Meetings about meetings

Meetings about meetings

The Noise

  • Boris Johnson has announced that there is an “increasing confidence” that coronavirus vaccines are effective against the new Indian variant that has cast doubt around lockdown lifting in June. Britain is preparing to give third booster shots in the autumn.
  • The economic outlook for the UK was positive following news that the first quarter of 2021 saw payroll employment rise, unemployment fall faster than expected and hiring accelerate ahead of the economy reopening. Unemployment sat at 4.8% in the first quarter, down from 5.1% in the prior.
  • Bitcoin fell as much as 30% as Chinese regulators cracked down on the use of digital coins. Other pockets of the crypto currency market were also sharply down for the day. In the US, Elon Musk had previously stated that he would cease to accept Bitcoin for his electric cars due to environmental concerns

The Numbers

The Nuance

The US dollar continued to fall from its peak at the end of March. This falling dollar is part of the rising inflation trend that is unlikely to end any time soon. Minutes published by the US Federal Reserve stated that “an unspecified number of committee members” had mooted discussing scaling back the central bank’s monthly bond purchases in a future meeting. This linguistic ballet represents the smallest possible commitment of the federal reserve to taper rates in the immediate future, without totally writing off any chance of it.

Although the dollar saw a small bounce on Wednesday, realistically there is very little chance of the federal reserve tightening monetary policy. The Chairman of the Federal Reserve, Jay Powell, has made it clear publicly that his sole aims are to attain price stability and higher employment. Whilst the US remains a long way from these twin goals, it follows that monetary policy will remain loose and that inflated asset prices will remain high.

As the UK and US continue to forge ahead with vaccine targets and rollouts begin to gain a foothold around the world, we remain focussed on finding the best businesses in the market that will benefit from the recovery and beyond. Pockets of the market responded adversely to whispers of tightening monetary policy, but the securities we select have robust business models with a high likelihood of delivering long term growth. Although uncertainty around inflation and new strains of the virus are risks affecting market sentiment, we aim to look through market chatter to the fundamentals of great businesses.

Quote of the Week

Twitter, @mansacam

Many first-time investors will be licking their wounds this week as Bitcoin took a trouncing. Of course we are always open to new and interesting investment ideas but, aside from having no inherent value, telling clients to buy PotCoin, Coinye or Dogecoin just sounded downright silly. Every work place had a crypto evangelist in it until this week. Zoom calls the country over will cease to be hijacked by a junior member of the team who has branded themselves the unofficial “Head of Crypto”. Well, oh how the tables have turned! In any case, it was fun while it lasted but, for now, crypto is firmly back in its box, thanks for the memories.