What a week this has been for recovery!
Property search engine ‘Right Move’ reported that levels of borrowing and enquiries in England bounced straight back to ‘pre-crisis’ levels, whilst Zoopla said that their UK Cities House Price Index showed a rebound in house search demand above the levels seen at the start of March!
Meanwhile, the UK government gave the green light for non-essential (the exciting!) shops to open on the 15th of June. John Lewis, M&S, Debenhams and Clarks are believed to collectively hold more than £15 billion of winter and spring stock that needs shifting. Expect the mother of all sales!
Primarks share price flew up 7% and JD Sports gained 11% in very quick order this week.
The travel company Tui saw its share price rocket 50% on news that Spain will be open to tourists from July.
The Dow Jones crossed the important 25,000 point mark in the U.S. and the mood across U.S. markets is now one of defiant optimism as more and more vaccines confirm initial stage success and a raft of successful CV19 rescue treatments come forward – whilst infection rates continue to fall.
Here in the UK, the Oxford Vaccine team actually complained that there are not enough CV19 cases in the UK to build efficient data! What a strange dichotomy!
Right across global markets, investors are suddenly starting to seek out value, finally overlooking the FANG stocks (Facebook, Amazon, Netflix and Google) in search of Banks, Retailers, Oil Producers, Car Manufacturers and other important industries.
We are noticing that our client annual reviews from May last year are now showing positive territory and the gap on even the highest past valuations is closing. There is still work to do, but our constant mantra of ‘don’t give up’ is paying off in spades.
We find ourselves in the exciting position where we don’t believe that our client portfolios need a full market recovery to lift their own portfolios back to pre-crisis levels. This is because of our diligent diversification, monitoring and fund selection
We would be forgiven for now collapsing in a corner somewhere and declaring this crisis to be over!
However, we need to be realistic. It will likely be next year before the FTSE 100 returns to its pre-crisis levels. This is due to two key problems.
Firstly, a global recession and secondly a global obsession.
I have spoken enough on the global recession. My firm belief is that it will be brutal but quick.
The global obsession with the China story, however, is one to watch.
I found myself paying twice the amount for half as many disposable gloves this week, because they are NOT made in China and instead are manufactured here in the UK. This change in my own outlook appears to be mirrored in my clients’ minds.
Let’s be honest. China appears to have not behaved very well. Their decision to enforce more draconian laws upon an island that lies over one thousand miles off their shores this week could be viewed very cynically indeed.
There is still grave concern (supported by some evidence) that the CV19 virus may have accidently escaped from a Chinese laboratory. Perhaps we will never truly know the source, but the world does collectively feel that China was very slow to sound the alarm on this pandemic.
The words ‘cover-up’ are now synonymously used with this country.
In the UK, many questions are being asked about our governments’ decision to push on ahead with Huawei integration into our telecoms systems.
Across the pond in the U.S. the anti-China sentiment is growing at pace. In a country where ‘someone needs to be accountable for this’, the bull may well be running around the china shop.
It seems likely that Mr Trump will impose more sanctions on China. However, I would expect tough rhetoric with little real action until the autumn Presidential elections are out the way. When you have measured all of your success on the state of your stock markets – you become very cautious about paying for breakages.
I know many of us in Wales are feeling slightly ‘behind the Berlin wall’ as we watch our English cousins move about more freely, able to try and kick-start their businesses, visit families and sit freely in public. I am starting to sense a growing unease.
The ‘Cummings and goings’ of a certain government adviser has proved a frustrating distraction as many of us just want to be able to get back on with our lives as best as we can.
I would expect the China agenda to prove an excellent opportunity for those in government all around the world who need to move the focus away from themselves.
In the meantime, the recovery is happening before our eyes. I believe that our darkest hours are now behind us and that the future for our clients, their families and their portfolios is bright.
As always, I am here for you 100% if you need anything at all.
Hang on in there, we are nearly through this now.
Darren
