Yet another update on China
by Lorenzo La Posta, CFA — Portfolio Manager
— China is facing a different set of issues that still have global consequences
For some reason, any time it’s my turn to write our weekly Global Matters blog, there is something happening in China worth writing about. Or perhaps, it is just my colleagues deliberately leaving me with the honour of updating our readers on the latest developments within the Chinese walls (pun intended). Luckily, these days we are not short of significant news and while the west is struggling with rising rates and elevated inflation, China is facing a different set of issues that still have global consequences.
- Global equities fell 2.1% last week
- Early voting in the US midterm elections has begun, with Republicans expected to take control of the house and gain a slim minority in the Senate
- Brent crude rose by 2.9% over the week to $98.6 a barrel
- Gold rose by 2.3% to $1681.9 per ounce
Will the strong dollar continue to spook markets?
by Robert White, CFA — Portfolio Manager
— At times such as this it is important to remember that the global economy is cyclical
We are living in a dollar-dominated world, a fact most famously captured by John Connally, President Nixon’s Treasury Secretary, who once told a group of global finance ministers “the dollar is our currency, but it’s your problem”. Students of economic history will be aware of the disruption that a strong US dollar can cause, however, at times such as this it is important to remember that the global economy is cyclical, and such periods eventually do pass.
- Global equities returned 4% last week
- Developed markets saw positive returns whilst emerging markets were a mixed picture with China notably seeing a large decline
- Brent crude oil rose 2.4% last week to $95.7 a barrel
- Gold fell 0.8% last week to $1644.9 per ounce
(IL)Liquidity of Property
by Jackson Franks — Analyst
— Open-ended property funds are not the only way to gain direct exposure to the property market
As mentioned in my previous blogs I am an avid Watford football club supporter. Although there are some ups and (a lot more) downs, being a Watford supporter has had one positive outcome. It’s enabled me to cope with the ever-changing UK political situation. Since David Cameron resigned as Prime Minister in 2016, following the UK’s vote to leave the EU, there have been three UK Prime Ministers over the preceding six years, with the fourth set to be announced.
- Global equities rose by 3.6% last week
- Xi Jinping was declared as the Chinese Communist Party Chief for a third time as he further consolidated his grip on power. His third term as General Secretary will make him the longest ruling Chinese leader since Chairman Mao
- Brent crude rose by 2.0% over the week to $93.5 a barrel
- Gold rose by 0.8% to $1657.7 per ounce
by Alex Harvey, CFA — Senior Portfolio Manager & Investment Strategist
— A modicum of value has come back into the UK bond market
Three weeks ago, I had just landed in Morocco and with impeccable timing, as I worked out how to use Agadir airport’s ATM, Sterling tanked on the back of the UK government’s now well pored over ‘mini-budget’. I found it mildly amusing that the ticker for the Sterling-Dirham currency pairing is GBPMAD. It certainly felt like it! Of course, this wasn’t a bout of Dirham strength but a Sterling maelstrom resulting from the aforementioned budget, and the Pound was in freefall against every major currency.
- Global equities fell by 1.7% last week
- The International Monetary Fund released their latest round of economic projections leaving their 2022 global growth forecast at +3.2%, but downgrading 2023 to +2.7%
- Brent crude fell by 6.4% over the week to $91.6 a barrel
- Gold fell by 3.0% to $1644.47 per ounce
Welcome to the New Age
by Matt Connor — Investment Analyst
— The recent explosion of TikTok has made brands rethink their advertising strategies
Like it or not, there is no doubt that social media is now an integral part of our lives, with our online presence an extension of who we are, and for many, who they aspire to be.
There were almost three billion monthly active users on Facebook in the second quarter of this year, some 37% of the global population. For a business, social media offers a treasure trove of potential customers, but still so many seem to get it wrong when advertising through these channels.
- Global equities returned 1.7% last week
- World indices and commodities saw positive returns
- Brent crude rose 11% last week to $97.9 a barrel after The Organization of the Petroleum Exporting Countries Plus announced a two million-barrel per day cut in target production
- Gold rose 2.1% to 1694.8 per ounce
Data, data everywhere and not a number to guide
by Richard Parfect
— Humans like to have a number to hold onto as it feels tangible and brings confidence
All through life our brains like to use “general rules of thumb” when dealing with problems. These rules may come through personal experience or maybe they are more prescriptive and laid down by doctrine.
When dealing with problems I have sometimes found it useful to use a “factor of three”. For example, if I plan to do a DIY job in the house, bitter experience tells me it will take three times as long as I might expect. Such a guide can help avoid the shock of under-estimation of an outcome.
- Global equities fell 2.6% last week
- The UK’s ‘mini’ budget continued to cause carnage across financial markets. The International Monetary Fund urged the government to change the course of action
- Brent crude rose 2.1% over the week to $87.96 a barrel
- Gold rose 1.0% to $1660.61 per ounce
Calm before the storm
by Mark Wright, CFA
— We now find ourselves in the eye of an inflationary storm
Not long back from my first holiday abroad since the pandemic, I was looking out my window longing to be back swimming in the warm Mediterranean ocean off the East coast of Mallorca. I will spare you the details of the travel chaos we experienced both ways, it was a lesson learned!
I was expecting 10 days of sun and nothing much else weatherwise, but it didn’t quite turn out like that. We were fortunate enough to witness not just one but two thunderstorms. I say fortunate because they served as a healthy reminder that it is always calm before the storm.
- Global equities fell by 5.1% last week
- The past week saw 500bps of global rate hikes across 15 central banks including The Federal Reserve and the Bank of England
- Brent crude fell by 5.7% over the week to $86.15 a barrel
- Gold fell by 1.9% to $1643.9 per ounce
The Law of Lindy
by Tom Delic
— Often the most successful new businesses are centred around ideas that satisfy age-old basic human wants and needs.
In 1964, American author and academic Albert Goldman wrote an article in US magazine The New Republic, titled ‘Lindy’s Law’. While dining at Lindy’s, a New York delicatessen, Goldman became interested in the discussions that took place between entertainment industry veterans who frequented the restaurant and would analyse the latest televised comedy shows. While the Lindy effect is a useful heuristic to apply across many aspects of our lives, we can also use it as a filter in the portfolios we manage for clients.
- Global equities fell by 3.3% last week
- Commission President Von der Leyner is considering various measures to deal with the current cost of living turmoil
- Brent crude fell by 7.9% over the week to $93.0 a barrel
- Gold fell by 1.5% to $1712.2 per ounce
Navigating fund fees and finding value
by Gary Moglione
— New regulations in the UK are making it increasingly difficult for multi-asset funds to hold investment trusts.
As investors in the investment trust market, we have seen the UK market grow significantly over the years. In addition to diversification and access to many asset classes not usually available to retail investors, closed-ended trusts have significantly outperformed open-ended funds over the long term. In the UK, over the ten years to September 2021, the average investment company returned 265% versus the average open-ended fund returning 70%.
- Global equities fell by 1.6% last week
- In Ukraine, talks with President Zelensky, UN Secretary General António Guterres, and Turkish President Recep Tayyip Erdoğan were held in Lviv with Turkey acting as the key interlocutor between Ukraine and Russia
- Brent crude fell by 1.5% over the week to $96.7 a barrel
- Gold fell by 3.1% to $1747.1 per ounce
Change – it’s a constant
by Gary Moglione
— We need to operate closer to the frontiers of where technology is going.
Back in February I gave a sob story of my childhood of how the 1970s and early 80s saw “austerity” hit my household, including my father’s industrial clothing factory closing down. Recent developments on the Continent, brings another childhood memory to mind; cold housing. Admittedly, the central heating system, decades past its use by date and an insufficiently insulated house, was not conducive to staying warm. However, an article caught my eye in the Financial Times this week that showed the average temperature in British homes has risen considerably since the 1970s; even those that actually had central heating in 1971 saw average temperatures rise from circa 14C to 18C today.
- Global equities returned 3.0% last week, marking the first fourth consecutive weekly advance this year
- Stocks rallied after US data showed signs that inflation, while still elevated on an annualised basis, had started to slow
- Brent crude rose 3.4% last week to $98.15 a barrel
- Gold rose 1.5% last week to $1802.4 per ounce