Hi and Good Afternoon Covid Concerns Firstly, we wish you and yours the very best at this troubled time. As England moves into lockdown lite (with schools and colleges remaining open), it is understandable that society and investors have returned to feeling worried. We know that investors have not panicked entering this new lockdown, they are seeing the pullbacks as investment opportunities. The US Election is tomorrow, with (hopefully) an outcome on Wednesday so, for those who follow investment markets in detail, you will understand that a consensus in relation to the outcome of the US Election is far from clear. Personally, I feel it is important to focus on what we can expect. Interest rates are expected to remain at an effective zero rate – negative against any inflation pressure – beyond the very short term. With Banks moving to charge for current/checking accounts the net rates may ‘become’ negative – without this true negative BoE rate being passed onto account holders! This environment would be expected to be strong for risk assets – over the foreseeable future – through to changes in economic policy.
Covid Covid is naturally dominating the media, with the economic news reacting as data unfolds. We have recently seen a pullback in the tech sectors, as asset prices in these sectors were overheating, as they were the only investment game in town. Naturally, travel, leisure and breweries or Covid connected assets have been further increasing in volatility since the expectation of lockdown. Assets in the US are clearly in need of stimulus and a ‘joined up’ policy to prevent the economy from further massive impact. Investment analysts continue to debate about the shape of the recovery, as a ‘V’ shaped economic recovery is now firmly out of the race. ‘W’ shaped – where the economy goes through a rapid succession of recessions driven by pandemic waves is another view…… A ‘K’ shaped trajectory, where sectors follow divergent paths, with some sectors relapsing into further contraction or some failing – while other companies thrive in the current economic environment, actually emerging better off than prior to Covid-19. Fortunately, our allocations have been very well balanced, using the best quality assets available, in sectors that have been strong, as our investment clients have seen from their results, when measured against relative benchmarks, peers and how investors compare against the main indices. We urge investors to consider their needs and plan accordingly, so if consultancy with our expert professional services is required, where we can demonstrate added value, get in touch. We will help and assist all we can. Stay safe and healthy. On a personal note, I am having a procedure carried out on 19 November (assuming I am clear!) so I will be in lockdown/quarantine for weeks to come so will be searching to support our investment clients. Best Wishes. Richard |
