Market Matters
10 August 2024
To all Financial Friends
Our last commentary was just 2 days before the UK General Election just over a month ago. We believe that the risk and potential reward to your investments depends on political and economic conditions. Under the heading of 'future outlook' we look at both headings and reflect on how the current conditions and future outlook affects each of the five strategies we have offered.
If you enjoy reading then here it all is! If you prefer 10/15 minutes on Zoom then skim read this and come on through. Use my calendar link to book a time to talk. www.calendly.com/yourfinancialfriend
The recent past will have brought some joy in that nearly all assets you hold will have put on worthwhile gains. Despite the very recent global stock market fall and over just the Last 12 months to date, here are the gains made. Global Technology +13.46% Gold and Silver +13.19% (over +25% in the last 6 months) Jupiter's Corporate Bond +12.21% Global Infrastructure +12.21% Strategic Multi Asset +8.15% American Equities +7.49%. The remaining basket of four funds commonly used by our students gained between +3.13% to +2.16%. Students holding funds tracking the FTSE 100 Index have seen gains of +12.68%
Markets have been boosted by the belief that interest rates will come down and inflation is under control. Both these outcomes could boost the global economy and are one of the main reason why your investments have risen over the last 12 months. Here in the UK the Bank of England reduced bank rate by 0.25% with optimistic hope for the future yet still managing to echo a note of caution.
The Federal Reserve in the US (sort of same as the Bank of England here) left their interest rate the same while investors think their economy needs rates to go down now. This delay in reducing rates has added to the worries of investors that their financial system is not confident of the downward inflation outlook.
The Current State of Play
Financial press headlines like the FT (6th August) 'Global Stock Markets Fall Sharply' may ring alarm bells, but the gains, reported above, today (9th August) include and allow for the market falling to date. As I write, virtually all global market indices are showing gains. So what happened? Seemingly out of the blue and without prior awareness a raft of negative data hit the US economy. The knee jerk reaction was fear of a US recession. Bad news for the whole global economy.
Economists say 'investors are exaggerating the risks of a meltdown in the global economy'. Economists also indicate the fallout can be contained by appropriate action by central banks. Whichever way the market goes the Five Strategies (attached) shared and adopted by Financial Friends can achieve gains, and/or help to protect in these changing volatile markets.
The Outlook?
Here in the UK the change to a Labour government has been accepted smoothly. New Chancellor of the Exchequer, Rachel Reeves, seems intent on keeping a firm grip on the economy. Her first Budget during the Autumn will prove the truth of the words spoken by her to date. A firm grip likely means cutting back on public spending and benefits and subtle but important tax rises. This will help confidence in the economy for the longer term but be painful in the short term.
A firm grip means less money in our pockets which means we spend less which of course is not good for business. How will our new Chancellor manage to achieve economic growth, essential for our well being, and stabilize the economy at the same time? Will she demonstrate the skills to achieve this outcome?
Politically in the USA comes the election there in November. Donald Trump vs Kamala Harris! Key for us and the rest of Europe could mean the outcome for Ukraine/Russia. Donald Trump means a win for Putin and a threat to Europe? Meaningful implications for investors and Financial Friends - let's stay 2 steps ahead of the market as much as we can.
The Future and our Five Strategies
Please find an attachment showing how the strategies adopted by a number of Financial Friends could prove valuable for the future, short term, medium term and longer term.
Reminders
If you would like to talk things through then here again is the link www.calendly.com/yourfinancialfriend. Always here with information and guidance. There is always money to be made in the markets. Wherever the money goes the price of what it invests in rises. Stay 2 steps ahead of the market. The stockmarket never 'crashes', only a part of it does. Infrastructure funds have now come to the fore showing steadier performance. The latest market fall in the last few days triggers belief of increased volatility. See how the attached 'strategies' can benefit from these expectations.
War and rumours of bigger war remain in our thinking, so does Donald Trump and the US election. Further commentary, if needed, may be sent as we all keep our eyes open and our ears listening. Read all the above as a commentary and consider together with what you read here and read and hear elsewhere. Take your own view of what to do. We all need to make our money work hard for us so our money outlives our lives, so stay knowledgeably invested!
PLEASE NOTE: A financial or economic commentary like these, are written to explain, interpret or give an opinion on economic events and markets to help readers understand what’s happening and why it matters. Designed to help you make informed decisions of your own by making you aware of opportunities, risks and potential rewards in the market.
