This is the third update from me. The first one was understandably, a little downbeat in outlook for the world economy and asset prices. The second was more upbeat and this update confirms that I believe there are reasons to be optimistic.
Late last week the US payroll numbers delivered one of the biggest economic data shocks: consensus had been for 7.5 million job losses whereas the report showed 2.5 million job gains! Other data suggests that domestic activity in the US is improving with weekly mortgage approvals and house purchases back to levels seen in mid-January alongside a rebound in new business openings. Why do I consider this to be a reason to be cheerful? Well, the US is nearly always the first economy to come out of recession and at a faster pace than anywhere else and it consistently grows faster than other developed markets. This growth normally spreads to other economies including Europe and the UK. You are probably familiar with the phrase: “when America sneezes, the world catches a cold”.
Last week the European Central Bank (ECB) boosted its pandemic-driven bond buying programme by 600 billion Euros and extended it until at least June 2021. So, central banks continue to support their populations, businesses and financial markets. Governments are also doing “whatever it takes” and it is likely the UK Government is going to have an emergency budget in the coming months that could announce large scale spending plans and other measures to stimulate the economy. Let’s hope that the EU and UK Brexit trade deal negotiators can progress their discussions towards a deal.
The world’s largest pharmaceutical companies at the forefront of COVID-19 vaccine development advise they are making progress and production lines are already set up for when a vaccine becomes available. Positively, they are expecting a vaccine to possibly become available as early as autumn or winter this year. This is a constructive backdrop for getting most people back to work, which would be supportive for asset markets.
Contract tracing and the NHS coronavirus smartphone app have identified infections and reduced the spread of the disease, official figures suggest. Analysis of the system that is being used on the Isle of Wight appears to show that it has contained the infection during the trial. The data gives hope that the integrated system could help to control infection rates as the lockdown is eased.
The world’s health seems to be on an improving trend, which is leading to a slowly normalising society, which, in turn, is generating improving economic data. I hope that all continues.
Finally, for now, the news that the families of front-line workers are to be exempt from Inheritance Tax should they die as a result of COVID-19 will be welcomed by many. The government calls this the “blue light exemption”.
I hope you and your family continue to stay safe and as always, please do not hesitate to contact us if you would value a discussion.
I was delighted to speak with Colin McInnes, IronBright’s Chief Investment Officer recently. During the short video below, Colin provides his views on where we are with markets and the economy in the midst of this crisis and where they may go next. I hope you enjoy the update.
Brunel Capital Partners
One positive thing about juggling 2 jobs and 2 young children during lockdown is that my wife and I don’t have much spare time to dwell on the state of the world outside of our four walls.
That said, when the kids are in bed and we finally have time together, one topic we do talk about is whether lockdown will change how we live our lives in the future and are the things we aspired for before still the things we want from this life.
Undoubtedly, the slower pace of life has been welcomed as well as enjoying lots of quality time with our boys. Being largely confined to our home does however help focus the lens on what is important to each of us and how we could embrace those things when lockdown eases to the extent we can do them. It has helped us realise the importance of our physical and mental wellbeing and, judging by the amount of ways we have found/bought to communicate with others, our relationships with friends and family.
Speaking with friends (I include our lovely clients in this category) and family it has become a common theme that many felt too busy and pressured pre-lockdown. I have had several conversations where (over?) commitment to work at the expense of their home lives is being questioned.
When we do find the time to look beyond our own four walls it is clear how lucky we are. I know that I had taken some things for granted. The freedom and luxury we enjoy compared to most people in this world is put in stark focus when for many of us our most pressing issue is that we can’t buy flour and eggs.
Never again will I take for granted the freedom we all enjoy to travel, to follow our dreams and passions and to hug the ones we love.
Plans are always subject to change which is why we like to be part of the long-term journey with our clients. It is however times like these that bring a sharper focus on these plans.
So, if you are thinking of a change be it working less (or more!), retiring earlier or want to know if you can follow a previously unspoken dream – speak to your planner. We will help you work out if you can do this already or what you need to do to make it happen.
Chartered Financial Planner
The continuation of the lockdown, albeit with a chink of light from the government on this being relaxed slowly through June and July, continues to give us time at home we would not normally have had. In my conversations with clients, I have been impressed by how we have adapted and how we have used the time to reflect and consider some of the benefits of these circumstances.
Following the frosts of last week, it definitely feels Summer is now in full flow and judging by my recent trip to the garden centre to buy some compost, gardens are probably looking their best in years. You probably guessed that I was greeted by a wry smile and went home with an empty Land Rover! Fortunately, Dr Buchan came up with a solution of using her stash of grow bags to pot up yet more plants and vegetables. Plant trading has become the new lockdown norm – social distancing firmly adhered to!
The fruits of her labour are now in full bloom. The view from my home office is a show of colourful Lupins (yes, I have been educated on all our different variety of plants). Much more pleasing for me, I have picked our first strawberries and the raspberries are not far behind. The first picking is always the best. The vegetable garden is now fully planted, and we wait to be self-sufficient over the next few weeks. The good life is in full swing.
Even our pets have joined in the joys of summer. Four mice caught last night by our two cats; eggs a plenty from the chickens and our 4-month-old Cockapoo now thinks he can sniff out truffles. I hope so as my Italian father-in-law will be very happy. A trade of truffles for wine seems fair to me!
I am sure your discussions with us have encompassed similar topics. With holidays on the back burner we can share garden and family stories before moving onto your reviewing your financial plans. Dan and I were only saying today how we missed our face to face client meetings; Zoom/Teams and telephone calls are not quite the same, but as we adapt, I am sure we can get better.
I hope that you all remain healthy.
Brunel Capital Partners
I hope that everyone is keeping safe and well.
The slight easing of the lockdown has lifted spirits in the Rylett household somewhat. We are now able to meet up with another person from outside of our household for the first time in months and just get out a bit more. Exciting stuff! I think this is extremely important for our sanity and mental health.
For us at Brunel, it is more of the same. The safety of our team and clients is paramount, so we will continue to work from home and we will only return to the office and offer face to face meetings when it is safe to do so.
There has been lots of talk about a recession this week and markets have been reacting to the news. We all know that the economy will suffer as a result of the crisis but what we don’t know is how deep it will be or for how long it will last.
As always, our advice is to maintain a long-term approach and not make any knee-jerk reactions. Your investment portfolio should be aligned with your objectives and if they haven’t changed, your portfolio shouldn’t change.
I wanted to share a couple of articles with you this week. The first, from me is a short note on being prepared for the unexpected. The second is from our friends at Vanguard about the nature of economic recoveries.
I hope that you find them of interest and as always, we welcome your feedback and if there is a particular topic you would like to hear from us on, please let me know.
If you have concerns or questions or would like to discuss your financial arrangements, please get in touch with your financial planner.
With best wishes
Brunel Capital Partners
We’re here for you – a message from the Brunel Team
To all our clients, we are here for you.
We have taken the necessary steps to deliver our service from our homes but as you can see, we are in regular contact with each other. The transition to working from home has been successful over the past 7 weeks. We are really benefitting from the extensive use of technology.
Boris Johnson is due to share his “roadmap” for easing the coronavirus lockdown on Sunday in a televised address to the nation. However, this will follow today’s (7th May) official review of the nationwide shutdown, which is expected to be extended by a further three weeks. So, any easements would not be permitted until the end of this month. We will be working from home for some time but this does not pose a problem albeit, we all look forward to the day that we can meet up with our clients on a face-face basis.
Some clients have asked whether investment markets have reached the bottom? Well, markets have displayed a remarkable turnaround since the lows in March. How can this be when the news is so bad, not only economically but health wise too? It may well be that the lows have been etched out, at least for a while. My point is that we all know the bad news and exactly what has caused it. We know the virus will be with us for quite some time to come and we are going to have to adapt. Business is remarkably good at adapting, at least the good ones – you have to deal with change all the time.
There has been unprecedented action from central banks and governments. Governments have taken fiscal action injecting money into both business’s and people to make sure there will be an economy to come back to. It’s not perfect, but it’s a good work in progress.
We will do our very best to help our clients navigate through these very difficult times, rest assured.
What do you dream of doing most once this is over? I crave sitting at a beach restaurant with a glass of great red wine, somewhere buzzy, surrounded by happy people! There are other activities such as having family and friends over, watching a film from a cinema seat and to get in the car and drive for longer than is currently permitted.
Pop Master update: my wife continues to win!
The Brunel team are here to help you, so please do not hesitate to get in contact if you would value a discussion. In the meantime, I wish you and your family a happy and healthy bank holiday weekend.
Brunel Capital Partners
“It’s an unforeseen problem,”…
“It came out of nowhere”.
These were the words President Trump used to describe the new coronavirus. The market crash that accompanied the crisis was a similar surprise.
It has been described as the Black Swan of 2020, a Black Swan is the term used to describe an event that comes as a complete surprise and has potentially severe consequences. It comes from the observation that European explorers, when in Australia, saw black swans for the first time. They had only ever seen white swans.
In his book, “Black Swan” published in 2007 Nassim Nicholas Taleb popularised the term, just before all hell broke loose on the financial markets. Black Swans can only be seen with hindsight, and therefore they are often used as a convenient excuse. “We didn’t see that coming” is often said by politicians or fund managers when admitting their failure to spot any warning signs.
“Expect the unexpected.” “Be prepared” “contingency planning.” These are all phrases that we are familiar with. We all take out insurance for events that we hope will never happen.
So I don’t buy the Black Swan argument. If we are looking for a metaphor, I love the idea of the grey rhino. Michelle Wucker writes in her book, “The Gray Rhino”, that a grey rhino is a highly probable, high impact, yet neglected event. Grey rhinos are not random surprises, but occur after a series of warning signs and visible evidence.
I love rhinos. They are my favourite animal. The reasons for that are probably worthy of another article. I have a picture of a rhino on the wall of my office, amongst other items that remind me of this incredible creature.
Before a rhino charges it stomps around a bit, snorting and getting angrier. It is giving you plenty of opportunity to act, take action and get out of the way. Believe me, you want to get out of the way. Once this two-tonne beauty gets going, it is very difficult to stop and the damage could be irreparable.
So why am I talking about this? What has this got to do with you or your finances?
Throughout our lives, we are constantly faced with grey rhinos. There will be another global pandemic in the future. How can you prepare yourself for it? Could this be by ensuring you have enough savings to fall back on to get you through the difficult times? Is your investment portfolio aligned with your goals and your appetite for risk? Can you still do all the things that you want to in life if markets tumble? What have you done to ensure that your family will be protected in the event of death or illness?
This list is not exhaustive but just some of the questions that a financial planner can help you answer.
So my advice is to pay attention to the grey Rhino. Look to head off the things that we can see in front of us. The alternative is to spend our time, looking back for black swans.
If I was to come face to face with a rhino. I’d want a plan.
If you want to get ready and build that plan, please get in touch.
So, both my wife and sons asked me today how long we had been in lockdown? I was surprised I could not remember. A good friend of mine said it was probably because I was comfortable working from home and the simplicity of our new life was creating a relaxed environment. Having a 12-week-old puppy around has helped. No time to reflect or get bored!
I am sure you are all adapting in your own way and have developed new routines. Virtual Pilates and Yoga sessions 3 times a week has been my favourite so far. I watched Grayson Perry last night on how he is encouraging people to use art to help fill their lockdown days. It was interesting to hear what he missed most of all was being able to dress up as a woman and show off. Each to their own.
As you know from our regular weekly communications, our team have adapted to their new working practices and of course, like you, they are looking forward to returning to normality sometime in the future. None of us yet know what this is going to look like! In the meantime, we continue to devote our energies to look after your financial plans and wealth.
This week has been a relatively quiet week in the financial markets. Given the extreme levels of monetary and fiscal stimulus, we believe there is a high chance of a strong economic and stock market recovery to follow. However, we continue to believe the best case over coming weeks is a period of consolidation, while the worst case is a fall back towards the low we reached in mid-March. Much depends on market reaction as we move into the heart of the earnings reporting season and receive more economic data that reflects the significance of the shutdown.
Brunel Capital Partners
I’ve always believed that a picture paints a thousand words.
When I think of this adage I am always reminded of a family holiday to Spain when the kids were much younger. It was just another little lie that I’ve offered up to them when I said “Come on…this will be great!” as I ushered them into the Prado Museum in Madrid. On reflection I must have told them a very good many white lies over the years, except of course when they ask “who I love most?” and I answer “sorry boys, it’s your sister”. But back to the story. I’m not that steeped in culture, more of a Messi and Guscott man than your Picasso and … um…um (well you see my point) but I thought it would be good for all our souls to browse the collections on display. It was also, I remember, very hot outside and another good reason to go inside was that I expected it to have good air conditioning.
Now, among other masters on display that day, Picasso was in the house and I needn’t have looked through all the notes and sketches that preceded his “Guernica” to be stopped in my tracks when I saw the main event, and to absolutely, instantly get what he wanted to say in that extraordinary painting. A book filled to the brim could not convey the same tragedy, power and emotion of “Guernica” and that moment has stayed with me to this day. Any time I think of it I can see it in my mind’s eye. Unfortunately, we remain the Luddites that we are, but I do not regret that museum trip in the slightest.
Now the Vanguard analyst behind the chart detailed below is no Picasso, although I’m sure that they would be very pleased to hear they are being mentioned in the same sentence as the great man. When I experience significant problems I always try and see the bigger picture, the context, and the Vanguard chart allows this when we consider the current turmoil in the markets. At a glance we can see that over time there are far more Bull markets than Bear markets, that there is more upside than downside, and in financial terms more good than bad.
As always, let us know if there is anything more that we can do for you and please do not hesitate to contact us to share any comments or concerns that you may have.
With all good wishes,
Brunel Capital Partners
Good afternoon everyone,
I hope that you and your families are keeping safe and well through these troubling times. If the virus has affected you or your loved ones in any way, our thoughts are with you.
As we enter week four of lockdown, the novelty has certainly worn off. The lack of structure and school work during the Easter holidays has certainly challenged the three boys in the Rylett household. Boys don’t do arts and crafts so have had to find other ways to amuse themselves!
There does seem to be a glimmer of hope and a sense that we are reaching the peak and the so called curve seems to be flattening. There is also some talk of some success in some of the therapeutic drug trials.
Whilst a further three week period of lockdown has been announced it is pleasing to see news of how other European countries may handle an exit to the lockdown. Whilst it will be some time before a return to normality, some easing will be good for everyone’s sanity and the economy.
For those of you that have been to our office in Bristol, you may have seen this canvas on our meeting room wall.
The simple message that this picture carries has resonated with me perhaps more so than normal during this crisis. We can’t affect what is happening to us but we can certainly change the way we react to it.
As a business, Brunel is absolutely intent on coming out of this crisis in a better place as we use this time to work on the things that we can control.
The Brunel team have continued to work hard behind the scenes to ensure that our service to you, our clients can continue in the way you have come to expect. We thank you for adapting so quickly to a new way of working where we have asked you to.
The team are also working tirelessly to ensure that our new secure client portal is rolled out to all of our clients. Our plan to launch our new investment platform, the IronBright Investment Platform is gaining momentum as we head towards our June target date, initially for Bristol based clients and then Wells clients, later in the year. Your adviser will be in touch to discuss this in more detail.
We can’t control or predict the markets or the impact this crisis will have on the economy over the long-term. What we can do is ensure that you have a robust financial and investment plan in place that can weather the storm and keep you on track.
It was the boxer Mike Tyson who once famously said “Everyone has a plan until they get punched in the face”. Well, this coronavirus crisis is that proverbial “punch in the face”. If you need to check whether you are still on track or whether any adjustments to your plan need to be made, please contact your normal adviser.
If anybody has any feedback or would like to get in touch, please email me on email@example.com or contact your adviser.
I hope everyone stays safe and well.
Brunel Capital Partners