Most of our clients will have now read their early Quarterly Proactive reviews, so I shall keep this weeks update a little briefer than usual.
Last Friday the FTSE 100 was around 5,700 points. I said that I was wishing for markets to ‘calm down’. At the point of writing this article one week on, the FTSE 100 is still around 5,700 points so perhaps wishes really do come true.
Calmer markets are what we all need right now. We have taken advantage of this short oasis at Thomas and Thomas, seizing the opportunity to swiftly rebalance clients’ Proactive and Pro-Ethical portfolios. This action creates us a good deal of work, but I feel it is the right thing to do and it has been very well received by our clients.
The main headline away from CV19 this week has been about Oil prices. More accurately, this really involves Oil ‘futures’.
Futures were first introduced as a way of offering Farmers some security that their future crops would have a buyer. They are a form of promise that is traded between someone supplying a physical item and someone agreeing to buy that item in future at a guaranteed price.
The winner in this ‘future’ will either be the supplier if prices fall, or the buyer if market prices rise.
In normal times, a futures trader will not ‘close out’ their position and actually take delivery of the physical item. Instead, they will look to sell on their future to someone who does want the item. This is all pretty simple when there is enough demand in a market.
The Oil market is currently in a crisis. We are simply not using the stuff, yet the biggest Oil producers keep generating more and more of it. An Oil future in a gallon of Oil to be delivered in May is currently worth about the same as a gallon of milk.
Oil prices will recover ‘in the future’ (pardon my pun) when people are back to work and the global lockdown is over. However, I believe we have been given a glimpse of a further future where no one needs Oil because of renewable energy. Perhaps those Thomas and Thomas Ethical Portfolios might not be such a daft idea after all?
My wish this week is for more calm markets. My wish is also for the return of Mr Johnson to the ghastly 5.00 briefings.
We now desperately need to see an injection of optimism for our country. The media would do well to remember that many people have now been marooned in their homes for six weeks. Constantly negative news headlines are incredibly cruel on those who are alone or are now weary of the whole affair.
I can picture a triumphant Boris returning to the podium with the news that we are now past the peak and laying down some new looser rules to allow some return to normality. Just such an appearance could push the FTSE up above 6,000 points……
But then perhaps I am expecting too much from my wishes today.
As always, we are here for you 100%. I want to finish by sincerely thanking Katy and Sophie who have been working tirelessly from their homes to support me and our clients through this torrid time. Unlike so many firms, we haven’t furloughed our team – despite an obvious fall in our own income and the huge difficulties that the lockdown presents.
As one of our clients, you come first and we will celebrate a better future together – of that I am certain.
Darren
