Positive Economic Forecasts, Cows and Disappointing 99’s!

May wasn’t a particularly lively month. It did, however, bring with it the marriage of Prime Minister Boris Johnson, making him the first PM to marry in office since1822.  Having eaten a slice of (no doubt extravagantly priced) wedding cake, Boris Johnson gone straight back to the office. Undoubtedly, he will be pleased with what May had to offer. The forecasts for the UK economy looked optimistic, and the stock market closed the month above the 7,000 mark. 

Elsewhere, China’s exports and imports surged on the back of the first trade talks with the new Biden administration. The jobs figures in the US were disappointing, even though the economy is showing every sign of recovery. Meanwhile, Amazon, never one to shy away from the limelight, looks set to tackle the jobs problem on its own. 

Overall, May was good for the stock markets we cover in this commentary. Most of the major markets saw growth and the positive economic forecasts are now setting in.  It was also a month in which a good dose of normality re-emerged. A herd of cows brought British Rail to a standstill, and the UK was rocked by news of a devastating crisis for ice cream lovers.  As always, full steam ahead (sorry, I couldn’t help myself!). 


The month started precariously in the UK. While lockdown restrictions began to ease, thousands of hospitality sector businesses remained unable to reopen due to staff shortages. It was a situation sadly mirrored in other countries too. Thousands of staff left the hospitality sector over the last year. So, many pubs and restaurants have been left with no one to pull pints and serve food. 

More generally, UK job vacancies hit their highest level since the pandemic began. Over 675,000 vacancies were reported in the February to April quarter alone. 

The High Street

Sadly, it looks like the ranks of the unemployed could soon be swelled further, though. Many retail stores are facing closure over unpaid rent, meaning inevitable job losses for staff. A moratorium was implemented at the start of the pandemic to stop landlords from taking legal action over unpaid rent. But, this ends on June 30th. Subsequently, two-thirds of retailers are expecting be subject to legal action.

With shopper numbers reportedly still down 30% on pre-pandemic levels, good news for the high street has been scarce now for a worrying amount of time.  Perhaps symbolically, May saw the very last Debenhams store close its doors, marking the end of an era for retail as a whole. Equally symbolically, Amazon announced plans to take on a mere 10,000 more staff. [see report]

Away from the High Street

Away from the high street, the news was mostly positive for the UK. The Organisation for Economic Co-operation and Development (OECD) predicted that the UK would grow at its fastest rate since WWII this year and the next. It is currently forecasting growth of 7.2% this year and 5.5% in 2022. It comes in stark contrast to the 9.8% contraction we saw last year. 

Car production has bounced back to near-normal levels. Nissan is said to be planning a huge electric car battery plant in the UK. And there are also rumours of a Tesla factory following a recent visit to the UK by the company’s CEO. House prices were up! They rose 10.2% in the year to March, marking the highest annual growth for 14 years. Nationwide reported that ‘accidental savings’ had seen an extra £10.6bn added to them during the pandemic. So, it looks like we might be spending that money moving or improving. One slightly negative note was that inflation more than doubled to 1.5% in April. 


The Government announced plans for a “Brexit Opportunities” unit. They also look set to offer Australia a tariff-free deal. Trade and investment deals with India worth £1bn were also announced. According to our newlywed PM, these will “create 6,000 jobs.”  So, as you see, there was plenty of positivity in May. But, nonetheless, the FTSE-100 index of leading shares remains a rather cautious creature. It gained just 1% during May and closed the month at 7,023. Meanwhile, the pound faired well against the dollar, gaining 3% to end the month at $1.4233. 


Last month, we mentioned the rise of Germany’s Green Party. The elections are due in late September and so far they continue to lead in the opinion polls. So much so, in fact, that if things continue as they are, we could well be seeing 40-year-old Annalena Baerbock taking over Angela Merkel’s long stint as Chancellor. 

Should Baerbock win, she and other EU leaders will almost certainly look to review the amount of tax paid by companies like Amazon.  Amazon reportedly did not pay any corporation tax in Europe last year. The firm, which has its European headquarters in Luxembourg, recorded a sales income of €44bn last year but did not pay any tax. It has apparently (somehow?) made a loss of €1.2bn.

Amazon’s European unit was also granted €56m in tax credits and has €2.7bn of carried forward losses ready to be used against any future profits.  A Green government in Germany would be set to commit to significant levels of spending. But, the jury’s out on whether or not Amazon will be contributing.

In other news, you may have heard about the shortage of specialised computer chips which is hampering car makers worldwide. That hit home in May as Audi was forced to “idle” 10,000 staff for the second time this year due to the ongoing shortage. It has been suggested that the shortage of semiconductors will cost carmakers around the world more than $100bn this year. 

The string of positive economic forecasts for the month included both the German and French markets. The German DAX index rose 2% to end May at 15,421. The French market went one further, rising 3% to close the month at 6,447. 


The US greeted the month with a game of snakes and ladders. There was every expectation that the payroll data would see another 1 million jobs added. After all, the US has seen a marked recovery from the pandemic with the Dow Jones index climbing to a record high. That is, until it went swiftly down the snake as the jobless figures came in well below expectations. Only 266,000 jobs were added in April, a month which saw the Government send $1,400 cheques to most Americans, as the unemployment rate edged up to 6.1% with 9.8 million people remaining unemployed. 

Back to Amazon, another organisation that has met a few goals, even if it hasn’t paid much tax, announced that it was set to hire a further 75,000 people in the US and Canada. It then went even further by agreeing to buy the historic MGM Studios for $8.45bn. This will give Amazon’s streaming service access to a huge back catalogue, including all the James Bond movies. Meanwhile, AT&T and Discovery announced plans to create another “streaming giant.”

We have, in the past, brought you news of many tech startups in the US that have excessive valuations (at least by conventional measures). May perhaps brought the biggest example yet, with news that electric truck startup Rivian is planning a stock market debut that will see it valued at $70bn. How many trucks have so far rolled off Rivian’s production line? That would be none.

The Dow Jones index, perhaps remembering those conventional measures, was on the lower end of the positive economic forecasts we saw in the month. It was up just 2% in the month to close May at 34,529. The more broadly based S&P 500 index was up 1% at 4,204. 

Far East 

May was an unusually quiet month for our Far East news. It started well, though, with good news on Chinese exports. These surged in April, up 32% from the prior year (albeit during the Covid crisis) to almost $264bn. April also saw imports rise at their fastest rate in more than a decade, up 43% from the previous year. 

The month ended with trade negotiators from the US and China holding “candid, pragmatic” talks around trade relations. Where did they meet? Virtually, of course. It’s not just thee and me that use Zoom – who’d have thought!

Long working hours have been hot in the headlines lately. And, in May, a study was released by the World Health Organisation, suggesting what we had long expected. Long working hours are unhealthy – even to the extent that they are killing “hundreds of thousands” of people a year.  The WHO put the figure at an astonishing 745,000. They also indicated that anyone working more than 55 hours a week has a significantly increased risk of strokes and heart disease.

The report found that people living in South East Asia and the Western Pacific Region were the most affected. Some readers will remember a story from a couple of years ago when Alibaba founder Jack Ma called for China to return to “996.” That is, working from 9 am through to 9 pm, six days a week, aka a 72-hour working week.

Continuing the spate of positive economic forecasts, the Shanghai Composite index increased 5% to 3,615. The Hong Kong and South Korean markets rose 2%, closing May at 29,144 and 3,204. Japan’s Nikkei Down index remained unchanged in percentage terms, closing the month at 28,860. 

Emerging Markets 

India was very much the centre of attention throughout April and May for our Emerging Markets section. The surge in Covid cases in India remains concerning, as does the variant which is now making its mark on the wider world.  Mercifully the rate of infection appeared to be slowing in May, although that did not stop calls from opposition parties for a full national lockdown, something Prime Minister Narendra Modi resisted due to the economic impact. 

We have written previously about tensions between India and China and the misgivings many countries have had about Chinese companies being involved in their 5G networks. It was, therefore, no surprise to see India’s telecoms ministry leave Chinese companies Huawei and ZTE out of its 5G network trials. The ministry granted permission to a dozen firms, but the Chinese companies were notable absentees. 

All the three major stock markets we cover in this section had good months in May. Perhaps in response to Narendra Modi’s controversial decision, the Indian market rose 6% to close at 51,937. The Brazilian market was up by the same amount to end the month at 126,216 while the Russian market did only slightly less well, finishing the month up 5% at 3,722. 

And finally

Positive economic forecasts aside, May wasn’t a vintage month for the “And finally…” section of the commentary. But, a herd of cows in Nuneaton gave it their best shot. Trains could not moo-ve (sorry) through the station as the herd of cows trotted through just before 11 am one day. Sadly, we have no information on which platform they arrived at. Nor do we know whether they were on time. Network Rail duly halted trains while the cattle sauntered out of the station and confirmed that they had spoken to a local farmer.

Regular readers will know of a rather larger traffic jam that we reported on recently. The giant container ship Ever Given blocked the Suez Canal and was, along with the pandemic, duly blamed for the UK facing shortages of pet food pouches and garden gnomes, among other essentials.  Now we bring you news of a real essential. The UK and Ireland are apparently facing a shortage of Cadbury’s chocolate flakes this summer due to a surge in demand. This would mean a summer without a ‘99 for ice cream lovers. Sundry chocolate bars were suggested as alternatives on social media, but surely there are some traditions that simply cannot be tampered with?  And, on that poignant note, I shall leave you to enjoy the sun… and an ice cream – but not with a flake! 

Written 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.

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