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Contents Click on the links below to get to the stuff you really really want. USA – The rise in stocks and bond prices since the beginning of the year halted yesterday on rising virus cases and likely restrictions (#USA) UK – Further lockdown restrictions sent stocks down, commodities declined the most; Some retailers benefited from prospects of greater delivery demand (#UK) Continental Europe – Much like UK (#Europe) Elsewhere – Stocks recovering from yesterday’s increased lockdown news in China (#Elsewhere) WTF – Bitcoin (#WTF) Links (#Useful) Numbers (#Numbers) Ts & Cs (#Ts+Cs)
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USA
It might be a new year, but the stories remain largely familiar. The virus numbers are on the increase and folk await financial stimulus. The rise in unemployment numbers on Friday also provided pause for thought.
Now that Biden’s Democrats have control of all three elements of power (presidency, House of Representatives and the Senate), he can push his budgetary reforms through. Optimism has risen on hopes that the stimulus levels will be higher than if the Democrats had not won the Georgia run-offs and, therefore, the Senate. But it’s going to be a couple of weeks before that legislation and money come through.
Meanwhile, the rising virus numbers and reverberations of Trump’s violent protestors put a halt to stock price rises yesterday. The S&P 500 closed 0.7% lower on the day, but have risen a fair bit since the beginning of the year. The demand for and prices of low-risk rated bonds has also fallen over the past week and a bit as hopes of economic stimulus and recovery rose. Investors were moving money from lower to higher risk assets (out of government bonds and into stocks) in the hope of capturing the rises that they anticipate.
That’s taken a breath for now while we await political calm and the final chapter of Trump’s unique tenure.
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UK
The prospects of stricter lockdown provisions put a dampener on stock price rises in the UK yesterday as well. Hospitals are under severe strain at the moment as government prevarication and blatant flaunting of social distancing rules have allowed contagion rates to soar.
Most observers are expecting the economy to stage something of a recovery later this year once vaccines are distributed, but the interim period is likely to contain more human loss and economic misery. So investors are trying to gauge how bad things will get and when to buy stocks. My thinking on that is that it’s really difficult to time when to buy, I prefer to research what I like the look of (currently stocks with good cash flows, little or no debt and good business prospects in the post-pandemic world) and buy it if the price is reasonable.
Yesterday was a day of general declines in UK stock prices. Oil and minerals were among the biggest fallers as the latest round of lockdown restrictions throttled the potential of rising manufacturing output and, therefore, demand for commodities. A few retailers did well, partly due to the likely increase in food deliveries set for the coming weeks. But most stocks were down, leaving the FTSE 100 and FTSE 250 1.1% and 1.4% lower on the day.
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Continental Europe
Companies across the continent aren’t having to deal with the full effects of Brexit, but they are under pressure nonetheless. The Euro Stoxx 50 and German DAX both dropped by around 0.7% on the day as virus numbers and lockdown restrictions cast their shadows. Consumer goods and services joined commodities at the wrong end of the list of sectors falling yesterday.
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Elsewhere
China is imposing further lockdown restrictions, and that sent a tremble throughout markets yesterday. If China’s demand falls, the global economy is pulled down with it.
That seems to have been put to one side this morning as the CSI 300 is up 2.9% and stocks across much of the Asia Pacific region are having a good day.
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WTF (What’s The Fact?)
Bitcoin
If you had considered buying Bitcoin, or any other cryptocurrency, I really hope you thought of it as a bet and not an investment. Bitcoin is totally at the behest of sentiment. So it’s going to motor up and tumble down according to crowd sentiment of what its “worth” is perceived to be.
Here are some other similarly baseless things to bet on: A celebrity-hair death match between the pates of Trump and Bojo Which is more boring, a pile of dust or anything that Kier Starmer says? Will Biden complete his four-year tenure before the pressure is too much for his ailing cadaver? Why are people who stormed the US Capitol Building stupid enough to identify themselves on camera?
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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) 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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