Brian’s Brainstorm
The Global Equity Bull Market
The bull market in global equities is getting a bit long in the tooth. After eight and a half years investors and commentators are starting to worry what might trigger a correction in stock markets around the world. Two possible scenarios spring to mind. One involves a nasty escalation of political tensions in North Korea and the other comprises a re-rating of technology and media stocks. History never precisely repeats itself. But similar situations have been played out in the past. For example, the shock of the September 11 2001 attacks and the bursting of the internet shares bubble as we entered the new Millennium.
How did these developments unfold in the financial markets? Well in the month after the co-ordinated assault on New York and Washington, global stock markets were roughly 10 per cent lower, while the most notable asset class to make gains in this period was gold. Some active asset managers are currently building up their holdings in gold as an insurance against events turning ugly in North Korea.
Meanwhile there are concerns that some technology stocks are trading at stretched valuations. Internet stocks went into free fall in general from March 2000 and global equities were in a bear market until March 2003, but not all asset classes fared badly in this period. Sovereign government bonds and property both registered strong gains. Once again some active fund managers are maintaining a holding in gilts and US Treasuries as a safe haven insurance should stock markets correct.
Staff Matters
- This weekend just gone saw three of our advisers travel to Wales to take part in the Invesco Perpetual Snowdon Challenge.
- With training proving far less attractive than just about any other option over the summer months, to say they found it challenging could be an understatement.
- Despite the sporadic preparation Ian, Martin and Martyn rose to the challenge and have already raised over £6,000 for the the Youth Adventure Trust. This charity works tirelessly to help give young people the hope, confidence and life skills to meet the challenges in their lives through a journey of experience, adventure and fun.
- There are still a few days left to donate to this great cause and clicking on the picture below will take you to the team’s Virgin Money Giving page.
Save the Date
We are happy to announce that our annual day of events with Seven Investment Management’s Justin Urquhart Stewart is set to go ahead on the 30th November 2017.
Further details will be sent out in the coming weeks. Please do keep this date free should you wish to attend.
Statistical Information
| Last Month | This Month | Change | |
|---|---|---|---|
| CPI | 2.6% | 2.9% | +0.3% |
| RPI | 3.5% | 3.9% | +0.4% |
As the depreciation of sterling continues to impact on the prices of imported goods many of the short term measures taken out by companies to protect themselves against this have expired. The increased import costs are now being reflected in the prices being paid by consumers online and in stores and these increases are fueling the inflation increases seen above.
The clothing & footwear sector is an import intensive area of the economy and as such has been a major driver of inflation since the last figures were released.
| Aug 2017 | Sep 2017 | Change | |
|---|---|---|---|
| Base Rate | 0.25% | 0.25% | 0.00% |
Despite another month where the Base Rate has remained unmoved the latest meeting of the Monetary Policy Committee (MPC) has generated more media interest than normal.
The MPC has now gone on record with its strongest hint yet that should the UK economy continue to strengthen then “some withdrawal of monetary stimulus” could be applied and a Base Rate rise occur. In reaction to this news the pound rose against both the dollar and euro as markets responded to the news.
The MPC is next due to meet on 17th October.