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Weekly Notes

Weekly Note

The Week In Markets – 10 – 17 September

OK: Another tranquil week to describe. The Chinese authorities have had another pop at one of their big industries, this time, gambling companies in Macau. That caused their share prices to plummet and further dented sentiment about the wider Chinese market. In contrast, Japanese shares, perhaps benefiting from flattery by comparison, had another good week. Other than that; all quiet on the markets front.

But, much as I say not much happened, for all we know, maybe it did. Markets have a lot in common with other complex phenomena, such as earthquakes or forest fires. Much as we think they should be predictable, they constantly confound humanity’s best attempts to forecast them.
This is because earthquakes and forest fires happen far more frequently than we assume. In the case of earthquakes, they’re happening all the time. But almost all tremors are so tiny we don’t feel them, so we don’t obsess about trying to predict them.

However, although the overwhelming majority amount to nothing, any one of these tremors could trigger others, which then trigger even more, and so on until we have a major quake (almost like the first tremor has “gone viral”). As Mark Buchanan put it in his excellent book – ‘Ubiquity’; “when it starts, an earthquake doesn’t know how big it will get.” This is why they’re impossible to predict.

And so it is with market sell-offs, which share the same mathematical signature as earthquakes and forest fires, and even wars. That’s something called a ‘power law’, which roughly means that there are exponentially fewer big wars/earthquakes/market crashes than there are medium ones and exponentially fewer medium ones than there are tiddlers.

Put another way, we see market sell-offs hundreds of times every day, we just don’t care because they’re tiny. But, like earthquakes, when a sell-off starts it doesn’t know how big it will get. So China causing investors to sell Casino shares might mean they have to sell other shares too, which causes even more investors to pull out, which then ripples out to a global crash. Or it might spark a rally in Japanese shares. Or it could just peter out to nothing. We won’t know until we know.

Taken the wrong way, this could be scary: We like to think our world is predictable, even if, deep down, we know it isn’t. But markets have always been this way. That’s why we use tried and trusted safety measures like diversification. Concentrating our money in just one company, market, or asset class makes us more vulnerable to unforeseen events. But using a selection of diversified funds and asset classes as we do (you hold, for example, a modest amount of Chinese and Japanese shares), we’re confident we can survive the small, medium or large tremors, and bounce back stronger afterwards too.

For now though, all is quiet. So you can forget markets – and earthquakes – and enjoy your weekend.

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week in Markets – 4 – 10 September

Global equities reversed this week, ending a long winning run. When markets have dropped, but there’s no clear reason why, it’s traditional for us market reporters to put it down to “profit-taking” then break early for lunch. But on this occasion, it’s worth taking a quick tour of the regions, as differing trends are playing out.

To understand what’s happened to a global equity index, the first place to look is always the US. American equities punch well above their weight in world stock markets: while their economy makes up less than a third of the globe’s, their companies represent double that amount in a global equity index. So they usually dictate the global tone. This week the consensus is that investors are worrying about the Federal Reserve beginning to slow the pace of stimulus. It isn’t yet overly clear why they’re worrying this week more than last, but that’s the mystery of markets for you.

If investors in U.S. equities are worried about this, then holders of British and Continental European shares are even more concerned: share prices on this side of The Pond have had an altogether soggier week. Looking at the winners and losers in the fund world, “value” funds have fared worse than “growth” funds, which implies investors are becoming less convinced that broad-based economic recovery and/or inflation are what we’re headed for.
The stand-out market this week has been Japan. For most of this year, it’s seemed as if investors had simply forgotten that Japan existed; its market has flatlined while most others raced upwards. But the recent resignation of Prime Minister Suga has jolted their memory, and talk of new leaders with new cheque books helped the Tokyo index to defy the wider gloom; it has rallied by 4% in just a week. (This is why Japanese equities form a useful part of a global portfolio – it’s good to have different parts doing different things at different times, and Japan often marches to its own tune).

Finally, we hop across the sea to China, where gaming giants Tencent and Netease were called in for another telling off from Beijing officials. Having already been on the receiving end of one share-walloping lecture earlier in the summer, they were again chided to “profoundly understand the importance and urgency of preventing minors from online game addiction.” Their shares promptly tanked again, dragging other tech giants with them, and turning what had been a mildly positive week for Asia Ex-Japan shares into a negative one.

And now a market scoop: The success of these tactics duly noted, the Evan-Cook household, which is similarly blighted by gaming-hooked minors, will henceforth move to the communist governance model. Sadly, at the time of writing, the US and Japanese markets are closed, so you’ll have to wait for next week’s report to hear how hard this hits shares in Microsoft and Nintendo.

In the meantime, have a great weekend.

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week In Markets – 28 August – 3 September

This week markets have offered us a carbon copy of markets last week: They generally went up, with Asian equities rising the fastest as they rebound from their mid-summer trouncing. 

Tempting as it is just to reuse last week’s note, instead I’ll expand on something I mentioned in it: central bankers’ impact on investment returns. Because the big cheeses of central banking met up at Jackson Hole last Friday (well, they did a group Zoom). There was much speculation about what they’d say, and what it would do to markets. But in the end markets shrugged, suggesting they’d correctly guessed the content (or lack of it) within the US Fed Governor’s speech. Ho hum.

But out of the proceedings did come an interesting academic paper. It helps to answer two big questions you might rightly ask: 1) Why, despite the trifling matter of a global pandemic, do share prices keep rising? And 2) why, if central bankers are creating oodles of new money through “Quantitative Easing”, haven’t we seen inflation go through the roof?

If the paper is right, then it’s because most of the new money that’s being created is going to people who already have it: Central banks inject this new money into the economy by buying assets, so it stands to reason that those with fewer assets will benefit less than those with plenty.

Then we come to something I dimly remember from A-Level economics: “The Marginal Propensity to Consume” (stay with me). Basically, the more money you have, the lower your marginal propensity to consume. In other words; if you give money to richer people, they are more likely to save it, and less likely to spend it, than someone who has less money to start with.

This is why, the theory goes, we haven’t had runaway inflation in prices of everyday goods and services, which we might have assumed would follow the creation of tons of money. If, instead of buying stuff, that money is being saved, or invested into assets like shares or property, it explains why we’ve seen high inflation in the prices of those assets. In short: there’s a lot of money swimming about, and it’s all looking for somewhere to earn a decent return, pushing up prices as it goes.

So there you go. That’s why we in the investment world focus so much on what central bankers do and say. If this paper is to be believed, their past and current actions are behind rallying stock markets, as well as other assets like homes, art and fine wine. If they stay on the current tack, there’s good reason to believe this will continue. But if they change course, it’s reasonable to believe that, well, markets will change course too. 

Here endeth the note. Less of a ‘The Week in Markets’, and more of a ‘The Decade in Markets’ this time. But hopefully, with the summer holidays ending, we can get back to shorter-term gyrations, which are less brain-bending than the long-haul stuff, and easier to digest of a Friday afternoon.

Until then, have a great weekend.

Simon Evan-Cook

 (On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week In Markets – 21 – 27 August

It’s been a benign week for global stock markets, led higher by Asia’s partial rebound from its preceding weekus horribilis.

Given the lack of action in the immediate past, most commentators have turned instead to the immediate future. Specifically, they’re commenting on what they imagine might be said at the Jackson Hole meeting of central bankers today (Friday), and what they imagine markets might do in response. I haven’t yet seen any comment about what they imagine central bankers will do in response to the markets’ imagined reaction to their imagined meeting though. I suspect that’s because, much as it reflects what happens in reality, it sounds silly in a newspaper.

We’ll come back to that meeting, because it will matter, and it does feel like this week’s drifting markets has been a holding pattern, with investors waiting to see what’s said later today.

Not everything drifted though. Shares in UK supermarkets have had a bumper week – so much so that my mum emailed me for the inside line. Sadly, she emailed the wrong person: my speciality is picking good fund managers, who then pick the stocks for me. But I can read the FT as well as the next man, and it seems it’s due to speculation that there’s a takeover spree heading their way.

WM Morrison is already the subject of a spiralling series of bids, and this week it was Sainsbury’s turn to take centre stage, with takeover rumours causing its share price to spike by more than 15% on Monday. So, who is buying them? The answer, certainly in the case of Morrisons, is private equity.

The term “Private Equity” is bandied around a lot, but perhaps not all of us know exactly what it is. The simplest answer is what it’s not: “Public Equity”, which is shares that are listed for anyone to buy on a stock exchange. So private equity is, instead, shares in companies, or often the whole company, held off the market by individuals or, in this case, funds run on behalf of individuals.

Which brings us back to those central bankers who will be chinwagging (albeit virtually) at Jackson Hole today. Loads of money has flown into private equity funds in recent years, just as loads of money has flowed into almost every financial asset you can think of (including ones that have only just been invented, like cryptocurrencies). This coincides with central bankers creating loads of money through quantitative easing (“QE”) which they use to buy financial assets.

I use the word “coincides” with a wink, because it’s no coincidence: Their actions are pushing up asset prices everywhere. Hence the focus on their comments today – any indication that they might stop QE, or even slow it, may mean less future money to buy stuff and push up prices. Now I’m speculating on imagined future events myself – something I promised myself I wouldn’t do (at least not publicly, anyway) – which means it’s time to stop imagining and get back to real life.

Have a great weekend,

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week In Markets – 14 – 20 August

In markets the hardest thing to get right (to the point of being impossible) is timing. So, I’m pleased to report that fortune has smiled on me this month: my recent two-week break coincided with possibly the dullest run for markets since records began – squeezing out two interesting weekly summaries would have been a tough ask. So, if you, like me, were taking a fortnight’s break from the 24-hour financial news cycle, you can relax – you missed nothing.

The last week has been a little wobblier though. You’d be forgiven for thinking this was due to the news coming out of Afghanistan, which has been bleak. But to the best of my knowledge that hasn’t been the cause. It has, instead, been the usual to and fro on the inflation-vs-deflation tug of war, which is all that markets can think about for now.

In this case, the very mild sell-off in equities, and corresponding rise in ‘safe-haven’ assets (such as government bonds or the US dollar) was caused by suggestions from US Federal Reserve officials that they may begin to taper their asset purchases by the end of this year. I could spend the rest of this note trying to explain exactly what “tapering asset purchases” is. But you wouldn’t thank me for it, not this close to the weekend.

So, I’ll turn instead to Asia where the market turmoil caused by the Chinese government’s recent actions continues to make for more interesting reading.

Asian markets fell by more than the global average again this week, extending the starker drops I described a couple of weeks back. In essence, the Chinese government has decided it doesn’t like the concentrations of power being built up by its tech companies. So it’s nipping them, painfully, in the bud. In fact, maybe ‘bud’ is the wrong term: Having performed spectacularly well for years, the Chinese internet companies’ were in full bloom. So now their woes are having a big impact on the Asian Stock Market Index – as companies like Tencent, which has dropped 40% in the last six months, had become huge parts of the market. This week it was the announcement of measures to ban unfair competitive practices that has wiped further billions off several Chinese tech behemoths.

Such concerns are frequently mentioned when thinking about US companies too, as antitrust talk has returned to the fore of late, and their tech giants are no longer the cuddly, universally popular entities they were when we first got smartphones (ahh, simpler times). But the US government has less inclination to clip its own companies’ wings and has less power than the Chinese Communist Party to do so even if it did. So, while the “FAANGS” aren’t winning with quite the gusto of the previous ten years, they’re holding up far better than their Chinese equivalents – for now.

That’s all that mattered for markets this week. Summer is a funny time though. Usually little happens, but when it does, things can move sharply. We’ll keep watching on your behalf.

Have a great weekend,

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week in Markets – 24th – 30th July

All the drama has been in Asia this week. Japan has hogged the sporting headlines, while China has dominated the pink pages. It’s worth understanding what’s happening in Beijing, as it provides a timely reminder that markets aren’t one-way bets, and that risks come in all shapes and sizes.

The numbers first of all: The Chinese stock market is down almost 9% on the week, having been off by 14% at worst (there’s been something of a rebound over the last few days). This has exacerbated what was already a sticky run: having rallied by 18% into late February, the market then dropped by 31% to hit this week’s trough. Given the importance of China in wider Asian and emerging market indices, these too have had a very tough week, leaving them flat for the year.

Why has this happened? One word: politics. This has been brewing for a while now, but what was made very clear this week is that the Chinese Communist Party (CCP) is uncomfortable with how much control was being gained by the private sector at the expense of the state.

The specific action that sparked this week’s rout was a crackdown on private tutoring companies, wiping billions off several companies in the process. But before that the CCP had signalled a wider discomfort with private data gathering and security, with the very clear implication that data should be the property of the state, not of private companies.

There are lots of risks investors have to consider, so many that some become forgotten, overlooked or simply not learned in the first place. This event is a reminder of the twin risks of political and regulatory risk. Perhaps blinded by the incredible returns made by Chinese tech companies in recent years, some investors loaded up on these companies, and in doing so forgot that you only “own” something in China for as long as the state says you can. Which is another way of saying that, ultimately, you don’t own it, the state does.

It is also a reminder of the benefits of diversification: even our most aggressive portfolio has considerably less than 10% exposed to Asian ex-Japan equities, while our Cautious Portfolio has less than 4%. The rest is spread across different markets and asset classes, and so actually benefited from rising share prices in the UK and Europe this week, where we have higher weightings.

And, thankfully, much of our Asia ex-Japan exposure is through one of our trusted, actively-managed fund picks: Schroder ISF Asian Total Return. Its managers, Robin Parbrook and King Fuei Lee, read the Chinese mood music months ago, and heavily reduced their exposure to China. As a result, they have seen only a modest dip in their Fund’s price, while Asian indices, of which Chinese tech companies are a large part, were walloped. Given the complexities of this situation, and the sense that there’s more to come from the CCP, we’re glad these Asian equity specialists are looking after these parts of our portfolios. They’re highly conscious of risk in whatever form it comes.

Have a great weekend,

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors.

Weekly Note

The Week in Markets – 17 – 23 July

This week we get all philosophical, as we explore the financial world’s equivalent of “if a tree falls in a forest, and no one’s there to hear it, did it make a sound?” 

Because the week’s stock market performance numbers look fairly silent: UK equities, for example, squeaked out a return of just 0.15%. But this hides a couple of noisy days, particularly Monday, which felt like one of those “here we go again!” moments, as many major markets plunged by over 2% in a single session: A big move outside of an obvious crisis.

This had the financial world bracing itself for worse to come, with the spread of the delta variant commonly singled out as the harbinger of another prolonged collapse in share prices. Then on Tuesday everything bounced back. And it’s been quiet since. So that, it appears, is that.

So, here’s the question: If a sell-off happens, but no one has time to sell, did it actually happen?

First a quick nod to pedants’ corner: Yes – obviously somebody was around to sell something, or prices couldn’t drop. But ignore that and go with me on this one – there’s a useful principle here. Which is that successful investors know that scale matters. Specifically, in this case, timescale.

In this note, I happen to be talking about a week. If that’s the timescale by which you judge your investments, then there was nothing to see over this seven-day period: it ended as it started. But if your time horizon is a day, then you’ve been through the emotional wringer. And emotions can be dangerous when investing, particularly the extremes of fear and greed: So on Monday’s drop, as the headlines turned bleak (as they always do on a red day), you might have been tempted to sell out in fear of a further drop. But, if you had, you missed Tuesday’s bounce, and locked in a nasty loss.

Now we can take this to extremes: We could shrink our time horizon down to microseconds, which some do, trading the millions of tiny moves that happen every day (if you think this is a fanciful exercise, I’d recommend a read of Michael Lewis’ “Flash Boys”, about how “high-frequency traders” rigged the US stock market).

But for that, we’d need a ridiculously powerful computer, a house inside the stock exchange, and no scruples. More relevant, then, is to consider lengthening our timescale. How long? A year? Maybe: In 2020 global equities made 12.3%. Nice. But during that year they collapsed by 26%, at which point many panic sold. They then rallied back by an astounding 63%. Those panic sellers definitely rue paying close attention: it wasn’t a problem for those who only check in every New Year’s Day.

But is a year enough? Go longer – to a decade, or several decades, or even a lifetime – and you’ll find supernaturally calm types like Warren Buffet. He is, I’m told, worth a bob or two, so maybe there’s something to be said for stretching those time horizons out a bit?

Food for thought. But, in the meantime, have a great weekend,

Simon Evan-Cook

(On Behalf of Raymond James, Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week in Markets – 10 – 16 July

After a brief squall last week, markets have settled back into their commentator-unfriendly malaise. To put some colour on that, global equities blinked to the tune of -0.04% over the week, while UK equities suffered a light wilt of -0.14%. As a rule of thumb, you’ll know not much has happened when I resort to two decimal places.

These numbers were despite dramatic inflation news in both the UK (a rise to 2.5%) and the US (lifted to 5.4%) – both hitting multi-year highs, and both higher than economists expected.

Another peep behind the curtain of financial commentating: watch out for the word “despite”. As in “markets fell despite good news on unemployment”. This means we, the commentariat, have caught a piece of real-world news and thought “Thank heavens! Surely that gives me something to write about!”. Only for the market to then either completely ignore it or do the stone-cold opposite of what we thought it should.

That fully applies this week. Given the efforts I’ve made to emphasise the importance of the direction of future inflation, you’d think news like this would send shockwaves through markets. Or, at the very least, cause assets that hate higher inflation, such as longer-maturity bonds, to sell off. And yet they didn’t – they actually rose as the news hit midweek.

Of all the many bewildering features of financial markets, this frequent disconnect between news and market reaction is perhaps the Queen of Bewilderers. Why does it happen?

There are lots of reasons. The chief one is that markets anticipate events well before individual commentator’s cotton onto them. This almost mythical ability to see into the future has been dubbed “The Wisdom of Crowds”. That crowds can be wise will be news to many of us, particularly after Sunday night, but there’s plenty of evidence showing that, in this respect at least, they can be. This means markets may have already anticipated, and therefore reacted to, this uptick in inflation several months back. Hence the insouciant shrug this week.

Another is that markets quickly look beyond the event itself, and instead react to the reaction to that event. Or even to the reaction to the reaction. (Picture yourself standing in front of a mirror, holding a different mirror, for a visual representation of this.) So the fact that inflation is higher than expected may mean that, instead of worrying about inflation, investors are fretting about central banks overreacting to that data, and prematurely squashing inflation (and economic growth with it) before it gets going.

Complex, isn’t it? It would be boring if it wasn’t though. It’s why we love our jobs: there’s always something happening, and tweaks to be made to portfolios.

Have a great weekend,

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

Weekly Note

The Week in Markets – 3 – 9 July

Right, it felt like something actually happened in markets this week. Nothing huge – this wasn’t Lehman Brothers or 1987’s Black Monday – but definitely some noteworthy tremors. Frustratingly, only hindsight will tell us if these were momentary wobbles, or augurs for something bigger. 

Our industry is frequently guilty of treating markets like people. Sailors do the same thing, or at least stereotyped sailors off the telly do: “The sea? Aye, she’s angry today.” they’ll mutter into their pipes, as if this massive, complex, unpredictable entity had simply woken up in a bad mood. Obviously, it’s not that, it’s an unknowable sequence of events and interactions culminating in some big waves. But it’s easier, and more fun, to give it its own personality.

Markets have that in common with seas: they too are the culmination of an unknowable sequence of events. And, just like seas, we try to pin a single motive to their actions when often there isn’t one. Sometimes, like 11th September 2001, there is an obvious cause. But more often it’s just millions of individual decisions adding up to an odd-looking move. Honest as it may be, we can’t write that in a report – it’s boring for one – so we have a go at suggesting why it went up or down. 

So here goes: Looking at this week’s moves, my best guess is that more investors are worrying that the economic recovery won’t be as powerful as previously hoped. Maybe because the virus is again proving to be a trickier-than-expected pony, or perhaps because various stimulus programs are being withdrawn, meaning that high-street spending will lose some of its oomph.

Thursday was the day when the wobbles happened. It was European stock markets that fell the most, while US shares proved more resilient. Again, it’s hard to say if this is because investors collectively think Europe’s economy will be harder hit, or if it’s due to the relative fortunes of the biggest companies listed on those markets. As I mentioned last week, Europe has higher exposure to banks, energy and natural resource companies, which means its market will benefit more from a fast-growing economy. In contrast, the US market is dominated by tech companies which, as we saw in the early lockdown, cope fairly well with an economic slowdown (and in some cases even benefit from it).

Adding to these trends was the news that oil prices climbed to their highest level for almost three years. Again, not good for economic growth, as that’s more of our money sent off to overseas oil producers, and less spent on tea and buns. So that didn’t help most share prices. Thankfully, as I write this on Friday morning, shares in Europe are on the rise again, and oil’s price has stayed put. So maybe it’s all been a storm in a teacup after all. 

That’s my second tea reference in just one paragraph. From this, I can infer, with one hundred per cent conviction, that it’s time to hit send and break for a brew.

Have a great weekend,

Simon Evan-Cook

 (On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

The Week in Markets – 28 June – 2 July

I’ve been moaning about the lack of market drama to write about over recent weeks. This one hasn’t helped, although it has made me more sympathetic towards TV commentators struggling through the inevitable Wimbledon rain breaks. But, actually, the 2% rise in global equities this week is the best part of 20 years’ interest at the current UK base rate (0.1%), which is a fairly dramatic statistic. So maybe I’m not looking hard enough.

That 2% rise is a good example of the illusion I mentioned last week: Was it actually equities rising? Or was it the thing we’re measuring them with falling? Well, we’re measuring them in sterling here, and the pound has had a duff week relative to most major currencies, so most of that ‘rise’ was actually the value of the pound dropping: it was off by more than 1% last week against the dollar. It’s hard to isolate any one reason for this weakness, so I’d put it down to a general sense that the prospect of a British interest rate rise has, if anything, moved further away.

Another indicator that it was currencies moving, not markets, is that UK equities, which didn’t get the same overseas currency boost, were off the pace: only a 0.3% rise at the time of writing.

Currency, however, isn’t the only reason UK equities lagged last week. And, for that matter, why they’ve lagged for the last decade. The make-up of the British market is radically different to that of the world’s biggest market – the US (which itself constitutes over half of the total global stock market). The UK market has heavy exposure to large oil companies, mining companies and banks, while the US market is dominated by tech giants like Microsoft, Apple and Google.

So the fact that UK equities have begun to wilt again, while US equities are regaining their mojo, tells us something about the outlook for global economic growth. Oil companies, mining companies and banks all need strong, broad-based economic growth in order to flourish. So they rallied hard after November’s vaccine announcements, as this heralded the likely easing of lockdown, and with it our thirst for buying stuff and going places, all of which need oil and natural resources.

However, in recent weeks that rally has faded, and investors have been returning to the tech giants, and with them US equities. This doesn’t mean they’re suddenly expecting a recession, but does imply they believe we’re heading back to the winner-takes-all conditions that have dominated for the last decade. That means the strongest company in any industry survives and thrives, but weaker competitors struggle just to defend their slice of the pie, let alone grow it.

Note that this is all “at the time of writing”, which is Friday morning. Later today sees the release of key US employment data. If these are wildly different to what’s expected, we could see this trend either accelerate or reverse. Finally some drama then? I should be careful what I wish for…

Have a great weekend,

Simon Evan-Cook
(On Behalf of Raymond James Barbican)

With investing, your capital is at risk. The value of investments and the income from them can go down as well as up and you may not recover the amount of your initial investment. Certain investments carry a higher degree of risk than others and are, therefore, unsuitable for some investors. 

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