Looking Forward
by Jackson Franks

For those of you that don’t know, this Friday is the mid-point of summer and as I have a Swedish partner this means there will be a celebration. Midsummer, or Midsommar in Swedish, is an annual celebration in Sweden which consists of a never-ending lunch party involving flowers in your hair, dancing around a pole and singing songs while drinking unsweetened, flavoured schnapps.

If that doesn’t sound fun enough you also get to down large quantities of pickled herring served with new potatoes, chives and sour cream, an acquired taste for sure. The Midsommar celebrations coincide with the middle of the year and I find it a great time to reflect on the prior six months and what the second 6 might bring. With COVID-19 impacting the way we have worked in the first half of the year let’s look forward at what the second half of the year may entail for the office sector.

Market Snapshot

• The US’s longest expansionary cycle in history (128 months) officially ended
• US stocks suffered their worst weekly decline in almost three months
• Brent crude fell 8.4% ending the week at $38.7 a barrel
• Gold rose 2.7% ending the week at $1730.8 an ounce

Playing the odds
by Robert White, CFA

While markets continue their remarkable rebound, the most important event for many people this month will be the return of the Premier League, something that cannot come soon enough for loyal fans (particularly Liverpool supporters). The resumption of top flight football provides a welcome distraction during these trying times as the German Bundesliga has already shown, even if the atmosphere is somewhat diminished by empty stadiums. The great thing about professional sport is that so much is captured by data, the quality and depth of which is extremely rich.

Market Snapshot

• Global equities rallied to post-lockdown highs
• Big upside surprise in US jobs data
• Brent crude rallied 19.7% ending the week at $42.3 a barrel
• Gold fell 2.6% ending the week at $1685.1 an ounce

The SpaceX Factor
by Alex Harvey, CFA

On Saturday night at 22:11 hours I was fortunate enough to see the International Space Station (ISS) blazing across the darkening London skyline at 17,000mph. For budding astronomers the Star Walk app points out where and when to look, and with it orbiting over 15 times per day you’ve plenty of opportunity to view it (the stunningly clear UK skies obviously help, as does the night sky to spot it reflecting the sun from above the horizon).

Market Snapshot

• Widespread protests and riots are taking place across the US
• Trump announced that Hong Kong would no longer receive a special trade status
• Brent crude rose 0.6% ending the week at $35.3 a barrel
• Gold fell 0.3% ending the week at $1730.3 an ounce

Size Matters
by James Klempster, CFA

There’s no two ways about it: size matters. We live in a society that admires big – The Angel of the North, the Great Wall – yet we also revere the precision of small – the microprocessor, automatic watches. When it comes to disadvantages, both large and small also can be found wanting. Needless to say, in the world of fund management things are equally nuanced.

Market Snapshot

• Several countries ease lockdown restrictions from today
• Risk assets continued to recover last week
• Brent crude rallied 17.1% last week to $31.0 a barrel
• Gold rose 0.1% to $1702.7 an ounce

Risks and opportunities in fixed income
by Andrew Hardy, CFA

Bonds, issued by both governments and corporates, will always have a significant role to play in multi-asset portfolios due to their inherent stability and reliable cash flows, which provide much needed balance for other riskier positions. However, recent developments spurred on by the COVID-19 crisis should prompt investors to consider deemphasising the focus on government bonds from this point and increasing allocations to corporate credit.

Market Snapshot

• Positive trial results for COVID-19 treatment and vaccine boosts sentiment
• European countries plan loosening of lockdown measures and partial reopening of economies
• Brent crude rose 23.3%, ending the week at $26.4 a barrel
• Gold fell 1.7% ending the week at $1700.4 an ounce

COVID-catalysed structural changes in global real estate?
by David Lashbrook CA (SA), CFA

As a landlord and investor in real estate, I am closely watching how the world adapts to the global lock down. In our case at Momentum Global Investment Management, the transition from office to homebound working has been seamless. I wonder if this is going to cause a structural change in the demand for office space over the medium term as companies renew their current lease commitments and review their ongoing office accommodation requirements.

Market Snapshot

• Weak earnings and oil market chaos hit equities
• April flash PMIs point to crippling impact of the pandemic
• Brent crude fell 23.6% ending the week at $21.4 a barrel
• Gold rose 2.8% ending the week at $1729.6 an ounce

Drop the top
by Richard Stutley, CFA

A lot has changed and at the same time many aspects of our lives and work go on much as before. We met last week for our regular round of asset allocation meetings just like we always do, only this time via video link rather than all sat around the desk. One area that looks interesting to us currently is convertible bonds, which in many cases are trading cheap relative to their component parts: the straight bond and the equity option. While convertible cars, or drop-tops, tend to dominate the drawdown phase of most people’s lives, convertible bonds have something to offer in the earlier accumulation phase.

Market Snapshot

• The global number of coronavirus cases surpassed 2 million last week
• China printed a 6.8% first quarter fall in their year-on-year GDP growth
• Brent crude fell by 10.8%, ending the week at $28.1 a barrel
• Gold fell 0.8% ending the week at $1682.8 an ounce

Some things never change
by Michael Clough

In many ways, life has changed so much in recent weeks. Our usual routines suddenly seem distant memories. In other ways though, some practices haven’t changed at all. The ongoing management of our portfolios and two key components which underpin this, asset allocation and manager research, have continued uninterrupted. Of course, the way we carry them out has changed.

Market Snapshot

• Global equities reverse some of the previous week’s gains, but relatively contained
• Global employment numbers and service sector PMIs plummet
• Brent crude surged 36.8%, ending the week at $34.1 a barrel
• Gold fell 0.5% ending the week at $1620.8 an ounce

China’s recovery
by Stephen Nguyen, CFA

We are living in unprecedented times, with much of the world under lockdown due to COVID-19. There are a multitude of potential outcomes resulting from the increasingly extreme global measures being taken to prevent its spread and of course many unanswered questions regarding the lockdown exit strategy or how it all ends. While we are yet to change our portfolios allocations materially, we are making evolutionary changes to the underlying holdings to emphasise balance sheet strength. It doesn’t presently seem appropriate to add significantly to portfolio risk: we stick to our unwavering belief that a well-constructed diversified portfolio is the most efficient way to achieve longer term outcomes. Nevertheless, it is instructive to sketch positive scenarios into our outlook and where better to look for inspiration for a positive spin on events than China, which was the first country to go into full lockdown at the end of January. What can we learn and more importantly what can we expect?.

Market Snapshot

• US equities rebounded by record amounts early in the week
• The US agreed upon a $2.2 trillion fiscal stimulus package late Tuesday
• Brent crude fell 7.6%, ending the week at $24.9 a barrel
• Gold rose 8.6% ending the week at $1628.2 an ounce

(iI) Liquidity of Property
by Jackson Franks

As we temporarily enter a new way of living, I spent Wednesday night giving my grandparents a step by step guide on creating a Skype account. After a good 45 minutes (which felt like weeks) and a lot of patience we managed to complete the process. They couldn’t quite believe that they could see me and me them as we sat down to eat dinner together via Skype. With my Grandpa’s interest in the financial markets, especially the real estate sector, we had a lot to talk about considering six UK open-ended property funds were suspended last week with the expectation that others will follow this week.

Market Snapshot

• The rapid spread of COVID-19 has led to the continued lockdown of parts of Europe and the US, although a steady slowdown in cases is being seen in Italy
• Global equity markets declined 12.2% over the past week
• Brent crude fell 20.3% ending the week at $27.0 a barrel
• Gold fell 2.0% ending the week at $1498.7 an ounce