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Contents Click on the links below to get to the stuff you really really want. USA – Biden wins Senate; Stocks highly priced; Taxes could rise (#USA) UK – Stocks have not kept up with peers; Brexit concerns linger (#UK) Continental Europe – Financial support and political union dominate (#Europe) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
Trump’s pseudo-dictatorial musings led to the inevitable tragic consequences. They also helped to deal the Republican Party a key blow – losing control of the Senate. Biden can now push through the majority of his financial and foreign policy pledges: higher financial support and stimulus, higher corporate taxes, a more conciliatory style of dealing with foreign entities, and the potential for greater scrutiny of tech giants.
The higher taxes might deal a bit of a blow to corporate profits and share prices, but share prices in the US are already incredibly high with many commentators suggesting that the majority of large companies’ stocks are set for falls. We’ll see about that.
Before vaccines can have their effect, many more will die of the Coronavirus Covid-19 variation thanks to lax efforts to curtail its spread. So it’s going to be a bumpy ride until Easter, by which time we might start to see the emergence of the new normal.
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UK
The UK has been similarly unimpressive in its handling of the virus. It is real. You should wear a mask and maintain social distancing, even if you’re a teenager who’s bored out of your brains (a permanent fixture for so many at that age).
The hospitals are under severe strain right now. If you can give blood, do. They need it (hence the adverts that are all over the place to this effect).
As for economics and stocks, the UK stock prices have lagged their peers due to the handling, not just of Covid-19, but also of that old chestnut, Brexit.
A deal has been struck, so we avoid the no-deal scenario that would have brought a nasty trade shock. However, while Bojo is loud and clear about the fishing deal (which accounts for 0.2% of the economy) he’s not had much to say about the services industries, particularly finance. World Trade Organisation rules, that he’s repeatedly said we can fall back on, don’t cover services, only goods. And two thirds of the UK economy is services.
So, while the longer term prospect for UK stocks is, I reckon, pretty good, it’s going to take a while for that come through as the country deals with a massive Covid-19 problem and the sharp adjustment of importers, exporters, travellers and employers to the post-EU world.
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Continental Europe
The EU now has the mixed blessing of not having to deal with the UK. German and Spanish net exports to the UK will suffer if things don’t transition smoothly, but Frankfurt, Luxembourg and Paris won’t mind because they’ve been vying for the massive share of global finance and professional services that the UK developed over the past 40 years.
Folk will be looking to the European Central Bank and their political leaders to provide financial support and political stability.
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Links
Investopedia (www.investopedia.com/dictionary/) – Loads of free explanations of financial terms including some helpful videos. Not 100% accurate, but a good starting point Guffipedia (ig.ft.com/sites/guffipedia/) – Lucy Kellaway of the FT has collected some painful examples of corporate people disappearing up their own analogies Guardian (www.theguardian.com) – Free to access website with a couple of decent columnists (e.g. Nils Pratley and Larry Elliott) Daily Telegraph (www.telegraph.co.uk) – It’s not free (£2/ week), but it provides a counter-balance to Guardian content (especially Ambrose Evans-Pritchard who is generally worth a read). Times of India (timesofindia.indiatimes.com) – Why use five words when 37 will do? Daily Mail (www.theatlantic.com/magazine/archive/2016/07/the-war-on-stupid-people/485618) – Click it. I dare you.
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———————————————————— IMPORTANT This is my opinion. Yes I read a lot and share what I’ve read with you, but this content remains my opinion. It’s NOT advice. If you take my advice – don’t take my advice. Any decisions you make about investments, your hairstyle or whether or not to eat marzipan are entirely at your own behest. If you’re unable to recognise the devil’s ear wax when you see it, then you’re on your own.
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