New article from Tatton Investment Management: More tunnel before the light
20 November 2020
Still, the virus has not gone away just yet. The case numbers, which had been stabilising at the end of October, jumped meaningfully last week in many parts of the western world. That said, two weeks in to the UK’s second ‘lockdown’, and case numbers are returning back to the October-end levels and from there will almost certainly decline, much as they have done in France and Italy. As the high frequency activity tracker graphs below shows, France’s activity is no longer contracting, and the UK is highly likely to follow suit.

Nevertheless, resurging public health pressures across wider Europe and the US have now worsened enough to dampen the capital market euphoria of late, as it is becoming clear that despite the multiple vaccine good news stories, for the economy, households and government borrowing, the 2020 narrative of ‘worse now, better later’ is bound to be with us until at least the end of the year.
Beyond that, what might we be concerned about to spoil the perspective of a strong recovery in 2021? During a research (Zoom) meeting with Karen Ward, JP Morgan Asset Management’s EMEA Chief Strategist (and frequent columnist for the Financial Times), she focused on her observation that recent consumer prices have risen more in the US (and the UK) than economists had expected. The chart below, plots the relative (not absolute) difference between expectations and actual readings. Karen stressed that this is not to say inflation is currently a problem, given the sharp slowdown in global activity and the rise in general unemployment. However, she pointed out that the supply-side disruptions (manufacturing, distribution, services) may be more extensive than realised.

This could be bad news for those sectors that that were driven up by falling yields and lower inflation expectations, but it could be positive for the value/cyclical sectors that have been laggards over the past decade. The US National Association of Housebuilders’ index of prospective buying shot up to a record high, albeit from very low levels in the Spring. If consumers become a bit more confident about employment prospects, then construction could become a strong driver for the economy. Although their capacity to surprise is remarkable, the tech darlings like Amazon will probably have a harder time competing in this area.
Another near-term market headwind is that despite the demise of the Trump campaign’s lawsuit in Michigan, and the recount in Georgia having increased Biden’s total votes, markets’ political concerns in the US have not gone away. The fear is that the Biden presidency could see a reprise of the hawkish and obstructionist agenda enacted by the Republican-led Senate, similar to that experienced under the Obama administration. On Thursday, US Treasury Secretary Stephen Mnuchin pressed US Federal Reserve Chairman Jerome Powell to cease programmes lending to small businesses. Meanwhile, the Senate and President have blocked the passage of more fiscal stimulus, and on Wednesday, Senate Majority Leader Mitch McConnell sent everyone home for Thanksgiving, setting up a frantic December of negotiations when the Senate reconvenes.
On the back of thus dampened recovery and growth prospects, long-term yields tracked back down, indicating that the market has such concerns, and tech stocks – 2020’s fear trade – regained some of their composure. Nevertheless, investors remain quite bullish in taking risk. According to the longstanding and authoritative survey from Bank of America Securities (previously Merrill Lynch), global economic growth and profit expectations are running at a 20-year high. The “reopening rotation” into previously laggard (“oversold”) sectors is likely to continue through this quarter, BofA believes. But for the more speculative end of the investment community, the suggestion is to ‘sell the vaccine’ in the coming weeks and months: “we’re close to ‘full bull’” is how they put it.
Despite the strong indications of China’s growth, its stock and bond markets came under pressure this week after three unexpected corporate defaults of state-owned enterprises (SOEs). “State-Owned” does not mean central-government-backed. These firms are involved with local governments and the relationships are not “backed”. A lot of these firms are at risk because President Xi Jinping is battling local states for power. This shakeout is a long-term positive for China, but has the possibility of causing a similar consolidation of Chinese risk asset markets as elsewhere, even if for quite different reasons.
Lastly, Brexit. A deal is rumoured to have entered the room through the back door, just as Dominic Cummings carries his box files out of the front. The absence of negative press briefings from either side, and the positivity of currency markets, provide some evidence that it may be more than rumours. However, as stated many a times before on these pages, do not expect that the timelines painted by politicians as “absolutely final” to be actually that – pan European negotiations never finish when they should – but conclude with some form of compromise, they almost always do.
News Archive
18 December 2020
New article from Tatton Investment Management: Goodbye to all that
14 December 2020
New article from Tatton Investment Management: Outlook 2021 - no deal Brexit?
4 December 2020
New article from Tatton Investment Management: December concerns over baubles and bubbles
27 November 2020
New article from Tatton Investment Management: Fiscal floundering
20 November 2020
New article from Tatton Investment Management: More tunnel before the light
18 November 2020
Interim Results For The Six Month Period Ended 30 September 2020
13 November 2020
New article from Tatton Investment Management: Change is in the air
6 November 2020
New article from Tatton Investment Management: Looking beyond the obvious
4 November 2020
New article from Tatton Investment Management: US Election Update
2 November 2020
New video from Tatton Investment Management: US election, the response to the pandemic and Brexit
30 October 2020
New article from Tatton Investment Management: Unsettled week ahead - or behind
26 October 2020
New article from Tatton Investment Management: Sunlit uplands or COVID gorge?
19 October 2020
New article from Tatton Investment Management: Watching and waiting
12 October 2020
New article from Tatton Investment Management: Baffling market optimism
2 October 2020
New article from Tatton Investment Management: A question of time horizons
25 September 2020
New article from Tatton Investment Management: A recovery on hold
18 September 2020
New article from Tatton Investment Management: Taking a step back to look forward
14 September 2020
New article from Tatton Investment Management: Frictions and contradictions
7 September 2020
New article from Tatton Investment Management: Market dynamic of a K-shaped recovery
1 September 2020
New article from Tatton Investment Management: Big tech gets bigger while the Fed takes the easy opt
24 August 2020
New article from Tatton Investment Management: Fed leaves bond investors with that sinking feeling
17 August 2020
New article from Tatton Investment Management: COVID II the sequel - as scary as the original?
10 August 2020
New article from Tatton Investment Management: July brings consolidation
2 August 2020
New article from Tatton Investment Management: Sunshine and shadows
27 July 2020
New article from Tatton Investment Management: PPE = Politics, Pressure and Economics
20 July 2020
New article from Tatton Investment Management: Discomfort of disappearing safety nets
13 July 2020
New article from Tatton Investment Management: Fast and freewheeling
3 July 2020
New article from Tatton Investment Management: H1 2020 offers meaningful lessons
29 June 2020
New article from Tatton Investment Management: Support balances increasing strains - for how long?
22 June 2020
New article from Tatton Investment Management: Equity valuations follow bond valuations' lead
15 June 2020
New article from Tatton Investment Management: Stock markets suffer altitude sickness
8 June 2020
New article from Tatton Investment Management: Markets are enjoying an uncomfortably benign pandemic
1 June 2020
New article from Tatton Investment Management: Optimistic markets despite second wave lockdown threa
26 May 2020
New article from Tatton Investment Management: Just as the sun comes out, clouds appear in the East
22 May 2020
New video from Tatton Investment Management
18 May 2020
New article from Tatton Investment Management: Us-China cold war: Threat or blessing?
11 May 2020
New article from Tatton Investment Management: Most welcome, if feeble, signs of pulling together
4 May 2020
New article from Tatton Investment Management: Opening-up will be slower than locking down
27 April 2020
New article from Tatton Investment Management: V or U-shaped recovery scenarios - the jury is out
20 April 2020
New article from Tatton Investment Management: Lifting lockdown remains a delicate balancing act
20 April 2020
New video from Tatton Investment Management: Stock markets between hope and despair
15 April 2020
New video from Tatton Investment Management: Is now the time to invest?
13 April 2020
New article from Tatton Investment Management: Fading threat of financial crisis re-opens old divide
6 April 2020
New article from Tatton Investment Management: Unprecedented quarter or calm before the storm?
30 March 2020
New article from Tatton Investment Management: Extraordinary: bear and bull market all in one
24 March 2020
New video from Tatton Investment Management: Why have stock markets appeared to rally on the lock-do
23 March 2020
New article from Tatton Investment Management: Government ordered recession
19 March 2020
New video from Tatton Investment Management: Confusion reigns in Capital Markets
18 March 2020
New article from Tatton Investment Management: Why aren't you doing something?
17 March 2020
New video from Tatton Investment Management: From euphoric recovery to depressed tumble
16 March 2020
New article from Tatton Investment Management: Notes on a crash: the short, the medium and long term
13 March 2020
New video from Tatton Investment Management: Panic equity selling or panic raising of precautionar
12 March 2020
New article from Tatton Investment Management: Forced sellers and other distractions
9 March 2020
New article from Tatton Investment Management: Dark times or glimpse of light at the end of the tunn
6 March 2020
New article from Tatton Investment Management: News of a reverse oil price shock rattles markets bey
2 March 2020
New article from Tatton Investment Management: Coronavirus - hitting too close to home
28 February 2020
New article from Tatton Investment Management: This week's market correction requires perspective
26 February 2020
New article from Tatton Investment Management: COVID-19 and the reaction of markets to pandemic fear
24 February 2020
New article from Tatton Investment Management: US markets hit new all-time highs and a 'bump'
17 February 2020
New article from Tatton Investment Management: V-shaped recovery for Valentine
10 February 2020
New article from Tatton Investment Management: Markets show no fear - should they?
3 February 2020
New article from Tatton Investment Management: Looking through the noise of the week
27 January 2020
New article from Tatton Investment Management: Short break to Goldilocks?
20 January 2020
New article from Tatton Investment Management: Parallels and differences to January 2018
14 January 2020
13 January 2020
New article from Tatton Investment Management: So far so good
8 January 2020
Tatton: Woodford & M&G suspensions have driven IFAs to us
6 January 2020
New article from Tatton Investment Management: 2020 starts with a Trump card
23 December 2019
New article from Tatton Investment Management: Goodbye 2019 - welcome 2020 and a new decade!
16 December 2019
New article from Tatton Investment Management: Brightening horizons - 2020 Outlook
8 December 2019
New article from Tatton Investment Management: Can Trump derail the 2020 economic upturn?
2 December 2019
New article from Tatton Investment Management: Markets are driving the markets
25 November 2019
New article from Tatton Investment Management: Markets pause for reality check
18 November 2019
New article from Tatton Investment Management: Swilling cash eases the market mood music
11 November 2019
New article from Tatton Investment Management: Recession concerns retreat
11 November 2019
Interim Results for the six months ended 30 September 2019
4 November 2019
New article from Tatton Investment Management: Crucial October period safely behind
28 October 2019
New article from Tatton Investment Management: Slowly turning
21 October 2019
New article from Tatton Investment Management: Brexit breakthrough versus Brexit fatigue
17 October 2019
17 October 2019
Acquisition of Sinfonia Asset Management Limited (SAM)
14 October 2019
New article from Tatton Investment Management: Market sentiment rebound
7 October 2019
New article from Tatton Investment Management: Stall speed economy fears spreading
30 September 2019
New article from Tatton Investment Management: Ominous US-Dollar strength
23 September 2019
New article from Tatton Investment Management: Diverging economic trends - catalyst for trade war re
16 September 2019
New article from Tatton Investment Management: Market sentiment rebound
9 September 2019
New article from Tatton Investment Management: Choppy water but no storm, yet...
2 September 2019
New article from Tatton Investment Management: Fattening 'tails'
27 August 2019
New article from Tatton Investment Management: Populism politics reversing austerity?
19 August 2019
New article from Tatton Investment Management: Market spat between bond and equity markets
11 August 2019
New article from Tatton Investment Management: Bond markets unnerve equity markets - again
5 August 2019
New article from Tatton Investment Management: The Elephant and the Little Old Lady
29 July 2019
New article from Tatton Investment Management: The quick and the not-so-quick
22 July 2019
New article from Tatton Investment Management: ...'Twere well it were done quickly
15 July 2019
New article from Tatton Investment Management: Positioning for a summer of wait and see
8 July 2019
New article from Tatton Investment Management: Liquidity drives stock markets to new highs
1 July 2019
New article from Tatton Investment Management: The middle of the year - a tipping point?
24 June 2019
New article from Tatton Investment Management: Battle of the ‘doves’
17 June 2019
New article from Tatton Investment Management: Mixed messages
10 June 2019
New article from Tatton Investment Management: The return of the central bank put?
3 June 2019
3 June 2019
Appointment by Frenkel Topping
3 June 2019
Preliminary Results For the year ended 31 March 2019
3 June 2019
New article from Tatton Investment Management: Bond rally musings
27 May 2019
New article from Tatton Investment Management: It is getting warmer
20 May 2019
New article from Tatton Investment Management: Market support for Trump or unwarranted equanimity?
13 May 2019
New article from Tatton Investment Management: Geopolitics re-enter market stage
7 May 2019
New article from Tatton Investment Management: Central banks disappoint expectations
29 April 2019
New article from Tatton Investment Management: Waning market stimuli put stock markets on notice
23 April 2019
New article from Tatton Investment Management: Spring time from here?
16 April 2019
Trading Statement for 12 months ending 31 March 2019
15 April 2019
New article from Tatton Investment Management: Brexit in-limbo aside sentiment is improving
8 April 2019
New article from Tatton Investment Management: Happy 10th birthday, choppy bull market
1 April 2019
New article from Tatton Investment Management:29 March 2019 – quarter end
25 March 2019
New article from Tatton Investment Management: Brinkmanship and extensions
18 March 2019
New article from Tatton Investment Management: Bits & Pieces
11 March 2019
New article from Tatton Investment Management: ECB stimulus U-turn leaves markets unimpressed
4 March 2019
New article from Tatton Investment Management: £-Sterling ‘applauds’ prospect of Brexit delay
25 February 2019
New article from Tatton Investment Management: Progress?
18 February 2019
New article from Tatton Investment Management: Investment perspectives for different Brexit outcomes
15 November 2018
Interim Results for the six months ended 30 September 2018
15 October 2018
New article from Tatton Investment Management: Autopsy of a stock market sell-off
1 October 2018
New article from Tatton Investment Management: Poor politics containing bond market risks?
27 September 2018
New article from Tatton Investment Management: Brexit clamour vs. real market new
7 September 2018
New article from Tatton Investment Management: Interesting times ahead
31 August 2018
New article from Tatton Investment Management: “Not the end of the world”
24 August 2018
New article from Tatton Investment Management: Steady markets vs. noisy politics
17 August 2018
New article from Tatton Investment Management: Political strongman tactics come home to roost
10 August 2018
New article from Tatton Investment Management: Summer heat wave makes way for return of political he
3 August 2018
New article from Tatton Investment Management: A gentle deceleration?
27 July 2018
New article from Tatton Investment Management: Hot air for a hot summer?
20 July 2018
New article from Tatton Investment Management:Earnings are growing, why worry?
13 July 2018
New article from Tatton Investment Management: Hard Brexit demonstration potential?
6 July 2018
Notice of Annual General Meeting
6 July 2018
New article from Tatton Investment Management: It is getting hot
29 June 2018
New article from Tatton Investment Management: Digesting or consolidating?
27 June 2018
Preliminary Results for the year ended 31 March 2018
22 June 2018
New article from Tatton Investment Management: Fragile recovery
15 June 2018
New article from Tatton Investment Management: No surprises
8 June 2018
New article from Tatton Investment Management: Delicate equilibrium
1 June 2018
New article from Tatton Investment Management: Ignore politics at your peril
25 May 2018
New article from Tatton Investment Management: GDPR? No - far more interesting news!
18 May 2018
New article from Tatton Investment Management: What's the economic reality of this week's news?
11 May 2018
New article from Tatton Investment Management: Batten-down-the-hatches?
4 May 2018
New article from Tatton Investment Management: Past the peak?
27 April 2018
New article from Tatton Investment Management: Confusing signals?
20 April 2018
New article from Tatton Investment Management: A mixture of messages
6 April 2018
New article from Tatton Investment Management: Could do better
6 April 2018
New article from Tatton Investment Management: Peaking, plateauing or dimming – and how about that
29 March 2018
New article from Tatton Investment Management: End of a stormy quarter
23 March 2018
New article from Tatton Investment Management: Now we know it's risky!
16 March 2018
New article from Tatton Investment Management: Back to Normal?
9 March 2018
New article from Tatton Investment Management: Tariffs to growth
2 March 2018
New article from Tatton Investment Management: Time to take some profits
23 February 2018
New article from Tatton Investment Management: Change of direction or gradual normalisation?
16 February 2018
New article from Tatton Investment Management: Breathing easier for the moment
9 February 2018
New article from Tatton Investment Management: Meteoric stock markets crash bac
6 February 2018
Tatton Investment Management's Stock Market Correction Assessment
2 February 2018
New article from Tatton Investment Management: Good news turns bad news - again!
26 January 2018
New article from Tatton Investment Management: Surprises
19 January 2018
New article from Tatton Investment Management: US$ weakness versus Bitcoin and Carillion
12 January 2018
New article from Tatton Investment Management: Bullish sentiment rings alarm bells
5 January 2018
New article from Tatton Investment Management: Encouraging kick-off
15 December 2017
New article from Tatton Investment Management: 2017 - taking stock
8 December 2017
New article from Tatton Investment Management: Progress versus Bitcoin
5 December 2017
Interim results for the six months ended 30 September 2017
1 December 2017
New article from Tatton Investment Management: Sudden, but not entirely unexpected
24 November 2017
New article from Tatton Investment Management: Invincible markets?
17 November 2017
New article from Tatton Investment Management: Yield-curve flattening: a bad omen?
10 November 2017
New article from Tatton Investment Management: Nervous investors herald more volatile markets
3 November 2017
New article from Tatton Investment Management: UK rate rise: ‘one and done’ or beginning of rate
27 October 2017
New article from Tatton Investment Management: Trick or treat season
13 October 2017
New article from Tatton Investment Management: All-time highs and Q3 results outlook: Reasons to be
6 October 2017
New article from Tatton Investment Management: Bad news – good news
29 September 2017
New article from Tatton Investment Management: Movements
22 September 2017
New article from Tatton Investment Management: QT to reverse QE and 2-year transition period to soft
15 September 2017
New article from Tatton Investment Management: BoE guides for year-end rate hike - Bluff or real?
8 September 2017
New article from Tatton Investment Management: ‘Back to school’ amidst hurricanes, earthquakes
1 September 2017
New article from Tatton Investment Management: Bad news, Good news
25 August 2017
New article from Tatton Investment Management: Summer low or summer lull?
18 August 2017
New article from Tatton Investment Management: More sellers than buyers
11 August 2017
New article from Tatton Investment Management: Stocks take note of North Korea crisis - or do they?
4 August 2017
New article from Tatton Investment Management: Consolidated base but momentum dwindling
28 July 2017
New article from Tatton Investment Management: Summer thoughts about the ‘longer term’
21 July 2017
New article from Tatton Investment Management: Summer lull - delayed
14 July 2017
New article from Tatton Investment Management: Pre summer-holiday investment check
7 July 2017
New article from Tatton Investment Management: Global growth ploughs on while markets take a breathe
23 June 2017
New article from Tatton Investment Management: Quo Vadis Britain?