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Market update Wednesday 25 March 2020

Since my last update on Friday, we have seen the introduction of the near full lockdown in the UK on Monday. Yesterday markets across the globe rallied, and as I write today European and American markets are mostly all up after news that Congress and the Trump administration had agreed a $2 trillion fiscal stimulus package.  Sterling also strengthened and the dollar weakened on this news.  Further government action continues to have the intended effect by providing support to the global economy.

Lothar Mentel, who’s views on the markets and global economy I have forwarded to you previously, released his latest update yesterday, and I thought you may be interested to hear this.

Why have stock markets appeared to rally on the lock-down?

Yesterday the UK followed much of Europe and the US into a painful lock-down of its people and economy, yet today stock markets rally 5-6% by early afternoon – how can these go together?

In this investment update, we discuss how governments’ fiscal support measures for the economy and the central banks’ monetary commitment to provide sufficient capital for bond markets mean capital markets no longer seem to assume a lasting collapse of the global economy. We then explain why central banks’ actions are both suitable and effective to prevent collateral damage from the COVID-19 restrictions driving the global financial systems towards another financial crisis.

Please paste the below into your browser to watch:

https://www.tattoninvestments.com/tatton-media/market-update

If you wish to speak to your financial adviser directly about any aspect of your portfolio, you will find their contact details on the About us page. We have accounts in place with Zoom and as such are able to carry out face-to-face discussions with you using this technology, in place of physical meetings.  Our contingency arrangements across our offices are now in place, but please be assured we are working hard to deliver the best outcomes for you, keep you updated and guide you through this unsettling period.

To contact us by telephone, please call:

Ashford office: 01233 646 666 

Hastings office: 01424 457 080 

Kind regards,
Mark Eaton
Director

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Market update – Friday 20 March 2020

Yesterday the Bank of England again stepped in to attempt to shield Britain’s economy from the coronavirus outbreak by cutting interest rates to 0.1% and also ramped up its bond-buying programme.

Late the day before the European Central Bank announced a stimulus package, also in the form of a bond buying spree.

The quantitative easing announcements helped to calm the bond markets yesterday and will directly add much needed money into these economies.

We see both of the above moves as positive news, designed to bring support and stabilisation to the financial system, along with the announcements this week from the chancellor of the support packages to be introduced for individuals and businesses across the UK.

In addition to these actions, the Federal Reserve provided support for money market funds. The Bank of Japan increased Japanese Government Bond purchases and offered further liquidity to the market. South Korea pledged more money for smaller companies. Australia cut rates and announced term funding scheme. So more government and central bank action is being pledged to counter the effects of the coronavirus.

Investors have taken the government support and policymakers actions as good news with a somewhat relief rally in markets this morning across Europe, with Asian markets also in the main having surged overnight.  Adding to the mix were oil stocks boosting the indices after Trump hinted he may intervene in the price war between Saudi Arabia and Russia.  Reuters indicates that there is little aggressive buying, but that the broad environment is perceived to be a bit better.

Away from financial news, amid the gloom of the forthcoming lockdown in movement, yesterday China provided a ray of hope, as it reported zero new local transmissions in a thumbs up for its draconian containment policies since January.

I have attached Lothar Mentel’s latest video from yesterday; as you will recall from my previous update, Lothar is a very experienced and successful investment manager providing investment strategies which we endorse.

Confusion reigns in Capital Markets

Since our last investment update video, governments and central banks around the world have acted precisely how we had suggested: They have put forward very sizeable monetary and fiscal support measures and stated repeatedly that they will and can ‘do whatever it takes’ and that there is ‘no limit’ in size as to what they may do.

In the attached video investment update I am discussing why, with the measures central banks and governments have now adopted under a quasi state‑of‑emergency wartime economic and financial regime, it is highly unlikely markets will be permitted to cause another global financial crisis. This remains a Corona health crisis that we all know will come to an end, what is unknown is the exact duration.

Please click on the link below to watch:

https://www.tattoninvestments.com/tatton-media/market-update

If you wish to speak to your financial adviser directly about any aspect of your portfolio, you will find their contact details on the About us page. We have accounts in place with Zoom and as such are able to carry out face-to-face discussions with you using this technology, in place of physical meetings.  Our contingency arrangements across our offices are now in place, but please be assured we are working hard to deliver the best outcomes for you, keep you updated and guide you through this unsettling period.

To contact us by telephone, please call:

Ashford office: 01233 646 666 

Hastings office: 01424 457 080 

Kind regards,
Mark Eaton
Director

AFM No Comments

Market update – Wednesday 18 March 2020

I would like to provide you with our current thoughts on the COVID-19 situation and share a video with you from one of the investment managers we endorse, who is very well respected as an industry specialist; Lothar Mental.  In the clip Lothar provides a general overview and his insight into the current market movements and outlook.

Global stock market movements over the last week have been unprecedented and nothing short of dramatic. The sell-off of shares around the world has been heightened by the measures governments are imposing for entire nations including the lockdown by the Italian government, the draconian measures announced by President Macron in France last night and the new tightened measures introduced by the British government. Not to mention the growing problems faced by the US and elsewhere around the world in response to the pandemic. With this backdrop, I wanted to send you our analysis of the current investment landscape and views as to how the market might behave in the short-term and why it is important to remain calm and remain invested.

Investment landscape

The continued spread of coronavirus and the wide-scale quarantining across the world has led to fear over reduced global demand and disruption of supply chains. The impact of this was compounded by disagreements last week between OPEC members, leading to the oil price falling from $60 a barrel at the start of the year to around $30 today.

Market analysis

Equity markets have fallen dramatically in response to these events and for the most part, indiscriminately. Some sectors have been hit harder than others such as energy and smaller companies which have led the sell offs, as well as those companies with complex supply chains and businesses reliant on discretionary consumer spending.

It has become clear that the impact of the virus is likely to be with us at least for the medium term and in response, consumers are likely to save rather than spend in the face of adversity and uncertainty. The concern for investors is that this develops from a health crisis to a liquidity crisis and beyond.

We all know that markets fear uncertainty and the global economic impact and the threat of recession is an unknown. However, what is becoming clearer is that we are beginning to witness a sustained and co-ordinated response from governments and central banks, such as the Bank of England and the Federal Reserve in the US with fiscal packages and a cut in interest rates. We anticipate that this over time should support markets.

Remaining calm

Whilst this current situation is undoubtedly worrying over the short term, we continue to remain committed to investing for the long-term.   We would urge caution and restraint in these volatile conditions and do not recommend any change to your investment strategy, in light of recent events.  The portfolio we have recommended for you was selected to match your assessed risk profile and for your investment time horizon and as such, we would recommend that you remain invested in accordance with this, rather than to sell out, realising losses.

If you are drawing an income from your investments, I would ask you to assess whether you could temporarily halt this, or at least reduce the amount you take, as withdrawals during a period of falling markets will compound portfolio losses.  This happens because as the value of your units in a fund decrease, a greater number of units need to be sold to produce the same level of income.  This in turn reduces the original income producing base making it more difficult for the portfolio to recover in value when the markets do and therefore to also provide the same level of income.

Please do not hesitate to call us on 01233 646666 if you wish to discuss the current situation in more detail, or your ability to lower your income payments.

Finally, please clink on the link below to view Lothar’s assessment of the situation.

From euphoric recovery to depressed tumble

Over the course of the weekend, stock markets have turned from euphoric recovery (US closed up +10% Friday night) to depressed tumble once more.

In today’s investment update we discuss what has changed and what we expect to change over the course of this week.

Central banks around the world have proven since last week that they mean it when they state that they will do whatever it takes to avoid outsized fallout from the COVID-19 activity restrictions.

Politicians have also made first moves towards mobilising fiscal policy to bridge the ‘Covid-chasm’ for small businesses and cash strapped households – they now have to follow up and get considerable fiscal accommodation under way.

Stock markets are increasingly pricing in a worst-case outcome, which by no means has to be a given, which means that stock markets are likely to continue to yo-yo up and down until things become clearer.

Please click on the below link to watch:

https://www.tattoninvestments.com/tatton-media/market-update-16-march-2020

Kind regards,
Mark Eaton
Director

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Coronavirus (COVID-19) statement

We wish to reassure you and address any concerns you may have regarding the steps we are taking as a company to ensure that we continue to provide our promised service to you while making sure we keep our staff members safe and healthy from coronavirus (COVID-19).

In light of the government’s recent advice and the impact of the COVID-19 becoming more intrusive, we wanted to assure you that we have a robust continuity plan in place if the need arises for all our staff to work from home. Our staff will be able to access their emails and our systems from home; we will continue to monitor your investments; we will provide you with our ongoing services and keep you updated, as well as being able to take any required action during these unprecedented times.

You can therefore rest assured we are well prepared in the event of an escalation in government restrictions of movement because of COVID-19 and are fully confident that our day-to-day operations will continue to work as required.

During these uncertain times, which have caused a lot of worry for many people, we also hope that you and your family will stay safe and well.

If you have any questions, please email your financial adviser in the first instance, you’ll find the contact details on our About us page. Alternatively, please email info@afmanagement.co.uk or call one of our offices below.

Thank you

The Absolute Financial Management Team

To contact us, please call:

Ashford office: 01233 646 666 

Hastings office: 01424 457 080 

Bognor Regis office: 01243 964 765