Posted 08 Apr, 2019 | By Chris Page

Cars, Mice and a pinch of Sleep Deprivation

‘Time flies when you’re having fun,” (well, so they say) and the past few months have gone very quickly indeed! Too quickly, in fact! It’s April already, and I’ve only now found the time to finally sit and post a new ‘blog.’

I know many of you will be bitterly disappointed not to have received my riveting updates for a while, but I shall crack out the small violin and ask for forgiveness. Along with the usual daily grind, I am living on a building site, have been involved with the recent company merger, and most importantly welcomed my daughter Abigail into the world! The jury is still out on which is the hardest but let’s just say her name begins with an ‘A’ and she doesn’t want me to sleep.

So, to pick up from where we left off… Brexit continues to dominate the papers for all the wrong reasons, there were clear indications that the US/China trade dispute might finally be coming to an end; and there have been clear markers for a sea-change in the US car industry – something that has worldwide implications.

World stock markets had a fair time of it in 2019, buoyed up by hopes of the US/China agreement, and this mini-revival has gone some way to re-trace some of the falls that the markets experienced in the latter half of last year.

So without much further ado, let’s delve into the detail…

UK

As always, there was the usual round of doom and gloom from the UK retail sector. Debenhams issued a profit warning, having failed to meet forecasts it made only two months ago… the ‘saviour’ that is Mike Ashley can be found watching very closely.

Elsewhere, the high street suffered its worst February for ten years with sales down 3.7%. We also suffered the shock of John Lewis paying its lowest bonus to staff since the 1950s! Office Outlet went into administration; and there was also a sense of foreboding surrounding the traditional high street travel agent Thomas Cook, who announced plans to close 21 shops and cut 300 jobs – all very cheery!

In spite of all the current uncertainty, the UK economy continued to turn in some impressive figures. Unemployment fell to its lowest level for 45 years and, contrary to economist’s predictions, figures from the Office for National Statistics showed that the economy had grown by 0.5% during January.

The UK’s FTSE 100 index of leading shares also had a good last month, rising by 3% to 7,279 where it is up by 8% for the first quarter of 2019. Ending March 2% down, the pound did fall slightly.

Brexit

I don’t really know where to start with all this, lets just say lots of ‘solutions’ have been put forward over the last couple of months but all have been rejected. The MP’s don’t want a no-deal but they don’t want ‘the’ deal either (that includes any variations where it is wearing a different frock – the consensus is that it’s still ugly).

After securing an extension until 12th April to get her bill passed, Theresa May must now go back to the EU to request an even longer extension to the ongoing fiasco. On the plus side, at least Labour are now talking to the Conservatives about a way forward… I’m sure that is going to put the nations minds at rest.

Europe

The news in Europe was bleak. March began with the revelation that EU manufacturing was facing its worst downturn for six years. The European Central Bank once again whirred into action, offering banks cheap loans in a bid to revive the Eurozone economy.

But, can it really get any better? Bearing in mind that the whole dynamic of cars is dramatically changing in favour of driverless/electric equivalents, the three conceptions about cars; 1) they’re driven by people; 2) they’re owned by people and 3) they’re powered by internal combustion engines, are seriously threatened.

The German economy has been the engine powering Europe for the last decade or so. Its car industry employs more than 800,000 people and accounts for around 20% of the country’s exports. If car production switches to driverless/electric cars made in the Far East and/or California, then the implications for Europe are surely set to be severe.

On European stock markets the German DAX index had a very quiet month – it rose just 10 points to 11,526. The French market did better, rising 2% in March where it is up by an impressive 13% for the year to date. The German index is up by 9% for the first three months of 2019.

US

March got off to a bad start in the US. Figures showed that the US had created just 20,000 jobs in February, well below expectations of 180,000. This was the lowest figure since September 2017 when employment was impacted by Hurricanes Harvey and Irma. There were few surprises then that the Federal Reserve announced it does not expect to raise interest rates for the rest of this year, voting unanimously to keep the US interest rate range between 2.25% and 2.5%.

In other news, ride-sharing app Lyft made its stock market debut valued at $24bn (£18.5bn), making it the biggest IPO since China’s Alibaba. We expect that figure to be dwarfed though when Uber comes to the market, with early signs indicating that the ride-sharing company will be valued at around $120bn (£92bn). With the news that Tesla is also on course to outsell BMW and Mercedes in the US, as above, there are very clear warning signs for the traditional car industry.

On Wall Street the Dow Jones index had a quiet month. It finished March up just 13 points at 25,929. It is another market that has done really well in the first three months of the year, rising by 11% since 1st January.

Far East

March ended with real optimism about the US/China trade talks, so it was little surprise to see China’s stock market up by 5% in the month.

However, the trade dispute has certainly taken its toll – figures revealed that Chinese exports in February suffered their biggest fall for three years – down nearly 21% on the previous year.

Unsurprisingly, the Chinese government looked to a raft of tax cuts to counter this, with China’s Li Keqiang warning that the country faced “a tough struggle” as he laid out plans to bolster the economy. Opening the annual session of China’s parliament, he forecast slower growth of 6% to 6.5% this year. He duly unveiled plans to boost spending with tax cuts totaling $298bn (£229bn).

The Shanghai Composite Index’s 5% rise meant that it closed March at 3,091 where it is up by an impressive 24% for the year to date. The Hong Kong Market was only up 1% in the month but is up by 12% for the first quarter of the year; while the Japanese and South Korean markets turned in much more subdued performances, falling by 1% and 2% respectively. For the first three months of the year Japan is up by 6% and South Korea by 5%.

Emerging Markets

March was a relatively quiet month for the Emerging Markets section of the Bulletin. Two of the major markets we cover went unchanged in percentage terms. The Brazilian stock market and the Russian market had minimal movements. However both markets have done well in the first quarter of the year, with the Brazilian market up by 9% and Russia up by 5%.

It was a much better month for the Indian stock market, which rose 8% in March.

And finally…  

Gloucestershire pensioner Stephen Mckears was confused. Every night he left a few things out on his workbench (in his garden shed, of course) only to find that every morning they had miraculously made their way back to their plastic tub.

Ruling out the possibilities of Mrs Mckears doing some late night cleaning; or the antics of a friendly neighbourhood ghost, Stephen determined to set up a camera in his garden shed.

He discovered that a mouse was tidying his workbench. Whatever Stephen left out, the mouse duly tidied away in the plastic tub. “I’ve started calling him Brexit Mouse,” quipped Stephen, “he’s stockpiling things for Brexit!” Not sure I found his joke particularly funny if I’m honest… but one thing’s for sure; he would probably make a better fist of the negotiations!

 

Share this article -
Share on Facebook
Facebook
Tweet about this on Twitter
Twitter
Share on LinkedIn
Linkedin

Chris PageWritten by Chris Page

Chris is an experienced financial service professional who joined the business in 2013, as a result of his hard work and dedication he was made a director of the firm late 2014.

Meet Our People