Market Commentary 2019

20th December 2019

Andrew Bailey announced as new Bank of England Governor

Andrew Bailey, formerly head of the Financial Conduct Authority, has been selected to take over from Mark Carney as the next Bank of England Governor. Bailey has previously held the position of deputy governor at the BoE for 30 years before his move to the FCA. Given his extensive work within the UK’s financial circles this appointment is seen as a positive move to by the UK government to insert a highly qualified domestic candidate into the role.

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13th December 2019

Conservatives secure convincing election majority

The UK electorate voted with their feet yesterday to give Prime Minster Johnson’s government a majority in the Houses of Parliament not seen since the days of Margret Thatcher.
The UK electorate voted with their feet yesterday to give Prime Minster Johnson’s government a majority in the Houses of Parliament not seen since the days of Margret Thatcher. The Conservatives secured 363 seats comprising of 43.6% of the total vote and a massive 49 seat increase from their previous position. Labour on the other hand, suffered one of the worst defeats since the war with just 202 seats secured which represents a loss of 60 seats. Labour’s performance has prompted many in the country and within the Labour party to call for Jeremy Corbyn to stand down as leader...

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12th December 2019

FED votes to keep rates on hold in December

The US Federal Reserve has voted in unison to keep rates on hold at its December meeting.
The US Federal Reserve has voted in unison to keep rates on hold at its December meeting. December for the FED has, over the last three years, proved a critical point in the year for implementing rate decisions. The FED maintained that they would be happy to leave rates on hold for 2020 but this, as always, is dependent on the current economic climate remaining supportive.

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6th December 2019

US posts another bumper employment number

The US employment market has once again stunned investors around the world by posting a large jobs number well ahead of economist’s expectations.
The US employment market has once again stunned investors around the world by posting a large jobs number well ahead of economist’s expectations. 266,000 jobs were created in November against expectations of just 180,000 with unemployment at 3.5% of the population. This number has served to draw yet another line under the strength in the US economy at present which flies directly in the face of talks around a US recession. US manufacturing and business investment remain subdued but the US consumer numbers and employment remain very strong. US equity indexes jumped up on the news as investors moved back...

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7th November 2019

BoE holds interest rates, signals possible future cuts

The Bank of England (BoE) has opted to leave UK interest rates at 0.75% in its latest rate decision meeting, but has surprised markets with two of its members voting to cut interest rates. The change in sentiment has been duly noted considering the BoE had hiked rates twice since Q4 2018 and adds weight to the idea that the central bank might cut interest rates in the near future. Having said that the UK's growth prospects had slowed materially in 2019, the BoE pointed towards a combination of weakening global growth and continued Brexit related uncertainty as the reasons...

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1st November 2019

US adds more jobs than expected in October

Non-farm payrolls data released today showed 128,000 jobs were added last month, comfortably beating analysts’ expectations of 85,000 jobs added in October. The food services industry saw some of the most notable gains, while manufacturing employment fell. Overall, the data suggest that the labour market is still tight, consumer spending remains robust and companies are continuing to hold onto their workers. The data reinforces the Federal Reserve’s forward guidance on monetary policy, where they expressed, in their recent policy meeting, their intention to be patient with interest rate cutting for the time being. Global stocks picked up on the news,...

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31st October 2019

US House votes on impeachment proceedings

The US house has today voted in support of beginning impeachment proceedings against President Trump. Whilst the vote is not an impeachment in itself, it does kick off an official enquiry into the president’s involvement in coercing the Ukrainian government into assisting him in gathering information on Joe Biden, a Democratic favourite in the 2020 presidential elections. Trump immediately took to twitter to label the proceedings the biggest witch hunt in American history. Once the investigation is complete the impeachment process will move to the senate for another vote where it is widely expected to fail on account of the...

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31st October 2019

FED cuts US interest rates for third time

Jerome Powell, chair of the US Federal Reserve Bank announced another quarter percentage point cut to the interest rate in the US, marking the third consecutive cut to the countries interest rate. The cut was again hailed as another pre-emptive move to help sustain the current economic expansion rather than a cut in the face of an economic slowdown. Whilst the cut was broadly priced into markets the comments from the FED accompanying the cut stated the FED would be reluctant to make any further cuts until the US began to show real economic weakness. Markets broadly agreed with this...

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30th October 2019

UK heads for snap election in December

Parliament last night voted overwhelmingly in support of a December snap election which looks set to be held on the 12th of December. Support emerged after the Conservative party backed a proposal from the LibDems and the SNP to hold an election before the January leave date. Labour, seeing the majority for a vote already in parliament were arguably forced to back the proposal to save face despite having some of the lowest approval ratings in recent history. Despite the Conservative majority in the polls, the new vote throws up the increased possibility of a hung parliament which could force...

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23rd October 2019

Parliament votes Yes to Brexit bill but no to 31st departure

Prime minster Johnson last night secured a crucial commons majority of 30 as MP’s voted convincingly to back the new withdrawal bill from the EU. Despite backing the leave bill, MP’s immediately voted against Johnson’s attempt to rush the bill through the house of commons to secure an exit by the 31st of October as promised. The EU will now decide if they want to offer the UK an extension to Brexit to allow the legislation to progress through parliament at a more sedate pace. Despite the positivity around the common’s majority on Brexit, the failure to secure an exit...

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21st October 2019

Brexit extension requested, meaningful vote rejected

Saturday saw a rare parliamentary session where lawmakers voted to request an extension to Britain's exit from the EU rather than vote on the final Brexit deal negotiated by Boris Johnson's government, allowing the withdrawal agreement to be put into legislation first. Following this, today the Speaker of the House of Commons, John Bercow, has refused another meaningful vote on the deal. Since it was announced that the UK had successfully negotiated a new withdrawal agreement with the EU, sterling had rallied around 5 per cent against the euro, while the domestically focused FTSE 250 index rose around 5.5 per...

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15th October 2019

Neil Woodford resigns from equity income fund

Neil Woodford has today announced the flagship Woodford equity income fund will be shuttering and returning cash to shareholders as soon as the fund’s holdings can be liquidated. The fund’s board concluded the strategy could not be repositioned into sufficient liquid assets ready for the fund to reopen again without it immediately shutting on the level of redemptions. Once cash has been returned, Neil Woodford announced he will himself be stepping away from the fund which marks the most high-profile resignation of a fund manager in recent history.

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11th October 2019

Stocks surge on Brexit and China trade deal combo

Global stocks have surged ahead today driven higher by the increased potential for a Brexit deal at the same time as a trade deal between the US and China appears on the cards. With global markets pinning a lot of hopes on these two events coming to pass today has seen most equity indexes rally over 2% with safe haven trades such as government debt, gold and the Yen very much on the back foot. Whilst these announcements are positive TAM remains focussed on downside protection and will be looking to build out its defensive assets at a discount.

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4th October 2019

Mixed US jobs numbers calm markets

The latest US non-farm payroll figures revealed 136,000 new jobs were added in September, down from 168,000 in August and just below analyst forecasts of 145,000. The unemployment number painted a brighter picture, falling from 3.7 per cent last month to 3.5 per cent this month, the lowest it has been in 50 years. Markets took the news positively, as it suggested that the Federal Reserve may continue on its dovish path by cutting interest rates a third time in its next meeting later this month. US equities were up following the announcement, while the demand for safe havens such...

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2nd October 2019

US manufacturing sector contracts to lowest level since recession

The US manufacturing sector reached a decade low growth numbers in September sending global markets tumbling on fears the US economy might be spluttering. US Manufacturing for September was pegged to post a slight gain in growth but instead returned a sharp decline in numbers against analysts expectations. This sparked off fears that the US was closer to a recession and saw markets pull back on the news. Trump took to twitter to blame the FED and the dollar for the decline rather than focus on the real driver of the weakness which stems from the trade war with China.

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25th September 2019

Democrat’s initiate impeachment proceedings against Trump

Donald Trump has become the fourth president in US history to face impeachment proceedings. Nancy Pelosi, US Democratic speaker of the house, last night announced the start to formal impeachment proceedings. The issue centres around allegations the President enlisted the help of the Ukrainian government to boost his re-election campaign by investigating the son of Democratic front runner Joe Biden. Whilst the proceedings are not seen as a market moving event, Asian markets closed down on the impeachment news predominantly because of its ramifications on the US China trade deal.

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24th September 2019

UK’s Supreme Court rules against proroguing of Parliament.

The UK’s supreme court made a monumental decision to rule that the information given to the queen on which she approved the proroguing of Parliament was unlawful and thus renders the prorogation void. The Supreme Court advised that parliament be reconvened at the earliest possible opportunity. The ruling has further hampered the prime minister’s efforts to take the UK closer to a no deal and taken the party into a potential constitutional crisis. The pound rallied on the news as investors took the news as a positive for a softer Brexit.

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19th September 2019

Bank of England keeps rates on hold

The Bank of England has voted unanimously to keep interest rates on hold at 0.75 per cent in its most recent policy meeting. Although it set a dovish tone when it signalled that it might look to cut rates if we see continued Brexit uncertainty and weak global growth, it also reiterated a commitment to hike rates in the event that an orderly exit from the EU is eventually achieved. Government debt strengthened modestly on the news, while sterling weakened as a result of the overall dovish tone of the meeting.

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19th September 2019

Federal Reserve cuts rates for second time this year

The Federal Reserve has cut interest rates by 25 basis points for a second time this year, to a target range of between 1.75 and 2 per cent, amid concerns about slowing global growth and trade wars. The policy statement was little changed from the July statement, with little indication of whether we will see further reductions in the months ahead. There were divisions among individual policymakers as to what should happen next, which painted a slightly more hawkish picture than markets expected. The dissent among policymakers dampened expectations for faster easing which prompted the US dollar to strengthen against...

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29th July 2019

Sterling under pressure as no-deal Brexit risk heightens

Sterling has fallen around 1.2 per cent against developed market peers today as markets perceive the risk of no-deal Brexit increasing following Prime Minister Boris Johnson's victory last week and his governments subsequent public dialogue on the subject. Whilst markets speculate if threatening to leave the EU without a deal is just posturing in preparation of attempting to renegotiate a deal with the EU, the currency continues to be volatile and has now fallen to the level last seen when the previous Prime Minister, Theresa May, triggered article 50 in March 2017. In response to the weakening currency, the internationally...

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23rd July 2019

Boris Johnson wins Conservative leadership race

As was widely expected, Boris Johnson has won the race to become the leader of the Conservative party and, consequently, Prime Minister of the UK as of Wednesday. Given that Mr Johnson has said he is willing to take the UK out of the EU with or without a deal come October, the outlook for the UK economy and its markets remains as uncertain as ever. As the result was largely expected, the immediate reaction has been muted, with Sterling already having priced in the idea of Mr Johnson's victory and falling last week to its lowest against the US...

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11th July 2019

Interest rate cut in the US almost a certainty for July

Jerome Powell, Chairman of the US Federal Reserve bank cast a surprisingly dovish tone at yesterdays meeting which has, in the minds of investors, nailed on a rate cut later on this month. Currently the market is expecting at least a quarter percentage point cut to the US base rate with speculation that any weakness in Q2 US earnings announcements next week could prompt a half a percentage cut to US rates in an attempt to stave off any further economic weakness from the worlds largest economy.

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5th July 2019

June jobs numbers in the US smash expectations

The US economy in the month of June put on a total of 224,000 jobs which was a big beat against the forecast 160,000 and up from May’s number of 75,000. Despite the slowdown in wage inflation, the result will reassure investors that the US continues to be in good health against the backdrop of slowing global growth. Conversely it will cause some volatility in the short term for markets as investors revise their expectations for the US cutting rates three times this year to potentially just two or one.

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3rd July 2019

Christine Lagarde succeeds Mario Draghi as head of the ECB

IMF boss Christine Lagarde will, in October, succeed Mario Draghi to become Europe’s first female European Central Bank president. The main question from markets is what will Mrs Lagarde bring to the ECB. Christine Lagarde has always supported fiscal loosening policies and dovish language on monetary policy. During her tenure within the IMF she stood the fund fully behind the ECB when it began its QE programme. Given this we believe the new head of the ECB will firstly support and then implement in October further interest rate cuts into negative territory and maintain another round of QE funding.

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1st July 2019

US and China agree suspension of new tariffs

Equity markets are on the rise again this morning as investors reacted positively to the news of a truce in the US China trade spat. Donald Trump and Xi emerged from their meeting hailing it as a success but warning that more needed to be done to get the deal right. With Trump announcing a suspension on the next round of US tariffs on goods markets are hoping the two economies will manage to forge an agreement which will see all tariffs on Chinese goods removed.
Equity markets are on the rise again this morning as investors reacted positively to the news of a truce in the US China trade spat. Donald Trump and Xi emerged from their meeting hailing it as a success but warning that more needed to be done to get the deal right. With Trump announcing a suspension on the next round of US tariffs on goods markets are hoping the two economies will manage to forge an agreement which will see all tariffs on Chinese goods removed.

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20th June 2019

Central bank come together to set dovish tone

Global markets reacted positively as Federal Reserve Chairman Jay Powell spoke about the need to once again become data dependant when it comes to the prospect of lowering US interest rates in the face of a slowing economy. Jay Powell’s speech came off the back of a speech from the European central bank outlining the same dovish message to global markets. Investors have, over the last few weeks, begun to aggressively price in one to two interest rate cuts from the US central bank and more monetary easing from the European equivalent which has seen both equity and fixed income...

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14th June 2019

Boris takes commanding lead in first Conservative vote.

Last night the UK’s Conservative party took its first vote on who it wanted to be its next leader. Overwhelmingly the numbers came out in favour of front runner Boris Johnson who secured 114 votes out 313. A Boris majority was no big surprise but the extent of this lead did come as a shock as the margin was double the size of the second place candidate, foreign secretary Jeremy Hunt. The first vote was so in favour of Boris that some candidates in the race have considered joining forces just to compete. Historically the front runner in Conservative party...

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7th June 2019

Weaker-than-expected US jobs growth in May

June’s non-farm payrolls came in significantly below analysts’ expectations, showing only 75,000 jobs being created in the month of May versus the forecast of 185,000. On top of this, the year-on-year rise in average earnings for the month was also lower than expected, at 3.1 per cent rather than 3.2 per cent, highlighting that the labour market continues to show signs of weakening. This data added to speculation that the Federal Reserve will cut rates this year and led investors to seek the safety of debt, sending yields on US Treasuries and UK government debt lower, representing a rise in...

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6th June 2019

Woodford fund suspended, TAM clients unaffected

TAM clients need not be concerned regarding the prominent position in the press this week of Neil Woodford's LF Woodford Equity Income Fund being suspended. TAM's portfolios hold no positions, nor have ever held any positions in the Fund. Woodford's fund was suspended this week as sustained and growing investor redemptions from the Fund risked not only the strategy's investment parameters being breached, but also the ability to obtain suitable outcomes for investors. Whilst TAM does not invest in the Fund, we remain aware of the risks posed by funds with poor liquidity and as such have released an investment...

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6th June 2019

European Central Bank maintains record low interest rates

President of the European Central Bank (ECB), Mario Draghi, has confirmed in a press conference today that the decision has been made to keep interest rates on hold at their record low levels until at least mid-2020. While the ECB raised its forecast for growth this year from the previous forecast in March, it lowered the forecast for growth in 2020. Similarly, they raised their inflation expectations for this year, but lowered them for next year. These were only minor tweaks, based on the ECB’s view that global headwinds continue to weigh on the outlook for the euro area. Mr...

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28th May 2019

Pro-Brexit Party wins European Elections

Nigel Farage’s newly formed Brexit party were triumphant in the European elections, taking 31 per cent of the votes, comfortably ahead of the pro-Remain Liberal Democrats who came second place with 20 per cent of the votes. The Brexit party had one single pledge to the electorate which was to deliver Brexit, and this clear strategy was evidently preferred by voters who appeared to have lost faith in the Conservative and Labour parties which have been divided in their views on Brexit. Mr Farage’s next challenge is the by-election in Peterborough on June 6 and a potential general election later...

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24th May 2019

Theresa May resigns as UK Prime Minister

In an emotional speech to the nation Theresa May announced she will resign as the Prime Minister of the UK. Whilst this announcement has been expected for some time her departure of the 7th of June is sooner than many had anticipated. The pound has managed to remain stable through the news which is testament to how expected the announcement was in the markets. The level of Speculation as to her successor continues to remain high with Boris Johnson remaining the bookies favourite to succeed her but that remains far from certain.

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26th April 2019

US growth beats expectations

US Gross Domestic Product (GDP) numbers released today show a 3.2% annualised pace of growth for Q1 this year, surpassing analyst estimates of 2.3% growth. This was despite a number of issues overshadowing markets in the first quarter including trade tensions, a government shutdown and fears of a global economic growth slowdown. Several factors contributed to this growth figure, including higher defence spending and companies building up their inventory bases and net exports, while consumer spending and business spending actually slowed. Growth was also heavily concentrated in the Technology and Industrial sectors. US equity futures markets were relatively unchanged, edging...

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5th April 2019

US job creation gets back on track

US job creation got back on track in March creating a total of 192,000 jobs up from a consensus figure of 177,000. This beat also confirmed February’s number of just 20,000 was more likely an anomaly but more importantly, it sent a reassuring message to global markets that the US economy is perhaps not as close to an economic slowdown as markets had predicted. Markets reacted accordingly with US equity markets rallying along with UK and Europe. Dollar also saw a bid on the news which was predicted.

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15th March 2019

MPs vote to delay Brexit

MPs backed Theresa May’s plan to delay Britain’s scheduled exit date of March 29th by 412 votes to 202. The aim is to extend the deadline to at least June 30th, however if the deal already proposed by May is once again rejected by MPs next week, there could be longer extension to the deadline, possibly into 2020 or beyond, if May fails to convince the remaining 27 EU leaders that a longer extension is not a desired outcome. A longer extension to the deadline would mean prolonged uncertainty for the UK and is an outcome many are keen to...

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14th March 2019

Parliament votes against a no deal exit

In the second vote of three, the UK parliament last night voted by a majority of 49 against the prospect of the UK leaving the EU without a deal. Of the three motions being put to parliament vote this week, last night’s decision against leaving without a deal was the one that was expected to go through without a hitch. On the news, the pound predictably rallied in Asian trading as investors took reassurances that this was a step in the right direction to avoiding a disorderly exit. Despite the certainty of the vote against a hard Brexit the fact...

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13th March 2018

May's deal gets voted down again

The UK government voted last night, once again, against Theresa May’s new Brexit deal by a margin of 149 votes. The vote represents yet another blow to the PM’s hopes of getting her deal passed. The next steps in the Brexit process are for a vote to be held in parliament tonight on the prospect of a no deal Brexit which is tipped to be voted down in favour of some sort of deal. Pending this there will be a final vote on Thursday to seek an extension from the 27 EU member states on the exit date still set...

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8th March 2019

Weaker than expected US hiring in February

US employers added just 20,000 jobs in February, significantly lower than the market’s expectation of 180,000 and the fewest in over a year. This disappointing figure was offset by a fall in the unemployment rate from 4% to 3.8% and a rise in average hourly pay of 3.4% from a year earlier. This decline in jobs growth from January’s high was fuelled by the decline in construction jobs, while the fall in the unemployment rate was driven by many civil servants returning to work after the US government shutdown. Although there were several conflicting signals from this month’s jobs numbers,...

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12th February 2019

Congress agrees tentative wall funding

Markets look set to open positively this morning as investors were buoyed by the tentative deal struck in the US overnight which looks set to avoid another US government shutdown. Naturally, the core of the issue was funding for the border wall with Mexico which Democrats have, all be it reluctantly, agreed to earmark $1.4 Billion to build an enhanced fence with Mexico. Despite funding being well off the $5.7 Billion Trump was demanding and only enough to fund fencing for just one quarter of the length demanded by the President. The compromise was exactly the climb down the President...

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11th February 201

UK economy slows sharply in fourth quarter

The UK economy posted lacklustre growth numbers of just 0.2% in the last three months of 2018. This figure for the year was at 1.2% which is the slowest rate of expansion since 2012. Headline contributors to the slowdown were seen in UK manufacturing and UK consumer spending which appeared to show signs of being susceptible to concerns over Brexit uncertainty. These growth figures have prompted the UK central bank to put the likelihood of a UK recession this summer at 25%. Whilst this news is negative on a headline level, there remains positivity for UK growth should Parliament be...

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1st February 2019

US jobs numbers smash expectations in January

The US jobs market, true to recent form, has once again smashed expectations for jobs created in January with a figure of 304,000 jobs created, up from the anticipated 165,000. US markets opened higher as investors took the bumper number as further evidence the US economy continues to be in the middle of a sustained growth phase which flies in the face of ongoing concerns around a global economic slowdown. US government debt began to weaken on the news as investors saw the prospects of FED rate hikes in 2019 increasing in probability.

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31st January 2019

Stocks rally on Federal Reserve U-turn

Stock markets across the globe rallied strongly on Wednesday following a dovish news conference by the Federal Reserve which eased fears that policy would be tightened too quickly. Fed chairman, Jay Powell, signalled they would be patient with raising interest rates, at least in the near term, and flexible with plans to scale back the bond-buying stimulus programme. Although there has not been a major shift in the economic backdrop, there has been some weakness in domestic demand as the positive impacts of tax cuts have begun to fade and the oil price has continued its decline, impacting global growth...

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30th January 2019

Theresa May wins vote to reopen Brexit negotiations

Theresa May has secured the backing of the House of Commons as MPs voted 317 to 301 in favour of her amended Brexit plan, proposed by Tory backbencher Graham Brady, which seeks for “alternative arrangements” to be made, including replacing the Irish backstop. Although a plan has been put in place, it is inevitable that there will be a clash with the EU, as even May admitted that the negotiations with Brussels will be difficult. For this reason, markets initially remained cautious, with the pound weakening on the news that the amendment put forward by Labour’s Yvette Cooper that sought...

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17th January 201

Conservatives survive no confidence vote

Prime minister May continued through what has been a tumultuous week for the UK premier as she, last night, survived a no confidence vote from Labour party leader Jeremy Corbyn by just 19 votes. It was the Irish DUP party voting in favour of keeping May in power that managed to secure her the additional 19 votes she needed. May will now hold talks with opposition leaders to try and clear the impasse of the current Brexit stalemate and present a new solution to parliament on Monday.

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16th January 2019

May suffers worst parliament defeat in British history

At 8pm yesterday evening, Prime Minister May suffered the most crushing parliamentary defeat in British history as MP’s from all parties voted against her proposed Brexit deal by 432 votes against to 202 votes in favour. The result immediately sparked a vote of no confidence by Labour leader Jeremy Corbyn, but this is expected to fail as Labour lack the backing to secure a majority. What is clear is May’s proposed deal is now dead which throws up both the prospect of a delay to Article 50 and a softer Brexit deal. With Asia markets closing higher overnight and European...

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4th January 2019

US jobs accelerate in December

The US economy has, for the month of December, created nearly double the level of jobs the market was predicting at 312,000 up from the 177,000 which was predicted. To accompany this, wage inflation accelerated at its quickest pace since 2009. These figures caused investors a conundrum in that the markets want the FED to slow the expected rate of interest rate hike’s, the FED, who maintain they are data dependent, have to take this latest job’s data as evidence that the US is still growing very strongly. Markets today are taking the news well with US and European indexes...

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