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Issue 14 - Trade Flare Up Between USA & EU Upsets The Markets

What was the famous line from Jaws 2?  – “Just when you thought it was safe to go back into the water….!”

We have continued to see investment markets fairly stable over the last week or so and we were even seeing some increases at the end of last week, partly buoyed by the news coming from the White House that the US – China trade situation was in good shape as a certain person who lives there, (The White House that is) sends a Tweet message to that effect, only to be followed by the news that a trade flare up between the US and the EU is likely and that has spooked markets this afternoon.

This is one example of what James Penny from TAM Asset Management was saying in our news & views last week – that it will only take a piece of unexpected news, good or bad, to trigger volatility in the markets and here we are. You could say it was expected and there will be more to come along the way and come tomorrow, the reverse may well be happening. In general though, we have still seen a good recovery from the darkest days back in March this year and slowly as the high streets, pubs, restaurants and sports and leisure facilities start to open, we should see a slowly building improvement in the economy.

For savers though, I am afraid to say that low interest rates are here to stay for the foreseeable future and with dividends being suspended from many corporations, generating income could become more of a challenge and we may need to be more imaginative in our approach. This is also a time to offer a risk warning though.  We have periodically seen investments being advertised that promise a certain percentage return and I saw one the other day, offering 8% and with a very smooth advertisement, suggesting the income was certain, if not guaranteed. On closer inspection, this was a structured product, where the capital was at risk and for most people it would not be appropriate to invest in. The old adage is worth remembering here – if it looks too good to be true, it probably is and my suggestion would be that if you are temped by any advertisements you see, get it checked out to make sure you really know the details of the terms and conditions before you part with any of your savings.

Turning now to the Covid situation, we have continued to see good improvements in the UK and Europe, perhaps with the exception of Germany, but with lockdown being eased more in the UK, and the prospect of Air Bridge agreements being reached, it looks as though holiday travel throughout Europe will be possible this year and so I suspect there is going to be a rush for last minute Summer holiday deals like never before. Having said that, the airlines are not expecting passenger numbers to get back to 2019 levels until 2024!

We also heard that a new vaccine from Imperial College London is to begin human trials here in the UK – this is one of a number of initiatives being tried and the suggestion is that a “cocktail” approach may even be something that is tried to combine different solutions. It is far too early to know how successful this might be, but they are all steps in the right direction.

As far as our business is concerned, we believe that having followed the social distancing recommendations closely, we are now at a point where we can return to all three of us working from the office at the same time again, rather than rotating as we have been doing, so I am pleased to say that with effect from next Monday, 29th June, we will be going back to “normal” in that respect but I will continue to defer most face to face meetings for the time being. I appreciate that there is no real substitute for meeting in person, but equally, we should not be taking unnecessary risks either.

I will keep this under regular review and let you know as and when we plan any further changes.

Finally, as things are easing up generally, I think I will slow down with the News & Views and plan to send them every other week for now and probably we will go down to monthly at some point but I would just say that I really appreciate all of the positive feedback I have received – thank you.

Stay safe and we will keep in touch.

With best wishes.

Richard, Chris and Lesley

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