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J.P. Morgan – Market Update

J.P. Morgan – Market Update

Please see below yesterday’s (08/04/2020) market commentary update from J.P. Morgan Asset Management who have great technical and market resources available to them:

We will continue to deliver market commentary from leading fund managers from around the country.

In the meantime, please keep safe and healthy.


Carl Mitchell – DipPFS

IFA and Paraplanner

9th April 2020

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Royal London Asset Management Economic Viewpoint

Investment input hot off the press from Royal London Asset Management this afternoon (06/04/2020):

RLAM Economic Viewpoint

Although there has been some encouraging news from countries where the growth in new cases has been slowing, it is clear from incoming case numbers that we are still some way off being able to contemplate easing social distancing measures in Europe, let alone the US. In the meantime, therefore, levels of economic activity remain well below pre-crisis norms.

Data has underscored the challenge facing policymakers. Over the week, the latest US weekly initial jobless claims number showed another a record jump of more than 6 million. Benefit claims have risen sharply in the UK too and incoming March survey data reflects a large hit to business activity and confidence in Europe and the US.

Economic activity data in China has improved as social distancing measures have eased and March business surveys show significant improvement. However, business surveys generally ask firms whether activity has increased or decreased, not by much. That is important in the current context where the level of economic activity is likely still significantly below pre-crisis levels. Export-related components of the surveys still signal contraction, consistent with weak global demand now holding back China’s recovery.

Meanwhile reminders that things aren’t normal, and that social easing can’t be unwound in one easy move while there is reinfection risk, came in the shape of some reversals of social easing (e.g. cinemas shutting again and lockdown being re-imposed in Jia county). In the US unemployment numbers this week highlight the scale of the challenge policymakers face in trying to limit the long-term economic damage from this crisis.

The good news is that policymakers globally continue to step up and introduce measures that improve the likelihood of economic activity being able to pick up robustly once social distancing measures ease. Again, we’ve seen measures designed to keep the financial system working (e.g. Fed’s announcement this week of a repo facility for overseas central banks), limit damage to household finances (e.g. the direct wage subsidy scheme announced by Australia at the start of the week) and keep viable businesses afloat. Other highlights included a 50bps rate cut in Canada late last Friday and a policy easing message from Chinese authorities.

Royal London are one of the key Workplace Pension providers in the UK offering innovative strong default investment options with ongoing governance.

Steve Speed


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In The Midst of Every Crisis Lies Opportunity

In the midst of every crisis lies opportunity

I’ve cut and pasted this input from an email received from the Jupiter European Growth fund management team yesterday (31/03/2020):

The pandemic has obliged many people to make significant changes to their daily habits. We can even expect an acceleration in some secular growth trends as a consequence of the crisis. We highlight three areas which could benefit over the longer term.

Clinical diagnostics: Expect an acceleration in some secular growth trends as a consequence of the crisis. In the diagnostic testing space, lab equipment companies such as Diasorin, Tecan and bioMerieux are all seeing a short-term increase in demand for their instruments. However, in our view, the real benefit is likely to come in the future as a consequence of their much larger installed base of customers and the greater revenues from the consumable reagents they will be selling to labs, once we get beyond the crisis. Our growth thesis on these companies has hinged on the cost-benefit to national health systems of being able to have faster, more encompassing diagnostic testing services. The coronavirus crisis clearly highlights the need for more investment into this area.

The industrialisation of the food supply chain: Governments will deem it critical to maintain food and farming industries during the worldwide battle against the Covid-19 pandemic. Before the coronavirus, China had already seen African Swine Fever (ASF) wipe out 50% of the country’s pig herd. Here, Genus, the global leader in providing porcine and bovine genetics could be a long-term beneficiary; it receives royalties for each commercial pig weaned. That’s not to say the company hasn’t had short-term problems. In February, owing to transport restrictions within the supply chain, it did not sell a single pig in China. Nevertheless, we have actually become more positive about the outlook for the business. Following the ASF and coronavirus crises we are likely to see a rapid and more professional rebuilding of the highly-fragmented domestic pork supply through the creation of large-scale integrated pork producers. This is a key priority for the Chinese government and should drive significant demand for the company’s products as they will improve productivity in food production.

The Digital World: Following the crisis, we will all migrate back to the physical world. But the current lockdowns are likely to introduce vast swathes of populations to the opportunities in the digital world, such as accelerating the adopting of online shopping, home delivery and other digital produce such as gaming. One of the attractions of Ubisoft Entertainment, a French gaming company, is the growth and superior economics of its digital offering (very low distribution costs, broadband getting even faster) over the sale of physical discs, which are more expensive to produce and distribute. We expect the rate of digitalisation to see a material step up and bring forwards the benefits we had previously anticipated for the business over the next few years.

As the Jupiter European Growth fund management team have outlined above even in the face of this adversity opportunity arises. The fast thinking entrepreneurs of the world will lead, and we could see a new generation of businesses and business leaders coming to the fore.

Steve Speed


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Weekly update from Brewin Dolphin

Weekly update from Brewin Dolphin

Further comment and update below from Brewin Dolphin below as this pandemic continues and the world adjusts to the coronavirus:

As we enter week two of lockdown in the UK (is that all its’s been?!) the UK government has given the clearest indication yet that measures could be extended beyond the current three-week period. Deputy Chief Medical Officer, Dr Catherine Calderwood, has suggested restrictions on movement may be necessary for at least 13 weeks whilst the UK deputy chief, Dr Jenny Harries, has warned resumption of normal life may be six months away, stressing the importance of phasing out restrictions over time to avoid a second peak down the line. For the NHS, meanwhile, the return of 20,000 staff to the workforce should prove a welcome boost as they come under pressure with up to a quarter of staff off work in some wards as doctors and nurses affected by the virus, either directly or indirectly, self-isolate.

In the US, Donald Trump conceded the US would not be open for business as usual by Easter after all, extending the current social distancing measures until the end of April amidst warnings from a leading infectious disease expert that 200,000 Americans could die. The US now has the most cases of any nation and the President’s handling of this crisis could well become a key determinant in his bid for re-election in November.

Meanwhile, as China looks to re-emerge from lockdown, their central bank unexpectedly cut the rate by 20 basis points, the largest in nearly five years, in a bid to relieve pressure on their economy as they pick up the pieces post-pandemic.

Finishing on a hopeful note, the chart below put together by Pantheon shows that case growth is slowing in some of the most impacted countries, perhaps an indication that the social distancing and lockdown measures in place are beginning to bear fruit though some are further down the curve than others.

Dollar Outlook

The dollar is the world’s major funding currency. Earlier this month, as the coronavirus crisis intensified, companies began to get worried about a sharp drop in revenues and a seizing up in funding markets – both of which would impact their access to dollars.  As a result, companies started to max out their dollar credit lines, which pushed the dollar sharply higher earlier this month. Last week, we saw the dollar pull back.  There are a couple things causing this: –

First, the Fed stepped in by offering swap lines to the world’s central banks, which has eased dollar funding concerns.

Second, risk assets bounced in the middle of last week.  As the chart shows, the dollar has been moving inversely with stock prices, as it did during the Global Financial Crisis, as the chart on the right shows.

It’s too soon to say the dollar rally is over, but on a 12m view, even after the sharp decline of the last few days, the dollar probably has more downside, for three main reasons: –

  1. Although the economic pain will be severe and this crisis will leave scars, the current consensus suggests the global economy is most likely going to snap back strongly in Q3, possibly Q4, this year.  This backdrop, combined with ultra-accommodative monetary policy and currently depressed risk appetite suggests investors spend most of the next 12m in risk on mode, which benefits higher risk currencies.
  2. The second reason to expect downside in the dollar is interest rate differentials.  The 2-year rate spread in the UK, Eurozone, Japan and China have all moved sharply against the dollar.  This didn’t matter when markets were tanking, but it should matter more once the volatility stabilizes and the pound, euro, yen and RMB all appear to have upside versus the dollar based on the historical correlation with interest rate spreads, which are unlikely to move much over the next 12 months.
  3. Commodity prices are depressed now, but should move higher over the next 12 months as the economy starts to pick up.  It’s true that the US has higher commodity exposure now given the rise in shale, and UK, Euro area, China and Japan have very little commodity exposure. But the rise in commodity prices should give much more of a boost to the Russia’s, South Africa’s, Brazils, Norway’s, Canada’s and Australia’s of the world.

In addition to these 3 drivers, the dollar is also expensive, market sentiment on the dollar is bullish, which has negative implications from a contrarian perspective, and its already massive current account and budget deficits are set to balloon even further.

Markets in a Minute

– The oil price plunged further over the weekend to its lowest level since 2002 with West Texas Intermediate falling as low as $19.92 a barrel due to vanishing demand and a continuation of the Russia-Saudi price war, heaping pressure on high cost producers such as US shale.

– Businesses are rising to the challenge of creating the tens of thousands of ventilators required to help those most at risk patients with Airbus, BAE, Ford, Rolls Royce and Siemens forming the “VentilatorChallengeUK” Consortium to help meet the demand.

– easyJet has grounded their entire fleet and given no indication when they can restart commercial flights.  Virgin Atlantic, meanwhile, look set to request a government bailout with other carriers likely to join the queue. Grounded crew meanwhile have been asked to help staff field hospitals.

Thanks to Brewin Dolphin for the input above emailed to me yesterday afternoon (30/03/2020). If this needs a little interpretation for you or you would just like to catch up, please phone me on 0151 546 1969.

Lines could be busy, but we are fully operational to date with all other staff working remotely as I ‘isolate’ in the office.

Steve Speed


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Budget Summary

Not many fireworks in the financial planning world. A fairly neutral Budget with infrastructure spend that should help boost business in the UK as we struggle with the Coronavirus.


Rishi Sunak’s first Budget took place against the backdrop of the global outbreak of COVID-19.  Not surprisingly the UK’s response to this was the initial focus – providing some much needed short term financial measures in the current uncertainty, from ensuring the NHS has sufficient budget to cope, to extending statutory sick pay rules that affect millions of workers.

The new Chancellor set out a Budget which supports the government’s ambition for a ‘fair and sustainable tax’ system.

Many rumours didn’t quite come to pass, we did not see an overhaul of inheritance tax, scrapping of Entrepreneurs Relief or an announcement of a wide spread review of pensions tax relief. But as expected we did see an increase in the Tapered annual allowance, and the good news was it was significantly more than expected, saving many from significant tax bills and the hassle of carrying out complex calculations.

Income tax

Starting rate for savings tax band – form savings income that is subject to the 0% starting tax rate remains at £5,000.

Income tax bands and Income tax rates remain unchanged
Income tax band for 2020/2021:
Basic Rate                          £1 – £37,500
Higher Rate                        £37,501 – £150,000
Additional Rate      Over    £150,000

National Insurance

The threshold at which employees will begin paying class 1 National Insurance increases from £8,632 to £9,500 from 6 April 2020.

Corporation Tax

The Government has decided not to reduce the rate of corporation tax from the planned 19% to 17% and instead it will remain unchanged at 19% from 1 April 2020.

Capital Gains Tax

Capital Gains Tax: Reduction in the Entrepreneurs’ Relief lifetime limit

From 11 March 2020, the lifetime limit on gains eligible for Entrepreneurs’ Relief (which offers a reduced 10% rate of Capital Gains Tax on qualifying disposals) will be reduced from £10 million to £1 million. There are special provisions for contracts for disposals entered into before 11 March 2020 that have not been completed and for certain exchanges of shares and securities made before 11 March 2020. The change ensures the Government continues to encourage genuine risk takers and entrepreneurs’ in a fair way, with over 80% of those using the relief unaffected.

Inheritance Tax

Other than the planned increase to the Residence Nil Rate Band (from 150,000 to 175,000 from 6 April 2020), there are no other changes to Inheritance Tax.


Changes to annual allowance

The standard annual allowance in 2020/21 will remain at £40,000.

However, to support the delivery of public services (particularly health services) the two tapered annual allowance thresholds will be raised by £90,000.
Therefore, from 2020-21 the:

a)   ‘threshold income’ will be increased from £110,000 to £200,000; and

b)   ‘adjusted income’ will be increased from £150,000 to £240,000.

For those with a threshold income above £200,000 and an adjusted income above £240,000, their annual allowance will be reduced by £1 for every £2 that their adjusted income exceeds £240,000, down to a minimum (tapered) annual allowance of £4,000 (£10,000 in 2019/20).

This means that anyone with a threshold income above £200,000 and an adjusted income of at least £312,000 would have a tapered annual allowance of £4,000 in 2020/21.

There is no associated proposal to offer greater pay in lieu of pension benefits for senior clinicians in the NHS pension scheme.

This measure is primarily designed to enable most clinicians to work more hours without incurring pension tax charges.

Change to lifetime allowance

The standard lifetime allowance (SLA) will be revalued (in line with the annual increase in the consumer prices index (CPI) to September 2019) from £1,055,000 in 2019/20 to £1,073,100 in 2020/21.

Call for evidence on pension tax administration

There is a tax relief inconsistency for those earning around, or below, the level of the personal allowance depending upon whether they are contributing to a:

a)   relief at source (RAS) registered pension scheme, such as a personal pension; or

b)   net pay arrangement.

Those contributing to a RAS  scheme currently benefit from UK basic rate income tax relief whilst those contributing to a net pay arrangement scheme do not.  Therefore, the government will consult regarding how to address this unequal treatment.

Inheriting a State Pension from an opposite sex civil partner

The Civil Partnerships (Opposite-sex Couples) Regulations 2019 gave opposite-sex couples the choice of entering into a marriage or a civil partnership.

The Budget provides funding to ensure that opposite-sex individuals who enter into a civil partnership can derive, or inherit, a State Pension from their (opposite-sex) civil partner.

Universal Credit: Additional support for claimants transferring to pension credit

This measure allows Universal Credit payments to be extended until the end of the assessment period in which the household reaches the qualifying age for Pension Credit and pensioner Housing Benefit.  This removes the potential gap in benefit entitlement that exists at the moment.

Consultation on the reform of Retail prices index (RPI) methodology

The method for calculating the RPI, which is widely used in the pensions industry, for instance in relation to revaluing pension benefits in deferment and pension income payments, has been reviewed by the UK Statistics Authority (UKSA).  A consultation will now run until 22/04/2020 with regard to making any changes at some point between 06/04/2025 and 06/04/2030.

Other than the planned increase to the Residence Nil Rate Band (from 150,000 to 175,000 from 6 April 2020), there are no other changes to Inheritance Tax.

Individual Savings Accounts (ISA)

There are no changes to the adult ISA annual subscription limit for 2020-2, it remains unchanged at £20,000.

The Junior ISA subscription will increase from £4,368 to £9,000.

Top Slicing Relief

Following Marina Silver v HMRC, new legislation has been introduced to clarify the top slicing calculation for gains made on or after 11 March 2020. The new legislation confirms:

For the purpose of the top slicing calculation reliefs and allowances are to be set against other income as a priority. Only if there are allowances remaining are they to be set against the chargeable event gain(s)

When assessing the tax due on the annual equivalent (the gain(s) divided by the years made over) the availability of the personal allowance should be assessed using the annual equivalent not the full gain(s).

This applies to both Onshore and Offshore life assurance and redemption policies.

Read our Knowledge direct article for more information

Stamp Duty

Non-UK resident Stamp Duty Land Tax (SDLT) surcharge

A 2% surcharge on non-UK residents purchasing residential property in England and Northern Ireland will be introduced from 1 April 2021. The surcharge is in addition to the standard Stamp Duty rates as well as the 3% surcharge that the Government previously introduced for buy to let properties and second homes.

Housing co-operatives: Annual Tax on Enveloped Dwellings (ATED) and SDLT

The government will introduce a relief for qualifying housing co-operatives from the ATED and 15% SDLT on purchases of dwellings over £500,000.  The SDLT relief will take effect in England and Northern Ireland from the Autumn Budget and the UK-wide ATED relief from 1 April 2021 with a refund available for 2020-21.

Tax evasion and promoters of tax avoidance schemes

HMRC’s continues to push its Promoter strategy.  HMRC will publish a new strategy for tackling the promoters of tax avoidance schemes with an aim of driving those who promote tax avoidance schemes out of the market, disrupt the supply chain to stop the spread of marketed tax avoidance, and deter taxpayers from taking up the schemes.

Not a bad Budget overall with little change for the majority of people. The increase in the National Insurance minimum threshold for employees could be useful and high earners could benefit from the new tapered annual allowance rules.

Steve Speed



Article and tax tables courtesy of Old Mutual Wealth.







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Coronavirus (Covid-19) in context

As the global news and local news about the spread of coronavirus grows we need to remain calm and ignore a lot of the background noise.  The best option in the circumstances is to remain fully invested and not change anything when volatility is high.

Please see the chart below that outlines the impact of various health scares on the S & P 500:



As you can see from the above chart when you look back historically the impact on markets has been minimal as the recovery can be quite sharp in the majority of cases.  If you zoom in (and listen to market analysis) most recoveries are V shaped.

So to precis, remain invested, ignore the noise and keep calm and carry on.  For those of you with liquid cash this could be a great time to invest!

As ever, if you are unsure please call me.


Steve Speed



Chart cut & pasted from one of the investment houses we use, SEI, from their email dated 05/03/2020.

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Confusing news over pensions and retirement

Confusing news over pensions and retirement

Over the last week, we have seen a series of news articles on pension savings and living in retirement. At first glance the information is confusing and may even appear contradictory. Here is our take on what they really tell us. Read more

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A summary of the Autumn Statement 2016 for business owners.

A summary of the Autumn Statement 2016 for business owners.

£1bn broadband investment

Small businesses struggling with poor internet connections could soon be able to access a better connection after the chancellor announced, in the Autumn Statement 2016, an investment of more than £1bn into building out the UK’s digital infrastructure.
The Chancellor said the government would be pursuing improvements in speed, security and reliability. Additionally, 100 per cent business rate relief will be provided for the next five years when it comes to new fibre infrastructure.

National Living Wage increase

Employers with staff on the lowest legal wage will now have to pay more after The Chancellor revealed in the Autumn Statement 2016 that the National Living Wage, the replacement to the National Minimum Wage, will go up from £7.20 to £7.50 in April 2017.
Labour are planning for it to be £10 if the party comes back into power.
The tax-free personal allowance has also been increased, and will be £12,500 by the end of the current parliament.

Increase to Export Finance funds

Small businesses looking to engage with export activities will soon have access to better financial assistance. UK Export Finance, an organisation that aims to ensure that no viable UK export fails for lack of finance or insurance, is set to double in capacity.

VAT changes

The government is stopping what it called “inappropriate use” of the VAT flat rate scheme put in place to help small companies. The VAT flat rate scheme is an alternative way for small businesses to work out how much VAT to pay to HMRC each quarter.
Temp recruitment agencies have recently been accused of exploiting VAT rules that were originally designed to benefit very small businesses.
The government used the Autumn Statement 2016 to introduce a new 16.5 per cent rate from 1 April 2017 for businesses with limited costs, such as many labour-only businesses. This, they hope, will maintain the accounting simplification for the small businesses that use the scheme as intended.

Letting fees

The government will be banning letting fees for private tenants “as soon as possible” after they have risen considerably despite attempts at regulation attempts. This could hit private buy-to-let investors who may find that they have to pick up this cost.

Business rates

The chancellor announced in his Autumn Statement 2016 speech that the doubling of rural business rate relief – completely removing the burden of business rates – would bring a “well-needed” tax break to small businesses that are the “lifeblood of their communities”.
Increasing rural business rate relief to 100 per cent is expected to save qualifying businesses up to £2,900 every year in business rate payments.


If you’ve got any queries regarding the planned changes, please contact us.

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Monday 24th November 2016 – Annuity and LISA

Monday 24th November 2016 – Annuity and LISA


We’ve picked out a couple of items that hit the news over the last week. These are:

  • The government’s decision to scrap plans to allow people to sell their annuities on a secondary market
  • Further negativity surrounding the yet-to-be-launched Lifetime ISA (LISA)

Read more