Innovation

Can governments borrow as much as they want?

Research: 11 November 2024

‘Income tax was first introduced to England in 1799. Napoleon was planning to invade and we had an (allegedly) one-off whip round to raise money to fight.’ Senior Research Analyst Robert Fullerton discusses the evolution of government borrowing in this week’s Innovation.

Nothing is certain except for death and taxes

Research: 04 November 2024

Financial markets are in the midst of a crucial two-week period. In the UK we had the eagerly anticipated budget from the new Labour government, whilst the US had one of the busiest weeks of the Q3 earnings season with 5 of the Magnificent 7 reporting.

Don’t look back in anger

Research: 28 October 2024

Rachel Reeves is due to announce her first budget on 30 October. It’s very likely the tricks will outweigh the treats. Labour has said there will be no changes to VAT, income tax or employee national insurance. In politician (a particularly difficult language for non-natives) this means things like Capital Gains and Inheritance tax will very likely be altered.

China Crisis

Research: 21 October 2024

China has repeatedly tried to stimulate its equity market over the years. But what is the real root cause of the problem?

Economists on trial

Research: 14 October 2024

Warren Buffett once semi-joked that any company that has an economist has one employee too many. It’s easy to see why. History is littered with examples of them getting things wrong. Most recently, they failed to understand the Federal Reserve’s thinking and encouraged everyone to pencil in that proved to be far too premature.

Cross Border Trades

Research: 07 October 2024

Global trade is always more complex than it seems. Bans or large tariffs on trades may appear significant but there is always a way to get around them. In 2022 the UK, US, EU and other G7 nations revoked Russia’s most-favoured-nation status, which meant Russia now doesn’t have to be treated fairly in terms of trade by these nations.

Changes

Research: 30 September 2024

A good manager should be reacting differently when they see more or fewer opportunities and will maximise profit by increasing or decreasing turnover at the right time.

All aboard Noah’s ark

Research: 23 September 2024

Let’s start with a statement of the obvious. Market participants generally have a clear preference for the bull to prevail over the bear. It’s the same story in the battle of the birds. All else being equal, almost everyone prefers a hawkish policy to a doveish one.

Magic Money Trees

Research: 16 September 2024

The OBR believes that over the next 50 years, based on current trends, UK public finances are unsustainable. Public spending would increase from 45% to 60% of GDP, but tax revenue would only be about 40%. This scenario would see debt at 274% of GDP.

Blame it on September

Research: 09 September 2024

"The US treasury yield curve has disinverted, and is now broadly flat. This is significant as this is the first time in 26 months.”

September Surprises

Research: 02 September 2024

Goodness me. It’s September. This has once again managed to catch me off guard. With hindsight, the signs were there. We go around the sun at the same rate every year, and we count the days in August up to 31 every time.

The Increasingly Volatile State of Markets

Research: 19 August 2024

I have just returned from a 2-week summer holiday – a period which coincided with particularly volatile markets in the first week of August, which may have been unsettling for you.

Whenever periods of headline-grabbing market turbulence occur, as professional investors we are inundated with jargon-filled rationalisations from experts across the industry. From my holiday, I was also more acutely aware of how these events were reported in the mainstream media.

All our yesterdays

Research: 12 August 2024

Last week saw some of the most severe market moves for some time, mostly based around Japan, but sent waves through other markets as well. The market rebounded very quickly in the short term, and suddenly we see lots of commentary about the market’s failure to “predict” these moves.

Cash vs Investing

Research: 05 August 2024

Since the 2007/08 global financial crisis we have seen low interest rates consistently for over a decade. This has meant little to no return on cash, resulting in a lower allocation within portfolios. For the first time in a long time, higher interest rates have made it appealing for investors to move money into cash or money market type investments. Now however, with rate cuts beginning, is cash really the right place to be for capital growth or to sustain income?

July’s reporting – sorting the wheat from the chaff

Research: 29 July 2024

The summer reporting season is in full swing. Results so far have generally been reasonable, although we’re still awaiting releases from many of the most significant companies. We are five short of a full magnificent seven complement, for example.

Fickle Friends

Research: 22 July 2024

JD Vance was previously only known to me as the author of a book called Hillbilly Elegy, which later became a Netflix film. It’s an autobiographical story about his working-class origins in the Appalachian mountains and how he overcame a difficult childhood to go to Yale. While promoting the book in 2016, he said “I’m a never Trump guy”. Now apparently he might end up as Trump’s Vice President.

The Spanish Double

Research: 15 July 2024

What a day of sport yesterday which is being dubbed as the Spanish Double. Alcaraz beat Djokovic in straight sets in the men’s Wimbledon final, defending his title. Then there was the men’s Euros final, no doubt you all know the result of that… Spain’s stock market has done well this year too.

An electoral open goal

Research: 08 July 2024

The 2024 General Election saw markets react with classic British understatement. Arguably, that’s because the large majority Labour won was approximately what was expected. But there hasn’t been a tidal wave of support behind the party. Its share of the vote has hardly changed since 2019.

French Twist

Research: 01 July 2024

France had the first round of parliamentary elections yesterday. Marine Le Pen’s far right Rassemblement National (RN – the former Front National renamed in 2018) came out on top according to exit polls, although they appear to have done slightly less well than expected.

Swiftonomics

Research: 24 June 2024

Swiftonomics is a definition which was coined in 2023, and refers to the economic influence of Taylor Swift. Last year both Taylor Swift’s Eras tour and Beyonce’s Renaissance tour caused a few global economies to have a surge in inflation.

Unwinding the yield curve

Research: 17 June 2024

You might remember towards the end of last year we did an Innovation looking at total (government + non-financial corporate) debt across various countries. Japan was at the top, but some of the next countries down seemed surprising. Sweden, Switzerland, France.

Shall I compare thee to a summer’s day?

Research: 10 June 2024

But there is another reason we think summer is indeed more lovely and more temperate. After the glut of news that comes with the darling buds of May, June brings some relative respite on the corporate results front.

May the odds be ever in your favour

Research: 03 June 2024

I have never been given much credit for the investment decision I am most pleased with, mainly because almost no one knows I did it. In the mid-2000s I kept a former employer out of Sportingbet.

Hot Commodities

Research: 20 May 2024

Alternatives can take a few forms, one particular area which sits within real assets and has been exciting this year has been commodities, with a number having gone up significantly.

What is good news?

Research: 13 May 2024

According to Factset, with in excess of 90% large American businesses having reported, more than three quarters have delivered better than expected results. That’s obviously encouraging, even when we factor in that the real benchmark for US companies is actually slightly higher than the published consensus.

The tortured correlations department

Research: 29 April 2024

What I did want to talk about is what it might mean for bond / equity correlations. Much of modern portfolio theory is predicated on this being negative – bonds go up when equities go down. In reality the correlations are dynamic and vary widely over time, including being positive.

Forever in your debt

Research: 22 April 2024

Emerging Markets have always been seen as a high risk and high volatility asset class, but as they have matured it is debatable to what extent this is still the case. Volatility in EMs has come down and has actually been lower than Developed Markets recently.

Game Theory On

Research: 15 April 2024

In last week’s innovation, my colleague Robert highlighted the risk of Iran being increasingly drawn into the Middle Eastern conflict. Following the launch of around 300 Iranian drones and missiles, he has been proven correct.

Fool's Gold

Research: 08 April 2024

My first job in financial services was as a graduate analyst at PwC in 2000, and the first thing I was asked to do was some work for the World Gold Council about whether there was any future for gold as an investment. I’m not sure how seriously everyone was taking it when they came and asked me.

If you ignore it, it didn’t happen right?

Research: 02 April 2024

Budgeting. Not the most fun thing to do in life, but needs must if you want to afford basics plus a few treats. The UK budget for 2024/25 came out the other week, and it made me realise that governments, like me, will put something in a budget and when it doesn’t work you just try to not mention it again.

No retreat, no surrender

Research: 25 March 2024

If you had been doing the same thing every day since 2007 and it suddenly came good in a small way last week, would you feel it was a success? Is it a triumph of patience, fortitude and stoicism, or is there something else you could have done? I’m undecided.

Women and investing

Research: 18 March 2024

It was International Women’s Day recently, and it made me think more actively about women and investing. It’s a huge topic, both women investing their money but also women working in the investment industry, and how important and beneficial it is for both of these to continue to grow.

The Great British ISA – will it work?

Research: 11 March 2024

The policy that caught my eye in last week’s budget was the Great British ISA. The details are yet to come, but it looks as though investors will receive an extra £5,000 of ISA allowance (a 25% uplift) to invest in UK businesses.

Analysts vs the machines

Research: 04 March 2024

I keep hearing that analysts are high on the list of people who are going to be replaced by AI. I can tell you Innovation isn’t being written by ChatGPT just yet, but I must confess I subscribed to the $20/month souped up version, in case of emergencies.

Greed and fear

Research: 26 February 2024

It’s been a busy full year reporting season. The latest data from Factset shows that 79% of the S&P 500 have released results and 75% of these earnings numbers have been better than expected. That comes on the back of good revenue growth.

Hard work to make it add up

Research: 19 February 2024

UK trend GDP is currently estimated to be 24% below its pre-GFC level. This equates to around £23,000 per household per year. 7% of this is a further leg down caused by covid. Both the GFC and covid were global issues, so why is the UK lagging?

Year of the Dragon

Research: 12 February 2024

The lunar new year happened over the weekend so we are now officially in the year of the dragon. Markets in China will be closed this week for the celebrations. There was a brief and small rally in China stocks last week, which was surprising.

Don’t count your chickens when there are black swans about

Research: 05 February 2024

A mixed start to the year

Research: 29 January 2024

It has been a mixed start to the year in terms of markets too. The back end of last year had seen the Fed add extra weight to some better-looking inflation numbers by signalling that 3 rate cuts were now their average estimate over the course of 2024.

The Sahm Rule

Research: 22 January 2024

Late last year I came across the Sahm Rule. It says that if the unemployment rate increases by more than 0.5% then a recession is pretty much inevitable, based on previous experience. Everyone started talking about it for a couple of weeks late last year as US unemployment came near to this number but never quite got there.

Around the World

Research: 15 January 2024

Around half of the world’s population will vote in government elections in 2024

2024: year of the…?

Research: 08 January 2024

2023 was generally a good year for equities. It might not have felt like it, but it was. The S&P returned 26% on a total return basis, and Europe was up double digits too. Even the much-maligned UK index delivered 8%.

A Christmas Carol

Research: 18 December 2023

Encouragingly, the spirit of Christmas present is a different picture. It now appears inflation is heading in the right direction. Core inflation numbers in the US and Eurozone have been coming down and are running at about, or just below 4%.

The long game

Research: 11 December 2023

As we near the end of 2023, predictions and outlooks for 2024 have started rolling in, with rate cuts and lower inflation all predicted, it certainly seems those are looking like reasonably safe bets. Predictions of unemployment rates and recessions are a bit trickier.

A new mindset

Research: 04 December 2023

Buffett credits one of Munger’s quotes with breathing new life into his investment approach. “Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices.” Like all great ideas, this is beautifully simple, yet transformational.

Lost in translation

Research: 27 November 2023

In September 2019 I found myself alone in Tokyo for a week or so on a work trip. I don’t speak any Japanese, but decided I still needed to eat, and accidentally ordered the most expensive meal of my entire life.

The i’s have it

Research: 20 November 2023

The challenge for Jeremy Hunt, like all other red briefcase carriers before him, is to balance the demands of different factions of the party, the fiscal position, and the views of the electorate. All while ensuring that the benefits of any new policies are direct enough that you’ll get the credit.

Inflated uncertainties

Research: 13 November 2023

Inflation will be front and centre again this week with the US CPI release on Tuesday and the UK print on Wednesday. Consensus expectations are that the US headline number will come in at 3.3%. For the UK, we should see a sharp fall in the headline rate, with consensus estimates currently at 4.8%.

The apple of your eye

Research: 06 November 2023

This year has been all about pairs, two sets of pairs in particular – inflation and interest rates, and AI and the Magnificent 7. Today we focus on the latter pair. AI has been a hyped theme and will inevitably do great things for our society when it is used properly. We just have to get through some ups and downs first.

All the money in the world

Research: 30 October 2023

Whether it is governments or football teams, debt has become something of a dirty word, but is a key driver of economic growth. In the US, all categories of debt have increased markedly since 2008 in nominal terms but overall debt levels have stayed about the same as a percentage of GDP.

Gilty feelings

Research: 23 October 2023

This week’s trigger points will be the quarterly earnings of the Magnificent Seven, four of which report between now and Thursday evening. It is rare that a set of quarterly earnings has such a potential impact on global markets, and we need Microsoft, Alphabet, Meta and Amazon.com to settle some of the currently jangling nerves.

Precipice

Research: 16 October 2023

It is a great privilege to be able to write these weekly explorations of what makes the world turn and the financial markets tick. These markets care about the price of oil (and gas), not who may be right or wrong. The oil price matters a great deal, as we were painfully reminded last year.

Scramble

Research: 09 October 2023

October has a habit of being a volatile month. Those of us of a certain ilk tend to have a vivid recollection of 1987, for both its weather and unfortunate stock market history.

Taking stock

Research: 02 October 2023

Monday 2nd October 2023. The start of a new week, a new month and a new quarter. It is a typically warm and dank autumnal morning here in Cornwall: one of those heavy mizzles that registers no rainfall, but which soaks everything. It is reassuringly familiar territory.

Busy doing nothing

Research: 25 September 2023

It feels as if an awful lot happened last week. In fact, the important parts were two things that did not happen. Neither the Federal Reserve nor the Bank of England raised interest rates. And hurray for that. The reaction of the markets to the two non-events, however, is intriguing.

Feeling peaky

Research: 18 September 2023

It has long held true that information is power. There is an apocryphal story that much of the wealth of the Rothschild dynasty can be traced to the Battle of Waterloo. Back in 1815 it was safe to assume that no one was ‘live-streaming’ the day, nor was there radio coverage, nor even updates on Teletext (nor Ceefax, if one happened to prefer the BBC).

Dancing in the Dark

Research: 11 September 2023

There are surely no three words less likely to engage a reader’s attention than “the Federal Reserve”. The mere mention of the world’s premier central bank is enough to induce an oddly simultaneous shudder and yawn. But please bear with me. There was time, way back yonder, when they may as well have shut up shop for seven years. The current lust for the limelight is not necessarily here forever.

Stranger Things

Research: 04 September 2023

It has been a strange summer in a strange year. A former US president has been arrested and charged with 91 felony counts across 4 states. He self-declared his height and weight in line with Muhammed Ali in his prime. He’s a one-man crime wave, but there is an idea going round this might help him get re-elected in 2024.

Bank Holiday Blur

Research: 29 August 2023

The August bank holiday weekend means different things to different people. For revellers and festival goers, it is one last hurrah before the summer season draws to a close. For analysts it represents the end of another long results season.

Predictable predictions

Research: 21 August 2023

The chances of the UK adhering to the current plan to outlaw sales of new petrol and diesel-only car engines by 2030 are precisely nil. We have not the slightest chance of having the needed number of electric charging points, nor the capacity in the national grid even if we did.

Sunny afternoons

Research: 14 August 2023

Financial markets are in one of those silly phases where good news is bad news, and bad news is a cause for celebration.

Quids, pros and quos

Research: 07 August 2023

Higher interest rates themselves do not directly affect inflation. Rates have been increased because the Banks believe that this will lower economic growth, and therefore the demand for goods and services.

When the going gets tough

Research: 31 July 2023

Last week we touched on the importance of perspective. Today, we continue with along the same lines. On the UK’s side of the jet stream, July has been cool, wet and windy. Those on the burning beaches of Rhodes have experienced what we might call the polar opposite.

Small, or far away?

Research: 24 July 2023

Perspective in financial markets is a complex concept. If anyone had suggested under the New Year mistletoe that by mid-summer the UK’s rate of inflation would still be as high as 7.9%, they would have been shown the Uber and sent home as a misery guts.

Beyoncé boost?

Research: 17 July 2023

Beyoncé has crept into economists’ interest more recently for reasons beyond her musical talents. Sweden’s recent high inflation spike was linked to (blamed on) Beyoncé’s tour appearances and the rise in hotel and restaurant prices around that time.

Follow the ball

Research: 10 July 2023

Even the most authoritative are just as hopeless at forecasting as everyone else. In fact, I might even argue that they are more so, because of the weight that their forecasts have.

It all depends

Research: 03 July 2023

Collectively, we have been trained to make goldfish look diligent. A week ago, the news was all Wagner and we all agreed Putin was toast. That is now all forgotten. Today we are writing disgusted letters to The Times about the despicable Aussies, or else heading to SE19 to wave a Union flag and think it funny to shout “Come on Tim”.

Of asylums and lunatics

Research: 26 June 2023

That was quite a week. Before I get my teeth into the economics, we ought to start with Russia. Readers may remember that I have been something of a student of Russian politics since I was a student, logically enough. Russian military action is frequently a sign of unrest in the Kremlin

Milling the tread

Research: 12 June 2023

My GPT-powered spreadsheets tell me this means that the United States has a positive real interest rate. The question is how much more positive this Federal Reserve thinks it has to make interest rates before it believes it has squashed the inflation that it largely created in the first place.

Spoiled for choice

Research: 05 June 2023

There are two directions that we could take Innovation today. First, we could examine last week’s statistics from the US labour market in detail and over several paragraphs, and conclude that actually no one understands it.

Public Laundry

Research: 30 May 2023

The short-term debt ceiling wranglings spotlight bigger issues. The United States government spends more than it earns. A lot more. Old habits, as we know, have a natural longevity.

Overflow

Research: 22 May 2023

Water can be a right pain: not enough in the right places and too much where we can’t cope. It would be very easy to be very harsh on the water companies. References to prioritising dividends and executive pay over customers come easily.

Go East

Research: 15 May 2023

Last week the Bank of England duly delivered its u-turn on its u-turn. Having previously nailed its colours to the mast of sub-2% inflation in 2024, now apparently we are all doing far too well, spending too much money and slacking off work. We are all very naughty and deserve even higher interest rates until we learn the virtues of hair shirts and gruel.

Back to the real world

Research: 09 May 2023

May 2023 brings a triple header of bank holidays. Or, for many revellers, a triple bank holiday headache. Of course, two of these days happen every year, but the addition of a third is still important, even on a one-off basis.

Ridicule is nothing to be scared of

Research: 02 May 2023

This week I seek inspiration from Donald Rumsfeld. The gentleman who was US Secretary of Defense through the Second Iraq War is remembered in this country with a quite unfair degree of ridicule for his 2002 comments concerning known knowns, known unknowns and unknown unknowns. The differentiation between the three types of risk is a requisite skill of the investment world.

Tulips and trees

Research: 24 April 2023

I am going to resist the temptation to start listing the analogies of gardening and investing, but there is one aspect that I do wish to dwell on for a moment. Time. Nature operates on multifarious timescales. The great gardens and gardeners understood this. The structures of the gardens were planted not on the basis of what will happen in the next three months, or year, or even five years.

Your trendy friend

Research: 17 April 2023

We have touched on investment truisms many times before. These tend to be nifty phrases, usually used by those of a certain age and looked upon as being either sagely or antiquated by everyone else. I may try to accumulate these into an indulgent lexicon if I find the idle hours over the summer, but for now I would like to focus on just one of these: “the trend is your friend”.

Archie Duke

Research: 11 April 2023

In this short, post-Easter week I thought that I would start with a misquote of the most famous line of Othello. “O beware, my lord, of accepted wisdom; it is the green-eyed monster that doth mock the meat it feeds on.” Odious git he may have been, but Iago knew a thing or two about how our brains work.

Trust

Research: 03 April 2023

These are just some casual observations that experience, possibly, still has a certain merit in life. There are virtues in having been around the block a few times, having seen water pass under innumerable bridges, having been there and seen that, a graduate from the university of hard knocks.

Don’t be a hero

Research: 27 March 2023

Imagine an investor who indulged in a little too much turkey and stuffing and entered into a prolonged post-Christmas doze. If they awoke and checked today’s papers, they would most likely start to panic. And not only about the date in the top right corner.

Do the right thing

Research: 20 March 2023

What is the worst prediction you have ever made? I used to have this idea that mobile phones would not catch on. My feeling was I already had a phone that few people called me on, so why was I going buy another one and carry it around everywhere?

A view from the goldfish bowl

Research: 13 March 2023

Markets can be a goldfish bowl at times. I found this out rather painfully at the weekend. It might well be the most important data set Joe Public has never heard of, but there is very little that stops social conversation as quickly as raising the subject of US non-farm payrolls.

Do you take me for a fool?

Research: 06 March 2023

Am I the only one that feels that (almost) everyone else is milking inflation for every penny or piastre that they can squeeze out of us? This may be grossly unfair, but sticking 20p on the price of garlic bread may be only 20p, but it is still 20% on a quid. By the time it has happened twice, by my mathematics that makes 40%.

(Out of) Puff the Magic Dragon

Research: 27 February 2023

Sometimes this really is as complex as markets get. We have argued for some while that the world needs to turn upside down before we should have confidence that markets have actually turned a corner.

The coy mistress

Research: 20 February 2023

Time’s wingèd chariot is galloping through February. Markets, especially equities, remain resolutely cheery, while investors struggle to explain quite why. ‘Twas ever thus. If markets ever behaved logically, we could all become robots. Or maybe that is already happening.

Income or outcome?

Research: 13 February 2023

As we know, the process of QE drove bonds yields near to, or below, zero. Any previous relationship with equities, risk and inflation was ejected from a very high window. If anyone now wanted to receive an income from their investments (which, ultimately, is broadly everyone), then bonds had been taken out of the equation.

Don’t grumble, give a whistle

Research: 06 February 2023

There was a lot to digest last week. After being served up more economic data than is healthy for anyone, it is no surprise that markets have a degree of dyspepsia. The data is inconsistent, occasionally contradictory and definitely confusing. The market mood, however, is undoubtedly brighter and, despite the occasional involuntary belch, has a new determination to look on the bright side.

Peaks and pivots

Research: 30 January 2023

January has been remarkably jolly. Though there is a day and a half to go until the month end, and there is many a slip betwixt the cup and the lip (as my jumpers testify), markets have had a renewed confidence. The MSCI World Index has risen by over 6% since the turn of the year, led by a rebound in the previously much-derided US large technology companies.

Stand and deliver

Research: 23 January 2023

It is a truism that successful investment is as much about the avoidance of land mines as it is about finding treasures. I have probably worded that poorly, as it is that very search for treasure that tends to unearth the booby traps. The more boring an investment strategy seems, the more likely it is that it will succeed.

Guilty Carbon

Research: 16 January 2023

This is the week of the self-proclaimed World Economic Forum. To be pedantic, it is the Annual Meeting of the Forum, held in the never-knowingly-understated Swiss resort of Davos. I know nothing about skiing other than the theme tune to Ski Sunday, but I believe that the attendees at the Forum have been greeted by some snow.

Size matters

Research: 09 January 2023

Copyright and index licences restrict us from naming names, but a well-known index of the UK’s largest companies this morning is, at last, above its pre-pandemic level. Before anyone is tempted to break out the Coronation bunting four months early, its little brother – an index of medium-sized businesses – is more than 10% lower than early 2020, having fallen by 20% over the past year.

What’s another year?

Research: 03 January 2023

The investment world is full of truisms. And a truism, of course, is something that will prove to be right 50% of the time. So, one might ask, what is there for investors to be cheery about on this miserable January Tuesday morning?

Puzzling Predictions

Research: 12 December 2022

Last week I talked about the Santa rally. If you’ll excuse the continuation of a theme, I’d like to focus on another flavour of what is generally a quiet month.

A bridge over troubled waters

Research: 05 December 2022

The idea of markets advancing through advent is a strange phenomenon. While there are explanations abound for its existence, my view is that there is about as much logical evidence behind it as there is for flying reindeer.

Despite, despite, despite

Research: 28 November 2022

Thanksgiving duly delivered another quiet week. Both equity and bond markets had a little seasonal cheer, the oil price fell and the pound had a decent bounce. So rather than dwelling on last week’s mundane events and trying to pretend that something interesting had happened (which hopefully we would never do), we can use the time this Monday morning to look ahead to 2023.

Loss and Damage

Research: 21 November 2022

A very rare quiet week across markets allows us to spend a welcome couple of moments reflecting on COP27, rather than the Federal Reserve.

Pop goes the weasel

Research: 14 November 2022

Hopefully none of our readers will have any involvement with so-called ‘crypto-assets’, or ‘crypto-currencies’. These are topics that we very rarely write about, primarily as they have no relevance to our business. Our portfolios have never, do not and will not hold these. I deliberately shy away from saying ‘invest’ into these, as they are not, in any shape or form, investments.

Hands up

Research: 07 November 2022

It is usually a good thing to own up when you get something wrong. This morning, I therefore get a double dose of goodness. It is hands up time. I have so frequently warned of the dangers of ‘accepted wisdoms’ in financial markets, that it feels terribly careless to have fallen into this very web of lazy thinking.

Higher and higher

Research: 31 October 2022

It feels as if Rishi has been in situ almost forever. After nearly a whole week of calm, it is possibly perverse to think that this time last week Liz Truss was still PM. The world moves on quickly; the pound is now worth all of $1.15, gilt yields have sunk back to September’s levels and England has lost another cricket match to Ireland.

Turning over a new salad leaf

Research: 25 October 2022

Let us look at the positives. We know the new prime minister and Rishi will presumably have a longer shelf-life than a Tesco lettuce. Economic policy will be more orthodox and predictable (for better or for worse) and the job of upsetting the markets will revert to the Bank of England

The lunatic is on the grass

Research: 17 October 2022

Readers may know that I am given to wasting some of my spare time on the golf course. One of the many truisms of this utterly pointless game is that no matter how bad one’s last shot, the next one can still be worse. It is a salient lesson for the World in October 2022

Climbing the ego ladder

Research: 10 October 2022

Last week was not especially helpful. Not only did OPEC deliver a spiteful proposal for a record cut in oil production, but on Friday equity markets sank after the publication of the uncontentious latest data about employment in the United States.

The blame game

Research: 03 October 2022

It would be nice if we could open our weekly market commentaries with something other than the state of politics in the United Kingdom. Regrettably, that opportunity has not yet come, and we need to start with an attempted explanation of the bewildering events of past seven days.

All about the dollar

Research: 26 September 2022

It is usually wrong to over-analyse the minutiae when markets are in this mood, but this time it is possible both to make sense of the events of the past week and to understand why almost all of the commentary around them is wrong. The starting point is that despite what you will inevitably have seen and heard about tax cuts, sterling and a crisis, this is actually all about the US dollar.

Hanging tough

Research: 20 September 2022

It was with no degree of insight that we ended last week’s column with the observation that last week’s update to the US inflation rate was a potential banana skin. The market duly planted its foot plumb on said skin, slipped and landed painfully on its coccyx.

Time’s wingèd chariot

Research: 12 September 2022

I confess that I love pageantry. Whilst doubtless we all mourn the late Queen in our own ways, the ceremony and the tradition for a change of monarch are astonishing. And while we cannot help but hear time’s wingèd chariot hurrying near, there is an irrefutable comfort in the continuity of the constitutional monarchy.

Livery and delivery

Research: 06 September 2022

We cannot escape Liz Truss this morning. Our new prime minister’s Amazon-esque incoming promise to ‘deliver, deliver, deliver’ rather begs the question ‘what?’. Tony Blair set an annoying precedent, back in 1996, of the use of a double repetition by politicians attempting to show that they are serious, serious, serious about any particular topic.

All gas and gaiters

Research: 30 August 2022

The world is full of little ironies. Last week the government announced a ban on peat in domestic compost, albeit not until 2024. Today, the chancellor is flying to the United States to have a chat about the energy crisis.

Triumph and Disaster

Research: 22 August 2022

I love Warren Buffet’s wonderfully simple idea that there are just two basic emotions in the stock market, greed and fear. The temporary dominance of greed creates bubbles, and when fear has the upper hand, we get crashes.

Like a dog without a bone

Research: 15 August 2022

Perspective is terribly important. Having spent much of the past week on golf courses looking like the surface of Mars, in temperatures that might not have been out of place on Venus, it might be tempting to muse over the oddities of the weather. For readers further north, with allegedly more typical summer weather, this might appear to a parochial perspective on climate change.

Cacophony (Part II)

Research: 01 August 2022

That was quite a week. We may all be seven days older, but very few of us are any wiser at the end of it. Markets, though, were thoroughly happy in their ignorance and finished an already encouraging month with a little flourish. The question now being asked is whether we have finally turned a corner, or if July was no more than an overdue bounce.

Cacophony

Research: 25 July 2022

Let me begin this week with a short diversion on the state of democracy. It is not a healthy place. There is a very modern belief amongst politicians that equates a win in a vote, by however small a margin, with a mandate for absolute power. We have a dictatorship of the majority, in which the minority are stripped of their voice.

Sue, Grabbit and Runne

Research: 18 July 2022

Today is likely to be the UK’s hottest ever. That achievement may last for only a day. It is probably a safe assumption that the last thing anyone wants to read about when the temperature is rising, is that the temperature is rising. C’est la vie these days.

Is you is, or is you ain’t, recession?

Research: 11 July 2022

Markets, as we know, are torn between the twin devils of inflation and recession. The former, like love, is all around. The latter, like Godot, has yet to show its face. Economists and investment market strategists are unusually united in their predictions that recession is an inevitability.

Where’s Wally?

Research: 04 July 2022

We can thankfully wave goodbye to the second quarter of 2022. We shall write our usual reflections and commentaries over the next fortnight, but there is no disguising that it has not been a good time for either equity or bond markets.

A sweet old-fashioned notion

Research: 27 June 2022

Despite last week’s arguably overdue bounce in the US equity markets, it has been a miserable three months for investors. There is a caveat to this, which we shall come on to, but the combination of extraordinarily high inflation and the start of a monetary tightening cycle has been painful for almost everyone.

The green subplot

Research: 20 June 2022

There is precious little in the financial commentary about climate change. It feels almost as if this has had its fifteen minutes of fame and that the markets have moved on. Why should we all worry about a hot spell, or a storm, when there is a cost of living crisis to write about?

I’m bored, can we leave?

Research: 13 June 2022

Mrs Johnson’s lip-read commentary on the Jubilee Pageant is a slightly far-fetched illustration of why it is likely that we have yet to see the worst of current markets. Nonetheless, it is still a relevant encapsulation of why equity markets are still falling. The problem is that investors have yet to become bored and to want to leave.

A matter of confidence

Research: 06 June 2022

The Conservative MPs vote this evening probably only matters in the short-term. A vote of confidence is never a good thing, but Boris’ quest for power and legacy means that he is the least likely person to walk away until he is absolutely forced to. Until something changes, the UK is greatly challenged.

Minute by minute

Research: 30 May 2022

I am sure that I have said several times over the years that everyone working in the world of investment should read Fooled by Randomness, by Nassim Nicholas Taleb. It was the forerunner of the much better known The Black Swan, but is the more important, if less entertaining, read. If I may simplify the book’s message, it is that most of what we observe from day to day, from week to week, happens by accident rather than design.

Bearing up

Research: 23 May 2022

A number of years ago, Ian Woolley and I wrote a series of articles attempting to debunk some of the jargon that afflicts the world of investment and financial markets*. In one of these, we tackled the issue of what it is that defines a ‘bull’ or ‘bear’ market.

Keeping baby in the bath

Research: 16 May 2022

It is slightly over 170 years since Thomas Carlyle first dubbed economics as ‘the dismal science’. It is hard to argue. Economics is something that people only worry about when it is going wrong. When all is good, we are Jiminy Crickets, giving a little whistle and spreading a little happiness as we go by.

Taking a pounding

Research: 09 May 2022

It is a long held truism that successful investment should be as dull as possible. The less eventful, the more yawn-inducing it is, the more likely that everything is going right. It is also a truism, in fact a cliché, that bad news sells.

Jurassic shock

Research: 25 April 2022

The bluebells and campion are coming out, the garlic is in full aromatic bloom. The first swallows have refound last year’s nests and the orchids are starting to peep through their grassy winter’s blankets. There is much to cast perspective on, or even distract from, an increasingly challenging world.

Energy sapping

Research: 11 April 2022

Having returned to the UK last weekend after spending some time in Asia, I can confidently report that it feels very cold back here in Cornwall. But the seasons are changing and warmer times are coming. Which is a good thing, as it is now cripplingly expensive to turn the central heating on and we can all save on cooking costs by eating salad.

Picking pockets of value

Research: 04 April 2022

We are only two and a bit years into this decade but it already feels like a blur. Warfare and violent oppression were present at the start of 2020, but the return to power of the Taliban and Putin’s invasion of Ukraine have brought more human tragedy.

Sunak’s Spring Statement – The Great Balancing Act

Research: 28 March 2022

After the Spring Statement last week, there is only one place to start my ramble. But at least it is an interesting place from which to begin. While the main theme of the Statement was obviously to help with the rising cost of living, for me the speech shone a light on how the onus will surely shift to the private sector and individuals for both saving and investment.

A bump in the road

Research: 21 March 2022

The world of sustainable investment has endured a difficult start to 2022. There are a number of contributing factors at play here, which I will expand on in this article. As a fund research analyst specialising in sustainable funds, it is not particularly comfortable to think that this year could be a tough one for this area of investment. However, I’m an optimist at heart.

Trapped

Research: 14 March 2022

Another week has passed and news from Russia and Ukraine continues to ebb and flow. All solutions are broadly still on the table. That is a euphemism for saying that we don’t know what is going to happen next. Geopolitical events are challenging to forecast, those that tell you they know for certain what will unfold are likely telling porky pies. The implications for financial markets are, however, worth paying attention to.

Kyiv is the key

Research: 07 March 2022

One week further into the invasion of Ukraine has taken us no closer to knowing the likely outcome. The issues for financial markets are unchanged, but have heightened.

Invasion

Research: 28 February 2022

Today is one of those few occasions when reporting on financial markets takes a degree of gravitas beyond the usual daily wheeler-dealering of the trading floors. It is also a reminder that extreme events can and do happen. Of all the possible scenarios that have been building over the early weeks of 2022, a full scale Russian invasion of Ukraine was the least likely.

Beware the resolution

Research: 21 February 2022

One week further on means that we must be one week closer to a resolution of conflict in Ukraine. Except that this does not quite work. Whatever military conflict there is at the moment is very minor and has been going on in the backwaters of Eastern Europe for the thick end of a decade.

Ukraine takes its toll

Research: 14 February 2022

One feels a certain compulsion to write about cheery things at the start of each week. As we head into the depths of February, this is becoming an increasing challenge. Inflation rates are still rising, the price of oil is nearing $100/bbl and Russia has its tanks parked all the way around Ukraine’s accessible borders. It is not the greatest surprise that no one is in any rush to invest.

Weighing anchor

Research: 07 February 2022

Andrew Bailey has what modern parlance may call ‘a tough gig’. Running a Central Bank has been a doddle for years. Economies have ticked over nicely, inflation has been a non-event and all the Banks have had to do is to twitch an occasional eyebrow in a Roger Moore-esque manner.

The Fed in a spin

Research: 31 January 2022

I am not sure if one is currently able to refer to men being marched up a hill and then down again. It is probably more tactful to liken the markets to magnificent men in flying machines, but even this does not quite convey the right degree of dizziness.

Atishoo

Research: 25 January 2022

Our last report argued that the greatest virtue for investors in 2022 would be patience. We had not quite anticipated the prescience of the argument and January has developed into an uncomfortable ride for equity markets. It is probably a little glib to say that a tantrum has been long overdue, but it has.

Turning the volume down

Research: 17 January 2022

2022 has started not so much with noise, but with a screeching cacophony. Our intention this week is to attempt to make some sense out of what is, yet again, a sensation of information overload. So let us start on the far side of the globe, in China.

Moving on

Research: 11 January 2022

Albeit slightly late, may we wish everyone a very happy, prosperous and safe 2022. Much water has flowed under many bridges since we last opined on markets and the state of the world and, although it may seem that the mists of confusion are still swirling, the future has become clearer.

Any world that I’m welcome to

Research: 06 December 2021

Anyone hoping that we may get a breather in December is going to be terribly disappointed. If anything, the roar of the daily market noise is becoming louder. Little of it makes sense, but that is always how it is when the noise is as loud as this.

Whatever happened to xi?

Research: 29 November 2021

The grey men did not quite fall from the fourteenth floor, but last Friday was an overdue reminder that markets are still markets. It is hard to take issue with the sensible view that the falls in equities in response to the breaking news of the omicron variant of covid were an over-reaction, but one that is understandable enough.

Vive la difference

Research: 22 November 2021

Now politics is not an easy concept to describe, but one way of getting to the nub of this intangible challenge is to think of it as the relationship between state and society.

Bright eyes

Research: 15 November 2021

Those with long memories may recall that it was only this time last week that we were musing on how markets might react to 6% inflation next year. The part of this that remains to be resolved is ‘next year’.

It ain’t necessarily so

Research: 08 November 2021

The markets and Central Banks are playing poker. Both are bluffing and the stakes are growing ever higher. The issue is what constitutes ‘transience’, where inflation is concerned.

Two can play that game

Research: 01 November 2021

There is a lot to cover this week. Readers will be more than aware of our view that COP26 is the most important global event for a generation, and likely for longer. It starts in the week after a frankly bizarre UK Budget and coincides with meetings of the Federal Open Markets and Monetary Policy Committees, both of which will take the path towards monetary tightening.

The Motivational Map of Shanghai

Research: 25 October 2021

We make no apologies for starting the week with COP26. The latest UN Climate Change Conference, as you will all know, starts in Glasgow this coming Sunday. This is, quite simply, the most important global event of the decade.

Intended consequences

Research: 04 October 2021

Last Thursday marked the official opening of our new office in Bath. In the absence of anything more interesting, I was invited to present a short talk on the state of financial markets as we head into the autumn months.

A stag, but no party

Research: 27 September 2021

A fortnight ago we were arguing that the UK should issue gilts to plug the gaps in the costs of care provision. Since then we have had the inaugural issue of a ‘green’ gilt being ten times oversubscribed: bids of more than £100bn were received for a mere £10bn issue.

Beg, tax or borrow?

Research: 13 September 2021

It is quite difficult not to start with Boris this week. I leave the pluses and minuses of his fixes for the care industry to everyone else, and ponder more on the wisdom or folly of using taxation as a means to raise revenue for the government.

Suga Coated Iceberg

Research: 06 September 2021

We all deal with change in different ways. Some are threatened by the unknown, others relish in its challenge. Financial markets, in a statement of the blindingly obvious, are fickle. They are, though, already dancing on the political grave of Yoshihide Suga, the soon-to-be erstwhile Japanese prime minister.

Deepest August

Research: 23 August 2021

August has proved, thus far, to have been largely uneventful. Markets have been very quiet; there is a tangible feeling of holidays being crammed into the last warm rays of summer sunshine before a canter back to the virtual desks and a reappraisal of what the autumn may bring.

History ignored

Research: 17 August 2021

For whatever reason, one the things I have always remembered from this was the lesson that no one has ever successfully invaded Afghanistan. Regrettably history also proves that this very simple truth is all too frequently forgotten.

Climate change is heating up

Research: 09 August 2021

This week I wished to discuss the FLA that is the IPCC: the Intergovernmental Panel on Climate Change. This estimable offshoot of the United Nations has started to set the framework for COP26 (COP is the acronym for Conference Of the Parties), at which the majority of the world will prove, or disprove, their commitment to decarbonization.

On the margin

Research: 02 August 2021

Rising costs are a feature new to almost everyone, from analyst to chief executive. We can argue the toss over how long the current state of affairs will last, but companies the world over are having to learn to deal with increases in costs of both materials and labour.

A rising sun and flagging equities

Research: 26 July 2021

There is little that disguises a short-coming quite like a bull market. With the MSCI World, S&P 500 and NASDAQ 100 Indices all closing last week at new record highs, it would be very easy to write yet another column saying how marvellous investment is in 2021.

When black becomes white

Research: 12 July 2021

The market’s addiction to handouts of free money has become so great that the foremost monetary authorities of the world have ripped up their rule books to find ways of feeding this lust.

You need a new fridge, mate

Research: 05 July 2021

Last week, Lytton, in British Columbia, recorded the unworldly temperature of 49.6 degrees celcius before the village burned down. Yesterday Edinburgh flooded. We are forecast July gales in Cornwall tonight.

The future’s not ours to see

Research: 28 June 2021

On the more mundane issues of the investment markets, 2021 so far has been a pleasant surprise. Equity markets are, give or take, 10% higher than at the start of the year. This, one might argue, is keeping them broadly in-line with the true rate of inflation.

Spot the dragon

Research: 21 June 2021

Of all the descriptions that might be applied to an economist, ‘maverick’ has to be amongst the last that spring to mind. Nonetheless, Andy Haldane, the estimable Chief Economist of the Bank of England has been awarded the James Garner-esque moniker of ‘Maverick’.

Contradictions

Research: 14 June 2021

If this is just an inflation spike, then we are all still at the races. On the other hand, should this actually be the start of a prolonged cycle, the Banks will have to tighten policy, and it will hurt.

What are we going to do now?

Research: 07 June 2021

This is a self-indulgent and roundabout way of getting to say that markets feel as if they are running out of ideas. What are they going to do now?

It’s all about the S

Research: 24 May 2021

We should all be talking about SEG. Because this is all about society. The environmental and governance issues only matter in so far as they affect the social. There is a nuance or two to this, but, broadly, ESG is all about the S.

On the Ning Nang Nong

Research: 17 May 2021

Last Wednesday’s American inflation data sent markets into a tizz. Many have long been suspicious of inflation, a dragon that few of us have actually experienced. Honestly. April’s US core inflation rate of 3.0% is the highest since the early 1990s.

Snap reactions

Research: 10 May 2021

Three little words. “I don’t know”. They can be hard to say, but the use of this wonderfully brief sentence is one of the most important skills that one ever learns in our closeted world of investment. Ignorance is not weakness. In contrast, the admission of not knowing is actually enormously powerful.

An Enigmatic Variation

Research: 26 April 2021

Sometimes there is a little gem that, quite unexpectedly, falls into one’s lap. The occasions are rare, but one must make hay when the opportunity arises. And so, instead of starting with a boast that last Friday I completed an Elgar for the first time (fellow cruciverbalists will know the life-affirming significance of this), I cannot resist raising the topic of rebranding.

The Timbo Effect

Research: 19 April 2021

After a fortnight digging the borders and cursing the frost, this morning I have come back to equity markets in fine fettle. Indices the world over have been setting new highs, apparently as fears of inflation have decreased a little.

Biden begins to deliver

Research: 29 March 2021

It’s the hope that gets you. There is a fine dividing line between being optimistic and leading someone to expect too much. We had hoped this weekend might be even modestly clement. It was cold, wet and windy. Today we have been promised a taste of summer.

Nothing will come of nothing

Research: 22 March 2021

The markets are obsessed with this thing called the ‘re-opening trade’. Broadly, this is a confusion of two trains of thought. First, we all need a party. Undeniable. Second, that the vaccinated world will be a passable photocopy of 2019.

A tongue, shriller than all the music

Research: 15 March 2021

This is a very roundabout way of bringing me to the subject of risk. And of being ‘beware’. I am possibly going to be controversial here, but I am going to argue that a great deal of what we are taught about investment risk is wrong.

The Funambulist of the Exchequer

Research: 08 March 2021

We ought to start this morning with last week’s Budget. It may seem an age ago, but it was only last Wednesday that Rishi Blondin Sunak very skilfully walked every fine line put in front of him.

Rout

Research: 01 March 2021

It is in the rules of stock market commentators that every two or three years one has to write about a ‘bond market rout’. In terms of media coverage the rout of the bond market is right up there with barbecue summers and white Christmases.

The Irony of Passive ESG

Research: 22 February 2021

Our focus this week though is not on tautology, but on contradiction. Specifically, we wanted to walk through the conundrum posed by passive ESG investment. There is no doubt low cost ESG funds will be terribly popular.

Buying British by the Pound

Research: 15 February 2021

The failure of some of the most senior people in the land to differentiate between reality and celluloid is a mere trifle to the markets. The faster we jab, the more the pound rises.

Dictions and Contradictions

Research: 08 February 2021

One should be careful with promises and predictions. This time last week I was confidently saying that we would quickly learn a little about how the world is currently turning. Well, it is still left to right but that is about as insightful as anyone is going to get at the moment.

Fifteen minutes of infamy

Research: 01 February 2021

Melvin now has its place in history as the fund that lost 50% of its value by betting on a fall in the stock price of a floundering US retailer of video games (I am showing my age here) called GameStop. Melvin has had its fifteen minutes of infamy.

The Hungarian Financial Phrasebook

Research: 25 January 2021

The world of investment is full of useless pieces of advice that masquerade as sagely gems carved into the panels of the trading floors of yore, but few surpass the nonsense that is ‘the long-term is only a series of short-terms’.

Dashing off

Research: 18 January 2021

The United States is still the foremost economy and military power known in the Universe. That is quite a mantle. The weekend’s leaks to the media tell us that Biden intends to start with a flurry of executive orders, not only to get a grip on the virus and vaccinations, but also to rejoin COP21.

A storming week

Research: 11 January 2021

Pandemic-wise, it is all about the vaccines and 2022. The markets are saying that they are not bothered about how bad things get in the first quarter, and possibly first half, of this year. What matters is that we are all vaccinated in time for next year.

Holidays are coming

Research: 04 January 2021

A very Happy New Year to everyone. The weather outside may be frightful, but Innovation will always be delightful. Or at least that is our aim as we head off into the challenges of 2021.

The tears have it

Research: 14 December 2020

It has been a year in which some of us old dogs have had to learn new tricks and I thought it would be helpful, and hopefully fun, to have a brief look back at some of the high and low-lights of the past 50 weeks.

Walking in a winter wonderland

Research: 07 December 2020

It is party time on the equity markets. The UK starts injecting people today, showing that either we are the best country in the world (source: Gavin Williamson, Secretary of State for Education and a man of commendable patriotism)..

Texture Like Sun

Research: 30 November 2020

Do you remember who was prime minister before David Cameron? Correct, it was Gordon Brown. To misquote David Bowie and Lulu, the man who sold the gold.

Soundbarks

Research: 23 November 2020

It now genuinely looks as if there is a credible was forwards from COVID-19, and we have not even needed the help of a Russian linesman. As Lynn Anderson sang, smile for a while and let’s be jolly.

A Shot in the Arm

Research: 16 November 2020

From the reaction to last week’s news that there may be a vaccine for COVID-19 that works, you could be forgiven for thinking the pandemic is ‘all over’. Surprise surprise, unfortunately it is not that simple.

Just an Old Sweet Song

Research: 09 November 2020

It is almost a week since the US elections and we have a bit of breathing room to take stock. Give or take something very odd happening in the American courts, Joe Biden will be the next president.

A Wing, a Prayer and a Vaccine

Research: 02 November 2020

We must move on to COVID and lockdown. Whichever way one may choose to slice this Victoria sponge, the western incarnation of lockdown has failed.

For whom the bell polls

Research: 26 October 2020

How many times do we say ‘if the polls are to be believed…’? We never learn. The trouble is we are scared of the unknown, of the future.

They say we’ll have some fun if it stops raining

Research: 19 October 2020

Zoom fatigue. Trump fatigue. Brexit fatigue. COVID fatigue. I really do not know if this is merely me, or whether it is a symptom of the new routines of working from home.

A tad harsh

Research: 05 October 2020

Mike Pence will have had better weekends. The prospect of his becoming president, for either the next month or the next four years, was enough to give markets a nasty little scare last Friday.

Watershed

Research: 28 September 2020

It is not being overly harsh to say that the current government is prone to quite rapid and random changes of policy. C’est la vie, as we will not be allowed to say come 2021.

Dragons' breath

Research: 21 September 2020

Where is Saint George when you need him? There are some old dragons that refuse to be slayed and are rearing their ugly faces in an unwelcome and fire-breathing way.

Brexit is back in town

Research: 14 September 2020

I do not ... see any evidence that dissuades me from the opinion that the government both wishes No Deal and that it will also achieve it. As far as ‘the markets’ are concerned, this is the worst available option for the economy.

Blowing froth off the apples

Research: 07 September 2020

Last Thursday the value of Apple’s equity fell by $180bn. That is rounded up to the nearest couple of cents for convenience and added drama, but it is nevertheless simply astonishing.

Too many zeros

Research: 24 August 2020

One of the questions that we are asked most frequently is the one about how are we ever going to pay back all this money. It is actually a very simple one: we can’t and we won’t.

Whatever it takes

Research: 17 August 2020

The appointment of an Italian as President of the European Central Bank probably caused the raising of a sceptical eyebrow back in 2011. It would have been most unfair.

Statistics in the fog

Research: 10 August 2020

August is frequently an indecisive month. Heatwaves one day, thunder storms the next. Financial markets can seem asleep, with so many away on holiday.

Never going back again

Research: 03 August 2020

What would your reaction be if some investment clever clogs suggested that in a year’s time the American economy would have shrunk by a third, but that the stock market would be 10% or higher? It is so far off the scale of credible scenarios that you would doubt the sanity of anyone suggesting such a thing.

Moving up

Research: 27 July 2020

Regrettably, logic is rarely so, er, logical. The fact that Tesla, for example, is probably more expensive than powdered unicorn’s horn, does not necessitate that Royal Dutch Shell, for example, is screamingly cheap. The symbiosis is asymmetric.

A crying shame

Research: 20 July 2020

ESG matters, as boohoo has found out to its cost. The issues of whether or not there was ‘slavery’ at work in its supply chain, and whether or not management at the company knew this, are only part of the complex equations here. What should shareholders do?

Flying high in a neon sky

Research: 13 July 2020

It is hard not to judge the Chancellor by his employer’s earlier assertion that “newt-counting delays are a massive drag to the prosperity of this country”. I believe that the expression now being used is ‘bulldoze and be damned’.

I love the smell of money in the morning

Research: 06 July 2020

Followed by the ‘chuff chuff chuff chuff’ of the rotor blades. Rishi Sunak is in his Apache, Ride of the Valkyries is blaring from the Treasury. Here comes the helicopter money.

The numbers game

Research: 29 June 2020

Regrettably the whole numbers thing was designed by somebody with a most peculiar sense of humour. Today’s first little quirk is centred on the peculiar game that is percentages.

Cheque the post

Research: 22 June 2020

We can argue until our fizogs have turned a brighter share of woad why it is illogical for equity markets to have performed so astoundingly well over the past three months. It will not change the fact that they have.

The pot is boiling

Research: 15 June 2020

Lockdown has created a pressure pot of steam that needs to be let off. For some, this will be hours spent in socially-distanced queues seeking the solace of retail therapy. For others, it will be the chance for a good fight.

Just a minute

Research: 08 June 2020

COVID is accelerating the pace of many changes already in train. It is more than a catalyst, it is an accelerant adding fuel to fires that were already burning. Most prominent amongst these is the shift from the physical to the virtual worlds.

Summer of discontent

Research: 01 June 2020

The UK government is giving a second wave of Covid infection every chance with its effective abandonment of lockdown. The rules are not so much relaxed as propelled out of the window with a Dominic Cummings-shaped weight attached.

Don't be so negative

Research: 26 May 2020

We would not wish to say that the UK will have a second wave. But the management of COVID thus far, together with an inability of authority to be seen to abide by its own rules, makes an uptick in reinfection that much more likely.

The way we weren't

Research: 18 May 2020

The government has become a victim of its own success. With a couple of exceptions (including our village drug dealer), the nation has bought into the idea that COVID-19 is a thoroughly nasty piece of work and that we need to stay at home to save lives.

Grounded

Research: 11 May 2020

Morrisons has made headlines this morning by announcing that it is selling petrol at under a pound a litre. We can only admire our fellow pedants, as 99.7p is indeed less than a pound.

Hung, drawn and quartered

Research: 04 May 2020

There is a perplexing contrast between the pace of life in lockdown and the helter-skelter of financial markets. The former is becoming strangely calming, as if it were a return to a slower and simpler way of life.

The first cracks

Research: 27 April 2020

Lockdown is creating catastrophic economic damage. Many businesses have taken a hard-line and literal interpretation of what is and what is not allowed: if in doubt, leave it out. That is going to change.

The shock of the new

Research: 20 April 2020

The mood of the markets will swing dramatically over the summer. They will hope that the world both can, and will, return to the old normal.

A rally built on hope

Research: 14 April 2020

OK, it does a bit but it is not that we are piggy-backing the amazing bounce to equities to say that the end is in sight and everything is coming up roses. In fact, it is quite the contrary. This looks like a bear market rally.

The Bank's elder wand

Research: 06 April 2020

The challenge is to explain where the money is coming from. So it is all good that the government is promising more or less unlimited funding, but how can they magic money out of thin air?

Nature’s frail fortress

Research: 30 March 2020

Investment markets are flying blind. Prices will swing wildly, and some will be very astute (or appear to be so) in correctly picking the moments when sentiment swings. As ever, none of us should be fooled into complacency or despair.

Bang

Research: 09 March 2020

It was Keynes who first gave us the concept of harmonizing the changing of facts and minds. The facts of the coronavirus have evolved very quickly and it is only right that the responses to it should also.

Excuse or explanation?

Research: 02 March 2020

The point though is that equity markets were ripe and ready for what is euphemistically called a ‘correction’. I suspect that what we saw last week was indicative of what we should now expect to call normal market behaviour. What was achieved in six days in February may take only three or four days next time.

Gentleman's relish

Research: 24 February 2020

The problem is the precedent of Brexit. A vote to leave was so alien, so mad, so impossible to most ‘investors’ that they never seriously thought it would ever happen. The same is true of Bernie.

Toontown

Research: 17 February 2020

What we need, so it is argued, is economy of scale. The future is one of enormous and liquid funds, with low charges and from which investors may depart in the blink of a gekko’s eye should they so wish. It is like Judge Doom’s vision for Toontown.

Woof

Research: 10 February 2020

After a little wheeze and a cough, American equities have shot straight back up to new highs, perhaps inspired by Trump’s wholly predictable non-impeachment. Or even the Democrat’s inability to organise a jolly in a Jack Daniel’s distillery.

Apples and pears

Research: 03 February 2020

The US has been home to the rise and rise (and rise) of technology. Here in the UK, what do we have to take the place of the declining hydrocarbon industry? Zilch is the simple answer.

A pocket full of posies

Research: 27 January 2020

To turn on one’s television this past weekend has been as if one were on the set of The Satan Bug. Coronavirus is indeed a scary story, but let me try to put some perspective on what we currently know.

A good week for the rhubarb

Research: 20 January 2020

If one believes in p/e ratios, over the last year and a bit, the 12 month forward rating of the S&P 500 Index has risen from c.14 times to something a bit over 18 times. This is the highest in 10 years.

That's life

Research: 13 January 2020

Liquidity is going to become an increasingly important and annoying part of our everyday office lives. The easy bits of this are seeing where the winds are blowing for equity and commercial property funds. It is trickier to see how the regulators are going to deal with fixed income and bonds.

Oil be back

Research: 06 January 2020

The American assassination of General Qassem Soleimani and Abu Mahdi al-Muhandis changes the rules. It is not our place to voice opinions of what is right and wrong, but this has transformed a simmering but manageable pot into an inferno. We suspect that Friday 3rd January 2020 will be viewed as one of the defining moments of Middle East history.

One tiny flaw in the plan

Research: 16 December 2019

Are you sitting comfortably? Then I shall begin. 2019, eh? Who saw that coming? You could knock me darn with a fevva. What a year.

Positively positive

Research: 18 November 2019

What this is to me is a clear case of greenwashing, of tokenism. Given the choice, the majority have plumped for the product without tangible positive benefit. It is very disappointing and I think tells a story about how seriously, or not, sustainable investment is being taken.

A celebration of mundanity

Research: 11 November 2019

Whether voluntarily or by coercion, the world is addicted to information. The providers of this stuff need your attention. Why? Because in this bizarre game of voyeurism, the more times you click, flick and scroll through their content, the more they can persuade advertisers that they should pay to have the opportunity to flog you things you don’t need.

Past times behind

Research: 04 November 2019

To financial markets that, arguably, long ago gave up on the relevance of valuation, this is music to the ears of the converted. The markets are driven by narrative, by smoke, mirrors and stories as tall as the Burj Khalifa.

Is it down to the lake I fear?

Research: 28 October 2019

So, today we know everyone in British politics continues to flounce around to everyone else’s infuriation. The big hope for investors is that Corbyn’s Labour Party is in such a shambles that, despite everything, Boris wins a working majority, as and when the election ever happens. Whatever the colour of the rosette on one’s political mast, markets would love it.

Sighs of relief

Research: 14 October 2019

So while we welcome last week’s outbreak of cheeriness, we do not trust it. The rise in the value of alleged domestic, or value, assets was nice, verging on the pleasant. Sterling has gained a little (not a lot). To use a gratuitous homophone, the problem is that the sighs of relief are not yet matched by the size of relief.

Multiple excuses

Research: 07 October 2019

It is given that my holidays and Hawksmoor’s roadshows will coincide with a market ‘event’. So as we were jollily training over to Norfolk last Wednesday with our sandwiches and lashings of ginger beer, equity markets duly took a baarf.

Mutables and immutables

Research: 30 September 2019

Today is the last day of the quarter. Or at least it is if you are reading this on Monday. Otherwise, welcome to the final quarter of the year. This is faintly terrifying. This is less so in terms of the speed at which mortality rushes by, but more of the mountain of newsletters and reports yet to be written.

Don't just book it

Research: 23 September 2019

We have a couple of thoughts about Thomas Cook. First, this is how capitalism works. It is Darwinian, it is cruel, but companies must be allowed to fail. It also reinforces the extent to which the foreign holiday (or two) has become the perceived right of the British.

Hotter than July

Research: 16 September 2019

Shock! Horror! Run for the hills. Get the guns, water and beans. Lock up your grandmother and your children. OMG. The price of oil is back to where it was in July. Oh no, oh no, oh no. Where will it all end?

Mercutio's curse

Research: 09 September 2019

Who wants to read yet another load of self-righteous pomposity about the mind-boggling idiocy at the heart of our crumbling democracy? Suffice to say, thirty-nine years after first reading Romeo and Juliet, for my English Lit O-Level, I understand Mercutio’s curse.

I was there

Research: 02 September 2019

Take a deep breath. And relax. Breathe in. And out. There is a time in the future when we will be able to look back and say, in the words of Max Boyce, I was there. That time is next week.

Hubble bubble

Research: 19 August 2019

Last week saw a little outbreak of sanity, though the causes may have been dubious. US equities fell by 3% (or so) last Wednesday, reportedly triggered by the basis point niceties of the yield curve. The fad of the week was the global 2-10 year spread, which by virtue of being inverted by one basis point, apparently foretells that the four horsemen have saddled up.

Manish boy

Research: 12 August 2019

America wants a trade deal with us. Really? Well knock me down with a chamois leather. Of course we can have a trade deal. Except that there is no ‘deal’ involved. We can have the trade arrangement America wants, as quick as we want it. But let’s not get too side-tracked by the chlorinated chickens again.

What a difference a tweet makes

Research: 05 August 2019

Trump loses his temper from time to time and fires off a tweet. This one had the dual purpose of putting the frighteners on the Fed for having the audacity not to promise more cuts in interest rates, nor free Ben and Jerry’s for anyone whose surname rhymes with ‘ump’.

Take another shot of courage

Research: 29 July 2019

It is an astonishing three and a half years since we presented Katy Lies. Those who came to our roadshows in January 2016 will remember our Steely Dan-inspired argument that financial markets were acting as drug addicts, hooked on handouts of free money from quantitative easing.

Phil and the Dealers

Research: 22 July 2019

Is there really so little new under the July sun? Boris gets to fulfil his life’s ambition on Wednesday evening. Donald Trump will probably insult somebody this week. There is trouble in the Middle East. Europe has another record heatwave and there are wildfires in Portugal.

Baa

Research: 15 July 2019

My point, of course, is that the S&P’s spark is so hot that it just can’t stop. 3,000 is but a memory of last week. As we seem to say every week, these are heady times.

Nights are warm and the days are young

Research: 08 July 2019

Hands up everyone who remembers predicting at that time that the post-GFC bull market would run for another five years? Or that the UK 10 year gilt yield was an outstanding bargain at 2.5%? If you haven’t looked for a while, that yield is now a mind-bending 0.7%.

The fish are jumping

Research: 01 July 2019

The easy living ethos appears to have got to Mr Trump. Rarely can a grown-up have straddled a border with such wonderfully childish enthusiasm. He was skipping from one foot to the other, saying “North Korea, South Korea, North Korea, South Korea”. Bless.

Goodbye yield

Research: 24 June 2019

I was going to say that bond investors are giving a message. But that would be typically on-the-fence financial flannel. Bond investors are shouting, yelling, hollering, caterwauling even, that President Trump’s trade and international policies are causing short and long-term harm to the global economy.

Into the dark

Research: 17 June 2019

Sometimes it is best to get things over and done with as quickly as possible. We shall assume, unless something weird happens, that Boris is going to be prime minister. So let us deal with that.

Icarus

Research: 10 June 2019

I have a great deal of sympathy with the theory that we are all characters in a gigantic piece of software. Beyond this, I am at a loss to understand the coincidence of my thinly veiled questioning of the powers of a certain fund manager with what occurred late last Monday.

Subway walls and tenement halls

Research: 03 June 2019

Global markets are in a bit of a grump. Bond yields are too low for comfort and Trump keeps tweeting. We have been here before.

Informed judgements

Research: 20 May 2019

In contrast, the Doctor has overseen transformational progress in accepting and reacting to climate change. Much of this is simple prudence: a bank must assess its risk of lending to oil businesses, for example, on a number of scenarios, including one in which half of current recoverable reserves become unrecoverable. Insurance businesses must know how many properties are at risk from higher sea levels, or from changes in global storm patterns.

Summertime soapbox

Research: 13 May 2019

Never mind; the reaction of investors to the latest round of Sino-American chest-beating has been relatively muted. Equity markets have come off their previous highs and bond yields were already chronically low. It is no big deal.

Strolling through the park

Research: 29 April 2019

It is only a matter of time until higher American growth, better global trade and a resolution of you-know-what all become potential sources of inflation and cold pricklies, rather than warm fuzzies.

The middle class revolution

Research: 23 April 2019

Whether or not one believes in climate change, the reaction to it is going to play a greater and greater role in our daily lives, personally and corporatively. And it must therefore also permeate everyone’s investment thinking.

Good-bye feet

Research: 01 April 2019

On the assumption that you received Innovation after mid-day, you may safely conclude that there are no April Fools in your next three minutes’ reading. Reality is quite surreal enough.

The herd instinct

Research: 04 March 2019

We need to start the week with an apology. This is the only Innovation of March. Your current respondent is, with quite unfortunate timing, disappearing to the other side of the world while everyone else deals with you-know-what, Hammond’s Spring Statement, the US-China trade deal and England’s win in the Six Nations.

The price of independence

Research: 25 February 2019

One of the better remembered of Newton’s lessons is that every force should have an equal and opposite reaction. No pain, no gain. A day in the sunshine in the garden on the moor yesterday, a day of middle-aged creaking and groaning today. Early spring, early hay fever.

Syd and Eddie

Research: 18 February 2019

Monday, Monday. It is half term week and we are set for a blast of tropical warmth. It is time to prune the roses, sharpen the lawnmower and give the spark plug a squirt of WD-40. Parliament wishes to regulate Facebook and something might be done about a rail ticketing system designed to make fares as complex as possible. It is a nice start to the week.

Relative perspectives

Research: 11 February 2019

It is that week of the year in which I am a year older. It is of course a truism that the speed of progress between cradle and grave accelerates the closer one is to the latter.

Les heureux

Research: 04 February 2019

Clever people have argued about human nature since we first slithered out of the primordial soup. Did we wish to exist in harmony with our fellow amoebas, or were our instincts of murderous survival? As they say, there are arguments on both sides.

Like garlic to a vampire

Research: 28 January 2019

Everyone is prone to suffer from the feeling that life is too short. As I face up to the start of my blankety-blankth year on this third rock from the sun, it seems to be happening with increasing regularity.

Excuse me while I kiss the sky

Research: 21 January 2019

It is a long time since I used a Blue Monday pun on Blue Monday. I was sure that I had last year, but no: twelve months ago the theme was all about how January’s bull market would end in tears given enough time. With my usual 20/20 hindsight, it was an easy call to make. Just not as much fun as fooling around with New Order songs.

Take on me

Research: 14 January 2019

This may come as a surprise, but the stock markets remain open today. One might have thought otherwise, given the magnitude of the national tragedy that has befallen the soon-to-be Lord Murray of Dunblane. Hard though it is, we must go on, comforted by the rarity of my football team having won a match.

Beneath this snowy mantle

Research: 07 January 2019

May we wish all our readers a splendid New Year. By the accident of finishing on 31st December, the period of time generally referred to as ‘2018’ ended up being a bit of a growler. 2019 has started with a slightly sore head, but it is nothing that a dry January should not be able to put right.

Raindrops on roses

Research: 17 December 2018

At the moment, the knives are falling. But we have our buying boots on for when they stop. A good number of equities are already offering the best value we have seen since the early years of the bull market. We like that. A lot.

High on emotion

Research: 19 November 2018

I am sorry. I am sure the last thing you want to hear about this morning is Brexit. It is like tinnitus, whining away in the background and never going away. The problem is that it matters a lot. Markets are moving significantly according to the whims of flouncing politicians.

When Black Friday comes

Research: 12 November 2018

It is beginning to look a lot like Christmas. This is not just because the weather is warm and damp: it is already seemingly impossible to buy one’s skinny decaf Honduran arabica macchiato in a multi-use receptacle (translates as ‘a cup of coffee’) without having one’s ears assaulted by Noddy, Cliff, Roy or Shaky.

The economy, stupid

Research: 05 November 2018

We should start November with some seasonal fun. The weekend weather was horrendous and I believe that emptying 115 bags of very well-rotted horse manure was possibly not the best exercise for my back.

The north wind doth blow

Research: 29 October 2018

We have done Blue Monday puns in Innovation on several occasions. The dealing screens this morning are duly showing a more optimistic colour to start the week, but there is no escaping that global equity markets are acting as if next door’s dog has left a present on the front lawn.

As Bramleys from a tree

Research: 22 October 2018

It is as if markets take holidays and roadshows as an affront. There is a certain inevitability about the correlation between time away from the office and the magnitude of market moves.

Leekage

Research: 08 October 2018

It is the time of year when we again set our motors running and head out on the highway. Sort of. These days we are terribly 2018, eschewing the Mustang V8 and road trippin’ in a rented Toyota hybrid.

A letter from Guyancourt

Research: 01 October 2018

Perhaps we should rename Innovation ‘The Weekly Brexit’. This farce moves into another crucial week of the Conservative Party Conference. The trouble is that a farce has a pretence of humour. Brexit is like sitting through Der Ring with all the good bits taken out. And with someone chatting in the seats behind, eating some especially malodorous popcorn.

The Bodyguard

Research: 24 September 2018

Dylanophiles will be familiar with the warning that ‘he that gets hurt will be he who has stalled’. It is a convenient coincidence that Comcast’s decision to part with the thick end of $40bn to buy Sky comes on the same weekend as the finale of The Bodyguard. I will try to explain.

Fragile tape

Research: 17 September 2018

Were we to pay strict heed to Thumper’s sagely advice ‘if you can’t say something nice, don’t say nothing at all’, Innovation would be thin gruel.

Context

Research: 10 September 2018

Humans like round numbers and anniversaries. We are two months away from the hundredth anniversary of the end of the First World War. Saturday marks ten years since Lehman Brothers filed for bankruptcy.

True grit

Research: 20 August 2018

It is already feeling terribly autumnal. A splendid selection of fungi has sprouted in my meadow. I dare commit none to the frying pan, for fear of the eternal ridicule of having been another ignorant scoffer of a death cap.

Absolute nonsense

Research: 13 August 2018

In a way it would have been nice not to start with Boris this week. But if someone keeps bowling half volleys it is rude not to dispatch them to the boundary.

No Regrets

Research: 06 August 2018

It is all too easy to fill one’s life with regrets. Never being one to turn down a mixed metaphor, spilled milk should be water under the bridge. As we all found out last week, had we invested $100 in Apple when it first floated in 1980 we would now be rich enough to own a medium-sized country.