike Pence, recused himself from his role in the proceedings and it would also seem that it was him that instructed the National Guard to be deployed.  In theory, I believe it is only the President that can give that order, so who knows?

All of this should now settle down fairly quickly in terms of the US Inauguration of President Biden on 20th January and hopefully, we will see some stability return thereafter.  Clearly, with the two seats in the Senate that were won by the Democrats, this now gives them a much stronger position politically, but what happens with Trump and his supporters now, is anybody’s guess.

As for the markets, as you know, they don’t like uncertainty and despite the Covid lockdown and the US shenanigans, markets are looking quite positive and the UK has had the strongest start to a New Year for some considerable time.  You might think this strange, when we’ve just gone into lockdown, but actually, markets look ahead and will be seeing beyond lockdown and anticipating the positive effects of the roll out of the vaccinations and hopefully, we will see that growth trend continue from here.

Although it now seems a little tame to say it, after all of the above, may I just close by saying I hope you had an enjoyable Christmas break and to pass on our best wishes for 2021.

As always, best wishes. Richard, Chris and Lesley

With only two days until Christmas Day, I thought it would be a good opportunity to reflect on the last year and to try to put a few thoughts into perspective.

As ever, the newspapers and other media are full of doomsday headlines, designed to frighten and draw us in to reading or listening to their “latest news” and yet often, it is the same news that has been regurgitated many times over.

Don’t misunderstand me, I do take the spread of the Corona virus very seriously and think that we should be additionally vigilant as the virus mutates and the “new strain” is spreading faster than ever, but the alarmist reporting would have us believe that we are accelerating into an irrecoverable position and that somehow the mutation creates a much worse scenario. So how do you get to the real story and what should we be doing about it?

Firstly, all viruses naturally mutate and more often than not, they are caused by a chance event that will typically have little impact on the properties of the virus. I read one report which suggested that virus mutations are rarely a bad thing! It would seem that one of the latest mutations identified in the UK, gives the virus the ability to spread more quickly but it would appear that it is no more deadly. Spreading quicker will inevitably mean that more people are infected, which in turn will lead to more hospitalisations and sadly, virus related deaths. Hence the tier 4 lockdown in parts of the UK, which, like the virus, is highly likely to spread to other areas and arguably, should do so.

The current UK Government advice “Hands, Face & Space” are the exact precautions we should be taking and will go a long way to minimising the spread of the virus and actually, they are not bad disciplines to consider, even after this pandemic has run out of steam!

I also had a quick look at the “Spanish Flu” pandemic of 1918/19 to see if we can learn anything from that experience.

This came during the last stages of the First World War with the first cases being identified in the US in March 1918. Cramped conditions, overcrowding and global troop movements, all contributed to the spread of the virus, which globally, went on to infect upwards of 500 million people and claimed in excess of 50 million lives – 10% of those infected. There were no vaccines nor any antibiotics to treat secondary bacterial infections – the only weapons available were non-pharmaceutical interventions, such as isolation, personal hygiene and limited public gatherings – sound familiar. The pandemic eventually subsided in the Summer of 1919 after a third spike in cases, some 18 months later.

So how does this compare to Covid 19? Globally, we have seen 78 million people infected and to date, reported deaths have reached 1.72 million – 2.2% of those infected. We have a number of vaccines which are starting the roll out process around the world. There is a greater understanding of the virus and how to treat those who are affected, such that survival rates are improving and as to when this pandemic started, that is open to debate. Probably in November last year in China, but we have no way to be certain.

Maybe, when Boris Johnson says we should be in a much better place by Easter 2021, which is at the beginning of April, and added to that with the anticipated rate of vaccinations, the UK should achieve “Herd Immunity” in the summer of 2021, perhaps that is not just wishful thinking but of course only time will tell on that one.

Turning now to the markets, as we approach the year end, it looks very much as though the US, Europe and Japan will all end the year higher than they began, but both the UK and Hong Kong are lagging behind at the moment, although, they have both shown a good recovery since the dark days of March. As always, we don’t know what we don’t know, and there is always the potential for something to change but as we move into 2021, I think we should be able to do so with a growing confidence and indeed, once the post Brexit trade position is clear, both business and markets alike will know what they are dealing with and will be able to move forwards.

As for the last few days and the UK border with France being closed for 48 hours, whilst I try to avoid making predictions, I have a theory that this was driven by a bit of political smoke screening on behalf of President Macron, (who on the domestic front is under pressure) to show that he can be Mr Tough Guy, just before we learn there has been a climbdown on the fishing rights demands which have been blocking the Brexit trade talks from concluding. (We shall see, but don’t shoot the messenger if I am wrong!)

As we reflect on 2020, it can be difficult to see anything but doom and gloom and yet there were many good news stories as well, the greatest of which to my mind, has to be the incredible response to “Captain Tom” who on the 6th April at the age of 99, started walking laps of his garden with his walking frame with a goal to reach 100 laps before his 100th birthday on 30th April. His main objective was to raise £1,000 for the NHS and as we now know, he captured the hearts and imagination of so many people, that he went on to raise a fantastically amazing total of £32.79m, which with the addition of gift aid, will bring the total to almost £39m going to the NHS. Now that is what I call a result!

Let me close by wishing you and your loved one’s a safe and happy Christmas, and although we may not be able to get together in the traditional way, we can at least keep in contact through the various online solutions so we can see or talk to each other and as we wake up in 2021, it should be in the certain knowledge that we will see increasing positive news and in due course, part season will return once more.

As always, best wishes. Richard, Chris and Lesley

They say that a week is a long time in politics, but actually, it’s also a long time on the Covid 19 scene!  Since writing just 2 weeks ago when I was saying there were 3 vaccines waiting regulatory approval, the Pfizer vaccine has now indeed, not only received that approval in the UK, but the roll out of vaccinations commenced this week.

In fact, if you’re into pub quizzes and the like, you might want to remember the name Margaret Keenan, as she was the first person in the world to receive the Pfizer Covid 19 jab and I am sure that will be a quiz question sooner or later!

This of course, is excellent news, but it did also raise one or two concerns that perhaps the regulatory process had been rushed.  The consensus here seems to be that normal procedure that is followed will often have lengthy delays and that these were speeded up.  Furthermore, the actual testing programme that had several phases were run in conjunction with each other rather than lengthy periods in between.  It’s fair to say that long term effects can’t be measured over such a short period, but nonetheless, beyond this, there do not appear to have been any shortcuts that would undermine the validity of the vaccine.

As early Christmas presents go, it’s not a bad one, although of course, we do need to remember this is just the first step along a very long road to immunising the population at large.

As more individuals receive this vaccine and indeed, as others get their approval and come to market, this should all help towards an improving situation in the New Year; although it may well be the Spring before we really see the benefit of those results.

The old saying that the hour is darkest before the dawn may also be true and with the Christmas festivities just around the corner, it is quite likely that the incidence of Covid will increase in the short term before declining once more and perhaps, we will then see the impact of the vaccination programme.

I am not trying to be negative, but rather to be realistic that it will take some weeks and months yet before we will really know what positive effect this might have on our way of life and indeed, the economy at large.

Although it itself, 2020 seems to have been a very long year, as we are now approaching the end of it, it does seem that time is once again accelerating and before we know it, we will be celebrating the arrival of 2021.

Where 2020 became a year of progressive and increasing negativity, perhaps we can look forward to 2021 starting slowly, but then reversing the trend and becoming a year of increasing positivity – let’s hope so!

Looking across the pond to the US, although President Trump continues to bring law suits, none of these are gaining any traction and it is now less than 6 weeks before he leaves office and Joe Biden’s team take over.  It’s interesting to see that in a cautious note coming from the Biden camp, he too has said that Covid may get worse before it gets better, but he’s pledging to roll out 100 million vaccinations in his first 100 days in office – now that’s what I call a challenge!  Let’s hope he achieves it.

On the Brexit trade discussions front, we really are reaching the last few minutes of the 11th hour in terms of the politicians and negotiators being able to reach some kind of consensus.  We were always expecting some brinkmanship, but it is frustrating when events go to the wire like this one is.

In the last 24 hours, we have seen the announcement that Boris Johnson will be going to Brussels for dinner this evening, for final discussions, which hopefully, will pave the way to an agreement.  We have also seen some small concessions from the UK, which hopefully, will help to pave the way to an agreement being reached.  By the time I write in 2 weeks, I hope it will be in the knowledge of the answer to that question – deal or no deal!

Thinking about the investment markets now, without doubt, the Covid vaccine news is proving very positive and as we know, markets anticipate ahead by a number of months and don’t like uncertainty.

I read an article the other day that suggested that around Board Room tables in coming months, the encouraging news from the vaccine programme should ensure that Companies are more inclined to take risks going forwards, make additional investments and retain employees and therefore, help to offset the worst of the potential unemployment numbers.  Time will tell if this is true, but the combination of the expected positive influences from the Covid programme, together with the new Biden regime, are already being factored in to market prices.  Putting the Brexit trade talks to bed, whatever the result, will also remove a further uncertainty, which should prove positive for markets in the medium term.

It’s a been a while since I have included a quotation, but perhaps Winston Churchill is worth a mention with his famous ‘Now this is not the end.  It’s not even the beginning of the end.  But it is, perhaps, the end of the beginning.’

I personally hope that is the case and that we can look forward with hope and optimism.

There should be time for one more News and Views just before Christmas, but in case events overtake us, I would like to close by wishing you the compliments of the season and our Christmas greeting is attached.  (We’ve decided not to mail Christmas cards again this year, but rather we will be making a donation of the relevant amount divided between Kent Air Ambulance and the Royal National Lifeboat Institution – two of our favoured charities.)

As always, best wishes.

Richard, Chris and Lesley

As I sit down to write this newsletter, the first thing that occurs to me is that one month from today is Christmas Day and I start to reflect on how this year has passed. Time is such an illusion as we know! Looking forward to something nice will ensure that it is slow in coming and yet something you dread, will happen in a flash!

So where does that leave 2020 – in some ways it seems to have been a very long year and now with more positive news on several fronts, it gives a glimmer of hope that where 2020 became progressively negative as the year wore on, perhaps 2021, will reverse the trend and become progressively more positive.

There are, I think, a growing number of reasons why this might be the case. The obvious one is the news that we now have 3 potentially effective vaccines which are simply awaiting regulatory approval before they start to roll out for use, hopefully this side of Christmas and there are many other vaccine projects being worked on as well.

I don’t profess to understand the science, but it would seem all three solutions to date have concentrated on making a protein that is unique to the virus and once our cells make copies of the protein, they then set about destroying the virus and let the immune system take over. This is somewhat different to other forms of vaccine which in the past have injected a small dose of the virus to enable the body’s immune system to build a resistance to it. All clever stuff and I purposely avoid asking the question – how do they do that? In the same way that we don’t need to know how a computer works to be able to use it successfully, we don’t need to know how the vaccine works, but if they really can be 90% effective, then I think 2021 will indeed see some significant steps in minimising the impact of the virus going forwards and letting some semblance of normality re-establish itself.

If this happens, there will be a large number of knock-on effects, most of which should be very positive for the travel and leisure industry in particular and the economy in general. Hopefully the focus can then shift to repairing the damage done by addressing the unemployment situation and getting people back to work.

One thing is certain, it won’t be a quick fix but rather a progressive and sustained improvement that we can look forward to.

Another hurdle that seems to have been knocked down at last is in the US, with Donald Trump, albeit reluctantly, accepting at last that the handover to Joe Biden has to take place although we should remain suspicious of his motivations in pursuing his many legal actions which still have to run their course.

As Biden starts to build his team though, we are already seeing signs of relief in the markets and if he is correct when he says that America will return to a role of leading the world rather than isolating from it, this should bode well for concerns about the environment and the impact of climate change – it has already been suggested that one of Biden’s first acts as President will be for the US to reinstate its place in the Paris Accord, which will I am sure be well received.

Another factor as we move into 2021 which will be in the headlights will be the all-embracing subject of ESG – (Environment, Social and Governance) with increasing emphasis being placed on corporations to improve their record and adopt more appropriate Board Room decisions to help to shape the future.

From a regulatory perspective, Europe wide legislation in 2021, which the UK will also adopt, will require us to emphasise and discuss ESG and individual attitudes which may indeed have an impact on some of the investment solutions that are in place. Already, we are seeing Fund Managers making determined efforts to ensure their funds are indeed ESG friendly. The good news is that 25 years ago, when socially responsible and ethical investing were in their infancy, there were only a few funds to choose from. Thankfully today and increasingly going forwards, these aspects will become the norm.

This I am sure will be reflected in the “winners & losers” of market recovery and which Companies and funds prosper – it will be interesting to see how this unfolds.

So, we now have a Covid solution in sight and the US Election is behind us, it is just the Brexit trade discussions we need to see concluded and then we really should be able to look forward to some sustained market recovery. We have already seen the US markets hit all time highs this week, but we also need the UK to catch up. Arguably, the UK market, which has been out of favour for several years now, has most to catch up but it is just possible that this will bet set in motion very soon now.

We may not be out of the woods yet, but I think the time has come when we can be quietly optimistic about the medium and longer term, which doubles the reasons to stay vigilant in the short term.

As always, stay safe and we will keep in touch.

Best wishes.Richard, Chris & Lesley

Richard Alexander Financial Planning Limited