The stock market now has some interesting features, some of which have not been seen before in my time.  At the moment, I am being bombarded with a volume of what were once called ‘New Issues’ or ‘Flotations’, but are now badged as ‘IPOs’, or ‘Initial Public Offerings’. A term we appear to have imported from Wall Street, just as CEO (Chief Executive Officer) has replaced the Managing Director in Britain.   So why are we seeing such a tsunami of Companies seeking a stock market quotation, so that the volume is swamping meetings with existing quoted companies?  There are many reasons, several interrelated. First, there has been pent up demand from the start of the pandemic. After all, no company could float in March 2020, given the uncertainty meant management had no story to tell. Secondly, corporate brokers are keen to stimulate the high fees that New Issues generate after a fallow period. A third reason is that Companies too are opportunistic and see the present time as being receptive to their prospects.  Fourthly, the investment industry is currently confused about the long-lasting impact of the pandemic. Many consumer habits may have changed for good, such as more online shopping, but in several others the change may be temporary.   Many of the New Issues being seen have been beneficiaries of the pandemic and management’s assurance that those benefits will stay and grow is questionable, particularly when the flotation is at a very high multiple that does not reflect that risk. A good example being the recent Deliveroo IPO at 390p per share and which now trade 20% lower.  Another high-profile trend is the increasing presence of Private Equity (PE) in business transactions. Perhaps the most familiar example being the £6.3bn bid by Fortress for supermarket chain Wm. Morrison. We know that supermarkets have done well during the pandemic as other retailers had to shut and many have even made home deliveries profitable. So why has PE alighted upon Morrison? Most likely it is because it has the highest level of freehold property amongst the major supermarkets. Indeed, over 80% of its stores are reported as freehold. That will make an enticing sum on any disposal to leave the main supermarket business at a very cheap net price. We have not heard the last of this bid, with a bidding war quite possible and even MPs taking an interest in the situation.   Private Equity has a reputation for extracting value from quoted and private businesses, increasing debt significantly and later on looking for a profitable exit.  Currently, a most popular exit is through a stock market listing during the present tsunami of IPOs.  I would say that I have not seen so many IPOs that I can remember, where stock has been sold entirely or partially by Pes.  Acquisitive quoted companies are consistently telling me that their main competitors in the acquisition of private businesses is now Private Equity. Certainly, the main fact that makes the PE business model so effective is the low cost of capital, which means that gearing a business is really cheap. Indeed, the only consideration for a private company seller that would make a sale to a quoted company preferable is in cases where the prospects for staff and the longer-term future of the business are paramount.  Certainly, PE holds lots of cards in terms of price.   Inflation is another current topic.  The authorities in the US, UK and Europe all say do not worry, it is temporary.  I am not so sure.  Consumers have lots of savings in many cases.  Supply chains are disrupted and the expected unemployment due to the pandemic has not materialised.  Indeed, there are labour shortages in most countries.  If the authorities have got this wrong and interest rates must rise, then the halcyon days for Private Equity may be shorter lived than expected and IPOs less frequent.

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  Thoughts from one of our Investment Managers Stephen Lovelock.   2021 has been labelled as the “year of the reopening”. Markets are now moving out of the pandemic period and entering an ‘in-between’ stage, where investors will have to be far more astute to discern which companies just rode a Covid wave and those that can capitalise long term. As talk of the end of the Covid-19 pandemic builds, concerns of inflation are on the agenda. Is the current talk and concerns about inflation just a flash in the pan as a result of the rapid recovery, after last year’s Coronavirus slump? The question on many investors’ minds, is if inflation is to continue, how high can it go and is it here to stay? There are some that say the US and UK are eager to run their economies “HoT”. If things slow down and inflation cools later this year, they may well pour more fuel on the fire. Inflation could become entrenched.   Inflation in the UK measured by the consumer prices index (CPI) rose to 2.1% in May from 1.5 per cent in April, exceeding market expectations and the Bank of England’s long-term target rate of 2%.   As we know inflation can eat away at investors' returns, with cash, bonds and growth stocks on high valuations particularly susceptible. Investors may wish to think about diversifying away from the assets that have served them well over the past decade if the recent spike in inflation becomes a longer-term issue.   Investment trusts are good at protecting investors from moderate levels of inflation, as many trusts have revenue reserves and can support their dividends. However, because of widespread dividend cuts during the last year, some trusts reserves were diminished. Historically, trusts investing in property, infrastructure and commodities offer some protection from inflation. With shares in Real Estate Investment Trusts (REITS) also having a history of outpacing inflation.   There are other issues and concerns, which Covid-19 trends are here to stay, and which will soon be a distant memory. Will we return to offices? Will the high street survive? Will international travel bounce back?   Another factor to consider is despite progress in US-China relations, the Global economy is still under extreme stress and the path to a full recovery is unlikely to be smooth. We have yet to see the full impact of reopening the country but remain optimistic about the ability of vaccine delivery and the human adaption to normalise economic and social behaviours.  

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After The outbreak of Covid-19 in March 2020 has resulted in the worst human and economic devastation the world has seen for many years resulting in governments and central banks around the world, cushioning the considerable fall in economic activity by introducing fiscal and monetary support on an unprecedented scale.   Equity markets, which were sold off at the peak of the pandemic, initially recovered as a result of this stimulus being introduced. Then in the final quarter of 2020, with vaccines being developed and rolled out, we have seen further recovery in global equity markets.   The UK was one of the worst-hit developed markets in the Coronavirus crash of last year after the FTSE All Share lost 9.82 percent, compared with gains of 14.12 percent from the S&P 500 and 2.13 percent from the MSCI Europe. This was not surprising, given the services focus of the UK economy. However, while this pulled the UK down in last year’s crash, it should also help it to bounce back harder. So, we can expect a recovery this year.   For the UK there were two significant catalysts in the fourth quarter of 2020; the Brexit agreement signed on Christmas Eve and Pfizer announcing an available vaccine in early November. This was a trigger for investors worldwide to have confidence in the sustainability of the recovery. It can be argued that the UK market has looked cheap since the vote to leave the EU in 2016 and lacked the catalyst to realise that fair value until the agreement was signed. These two catalysts are releasing several opportunities in the UK making it investable for the first time since 2016. Many international investors have understandably, not bothered with the UK as the currency was vulnerable. They waited until we gave them confidence to invest.   After the decade-long bull run was halted by last year’s Covid-19 crash another reason that the UK could do particularly well in the recovery, was characterised by the out-performance of growth over value. However, increased inflation expectations (in response to the massive amounts of fiscal stimulus pumped into the economy) have led to a sudden reappraisal of value stocks   As we enter the second quarter of 2021 and hopefully look to a new period post-pandemic with the UK equity market back on investor’s radars, the UK could do particularly well in the recovery.   Stephen Lovelock

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This month has many interesting topics on the horizon, and I will cover a good few in this article.

If clients remember, last time, I voiced my concern over potential inflation and the rising level of state-owned debt along with a likely continual depreciation of the US Dollar. In 1980, only 40 or so years ago, the US deficit was just $1Trillion. In 2025, it is expected to be $50 Trillion. Those projections of Dollar weakness are already starting to come through.

The Pound Sterling has ticked up to $1.38 against the Dollar, after having hit £1.40 briefly and it has even begun to show strength against the Euro at1.17. Commodities are starting to increase in price, although this has not really hit the consumer yet. Timber, Specialist Polymers and Base Metals being to the fore. Our two stock selections, with a copper bias, RTZ and Atalaya both continue to look well placed, with the latter up by nearly a third.

Expect those economic trends to continue.

It has been a stark feature of the US market, that certain growth companies have achieved astronomic ratings despite the fact that they are not making profits. The Technology sector has been at the forefront here. People can see how the likes of Amazon and Google have become very profitable as they have changed people’s habits. The NASDAQ technology index, has, however, had a few nervous days and is lower now than it was in February. Is this trend over?

The UK has lacked those sorts of technology companies, with the FTSE 100 index dominated by Mining, Oil and more traditional overseas earners. More recently, the UK has got in on the act with the Hut Group, a digital FMGC business, had a very good start after floating at the end of 2020, but it too is lower than it was at the start of the year. Its value is still very high at £6.3bn.

Moonpig, the online greetings cards business had a good debut too, but the price is now not much higher than the early levels. It still has a £1.5bn market capitalisation. Is this online/ digital boom over? Certainly, these companies were definite beneficiaries of the lockdown as people changed their habits. More recently has come the Deliveroo debacle, with the share slumping by 28% on issue. It was also a lockdown beneficiary as people opted for home deliveries of meals and restaurants saw the service as the only way to trade, despite its high costs. Yet it still has a £5.2bn value and is yet to record a profit. I am sure some will still love the service, but others may return to collecting ‘takeaways’ themselves when freedom to do so increases. Some institutions refused to invest due to the employment policy at Deliveroo, especially after the recent Uber case ruling. Time will tell how the business fares, but I think it is a warning that unprofitable technology companies carry very high risks when high valuations are attributed to them.

To me, it emphasises that the market is unsure how the post-pandemic world will be. I prefer to stick with old fashioned investment criteria, growth, value, dividends and balance sheet strength. Our job now is to find value with a slight edge in the new situation. I came across one the other day in SCS, the furnishings business, specialising in Sofas and Carpets. Yes, this is not an easy sector by past records, but this £90m company has no debt and a lot of cash. Even allowing for customer deposits and seasonal factors, it probably has nearly a third of its market value in cash. Yes, it needs to see its stores open again for recovery and the ability to resume dividends, but the risk looks a favourable one. One thought might be worth considering. If people have a hybrid solution to office and home working, will they wear out their sofas and suites quicker? The average replacement cycle is currently seven years. It used to be five years before 2008.

Lastly, I thought that I would end on the subject of Rare Earths. Many people will not know how important they are to modern life. First, they are not completely rare, but they are essential in things like mobile phones, defence systems etc, but particularly for all the new generation products in the so-called ‘Green Revolution’ such as wind turbines, solar panels and electric cars. The problem is that once again luck has favoured China, which currently has a near monopoly on the supply of Rare Earths, as it supplies around 80% of the world Rare Earths.

China has been dealt a very strong hand with the supply of the seventeen elements that comprise the Rare Earth category. Nevertheless, Greenland has been identified as a rich source of Rare Earths, which is why Donald Trump tried to buy it two years ago. What is topical is that when you read this newsletter, Greenland, the world’s largest island, with a population of under 60,000 people, mostly Eskimo and heavily dependent upon Denmark for funding will have had a key election which could change the prospects of getting a significant amount of Rare Earths not controlled by China. Rare earth extraction is high on the election topics. The two main parties have different policies. One pro extraction and one against. The outcome will be important for the Chinese, in terms of pricing and supply constraints, as well as for all of us in the Western world and the cost of new technology.

  Barrie Newton

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Markets rose across the board over the last quarter. Most markets had been trending up since the April 2020 lows, as COVID restrictions were reduced. New momentum was induced by the positive vaccine news. UK stocks advanced strongly. For much of the year UK stocks were the poor relation, particularly compared to some US Tech stocks. With the vaccine news and a Brexit trade agreement without tariffs UK stocks began to perform. The pound rose to its highest for some time against the USD which will help with those hoped for summer 2021 holidays if the COVID situation allows. Some areas of global stock markets have started to look expensive when viewed historically but it was the year of tech and the markets are reflecting the great changes taking place at pace. Some other themes entered in the last quarter. With Biden winning the US elections, environmentally sensitive and companies considered socially responsible received a boost. Biden has promised to invest $2trillion into this sector both to push the environmental cause but also to rebuild. This looks to be a theme alongside tech that will have longevity and could also quicken and lead to disruption in many older industries and ways of doing business. I noted that at times during the lockdown, on occasion 59% of the UKs electricity came from renewable sources – mostly wind and solar. The UK is far ahead of its US cousin in this sector and if the US follows that is going to create some interesting investment opportunities. Another area which has raised its head is the potential for inflation. In order to pay for the pandemic and schemes such as investing in the environment above, the US and many governments are printing more and more money. As a result, commodity prices have started to increase. My colleague Barrie Newton looks at this area in more depth and my colleague Steve gives his views on the economic impact of COVID-19.

UK Stock markets

The UK market has been held back from some years with the various uncertainties that have been around. Some of these key uncertainties are now behind us. It is quite likely that overseas investors and pension funds start to invest in the UK again, which could be very good for UK stocks. The UK stock market is much cheaper than many of its peers. Dividend yields still sit at around 4% and therefore still look very attractive against bank rates. There are many World class engineering, software and pharmaceutical companies in the UK and listed on the UK stock market. At CFM we expect to see inflows of investment and bid approaches for many of these stocks.

Interest rates

Since the New Year, the US Federal reserve banks have begun to suggest they may raise rates quicker than expected. This has not yet been set in stone but may be a sign of things to come. This is set against a backdrop of massive borrowing for COVID and in the UK the money supply is growing at around 20% per annum. Such statistics have not been followed much for years but are now coming back to the fore. There has been a debate bubbling away for a while now with some suggesting inflation targeting, which is generally accepted as having been responsible for creating price stability for several years, with a new regime which targets real economic growth. Naturally, there are pros and cons. What does this mean for your investments and mortgages? Interest rates have been falling for 30 years. We now see a situation of massive printing of money and potentially the policy framework changing to allow more inflation into the system. We may not immediately see high inflation in the statistics, but prices are likely to rise somewhat. Commodity prices are already rising sharply. Fixing a mortgage perhaps for longer than the 2 years we most do and choosing 5 or 10 might be worth considering. For investments, bond prices have gone up and up for years. UK Stocks, the FTSE at least has not made much headway for 15 years. If there is inflation, companies that are able to increase their prices will see profits in nominal terms at least increase. Those stocks might outperform. High interest rates would hurt shares but if interest rates are held down and the companies’ underlying earnings increase, it will be good for shares and not good for bond investments. At CFM we will be holding more shares in balanced portfolio’s going forward. With government bonds paying out 1% and corporate bonds 2% against UK shares 4%, shares look better value and should offer some protection against inflation.   By Paul Coffin

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There is a fundamental change underway to affect us all. The pandemic has been occupying everyone’s thoughts and understandably so. It has changed a lot of things, the move to online buying and away from shops; the move to home cooking and away from restaurants, are two we are all aware of, but they are behavioural changes. Investors have been focussing on whether these human preferences will be reversed in post-pandemic normal times, or will they mark a perpetual change. That is one of the main questions in the investment world. While investors have also been studying the personalities and policies of the two US Presidential candidates and now the move to a new Presidency, something more important and structural has been escaping attention. This concerns the huge deficits in the Western world due to the pandemic and especially the effect on the world’s Reserve Currency, the US Dollar. A Reserve Currency is seen as a ‘hard’ or ‘safe’ currency for international trade and investment and so it is held by central banks in their reserves. There has been a succession of Reserve Currencies over time, generally, that status lasts for 80 -120 years. It is a function of being the world’s dominant economic and political power. The UK had that role from around 1815 until just after the First World War when an exhausted Britain passed on the baton from the Pound to the Dollar. So, what might suggest that the Dollar is coming to an end as the Reserve Currency? Three interrelated facts – China, Deficits and Funding. It is now estimated that China will overtake the USA as the top economic power by 2025. You cannot find alternatives to Chinese products in many trades. To shorten supply line and onshore production is now a virtue but will not happen any time soon. This has enabled China to start to flex its muscles. Hong Kong is a good example. China takes a long-term view about its aspirations and acts differently from the West. In the 2008-9 Financial collapse, it overcame it with huge infrastructure investment, still going on today to make it more competitive. The US is fiddling about with $2,000 cheques to the populace, which just props up consumption. The US deficit is in Trillions of Dollars and going higher. It will soon reach 20% of US GDP. The question is who is going to fund this borrowing? It cannot come from within the US, as personal debt is also at record levels. It must come from abroad and China has been a serious funder, until recently. China generates huge surpluses. In 2020, its exports rose 21% as it sold us all PPE and other necessities. But China is reducing its investment in US Treasury bonds – down from $1.25Tr to around $1Tr now. It is not just the reduction; it is a lack of new funding that hurts. This at a time when the US is borrowing more. China is buying other currencies, such as the Yen, and working hard on a digital Yuan to boost its possibility of becoming a Reserve Currency. Now if you need to borrow abroad and are finding it difficult, then you will be forced to offer higher interest rates. In the US, as across the West, indebtedness is only serviceable with rock bottom rates, so the Federal Reserve will do anything to keep rates low. The natural result of this is twofold. First, the Dollar will be a weak currency. Since the 2008-9 financial crisis, the Dollar has been strong as the rather anaemic recovery led the world to covet the safe Dollar. That situation has now started to change. Since the end of June, the Pound has risen from 1.23 Dollars to 1.36 today; a 10% gain. You might argue that this is the result of a Brexit deal, but you would be wrong. The Pound to the Euro has gone from 1.095 to 1.11 in the same period. A rise of 1.8% only. It is clearly the Dollar that has started to be weak and it will continue to be. The second feature is inflation. When you devalue a currency, it is great for exporters, but bad for domestic inflation. Those old enough to remember can recall Harold Wilson’s famous sleight of hand when announcing a 14% Sterling devaluation in 1967. ‘’It does not mean that the Pound here in Britain, in your pocket or purse or in your bank has been devalued’’. No, the £1 note would be the same, but inflation would nibble away at its edges in terms of what you could buy! We could argue, who cares about deficits when the whole Western world has the same relative disadvantaged balance sheet. Nevertheless, what happens when the Pound in your pocket is a Dollar and a Reserve Currency? As so much of the world’s commodities are traded in Dollars, their value must rise when measured in a depreciating currency. Watch what is happening to oil prices (+33% since the end of June) and base metals such as copper (+37%). They are all rising just like a compensating see-saw and giving a view on the future. They are projecting that when the pandemic is over, world economies will be kickstarting together and commodities, where there has been little investment in capacity over the past decade, will be in short supply. So how does this alter one’s investment perspective? We can draw a few conclusions. First, the average US consumer is going to have a tough time. How long will the Federal Reserve be able to hold low interest rates if inflation hits 3% or 4%? Secondly, UK businesses trading heavily in the US will face ‘headwinds’. High US earnings have been a big tick in the box for UK investors, but that should change. Analysts will comment on a constant currency basis, but it will mean less cashflow and less available for dividends, however, it is dressed up. Some of those sleepy domestic UK stocks such as utilities and food producers could be more attractive, particularly as the UK market is cheap against the rest of the world and is investable again. Money is flowing back now Brexit uncertainty has gone. Commodities are suddenly starting a bull market after a 10-year bear. There are interesting possibilities here too. Gold and Silver remain a focus at times of uncertainty, but there is a wide range of industrial commodities where capacity will take a good while to increase. This all suggests that we will see important structural changes to the way the world’s financial systems operate, with implications for all of us. Barrie Newton

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2020 has been an extraordinary year for financial markets, reeling from the economic impact of COVID-19. As we leave 2020 and enter 2021 there is still a level of uncertainty in the UK. This of course is due to the new variant of COVID-19 and the overwhelming number of infections, which has put pressure on the NHS. However, we are now in the position of having three vaccines available. With the UK Government increasing effort to roll out vaccination to all those vulnerable, we can expect that by the end of February we could see an easing of lockdown. This will hopefully add some normality to the UK economy, and in turn, remove a level of uncertainty.   Having secured Brexit with an agreed deal, this will remove the prolonged underperformance since the Brexit referendum four years ago.   Despite the recent world markets rise of 3.55%, with the UK and emerging market up nearly 5%, I suspect the first and second quarters of 2021 will still have a level of volatility.   Another impact of the pandemic is that many tech and growth stocks have seen future growth expectations happen in nine months, making them the best performers whilst looking hugely overpriced. Maybe there is a correction due, or a rotation into value shares. Another consideration is that corporate debt is massive, but UK households have apparently built up £100bn of unspent cash in the last nine months. One day when we are finally allowed out again, this will rebalance. A lot to consider on top of how the Government will deal with the financial shock that the economy has suffered. There is much to think about this year.   I have previously written about the virtues of Investment trusts and they have certainly proved their worth throughout 2020. As from the strength of the stock market rebound since the crash of last February and March, many London listed Investment companies ended 2020 in a very strong position. From an average premium of 1% over net asset value (NAV) from the start of 2020, many investment trusts plunged to a 22% discount to their underlying asset values in March before recovering to close the year on an average premium of 1.7%. Some investment trusts have also increased their dividends during this period.   There are many value plays to look at, with a number of shares still looking oversold. I have to some extent avoided funds in property, high yield equities, hydrocarbons, and leisure, but I am sure their time will come.  The winners in 2021 will be the companies with strong balance sheets, good management teams, and the potential to deliver good earnings growth regardless of what is happening in the wider economy.   2020 was the year where markets experienced the worst contraction on record followed by a steep recovery fuelled by extraordinary monetary and fiscal stimulus. So if 2020 was anything to go by, this year will be anything but boring.   Stay safe and wish you a Happy New Year.       S.W.Lovelock MCSI

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Today, we look at two contrasting sectors with regard to how they are faring in the pandemic crisis. The Property sector and Food Retailing have experienced very different fortunes. Taking Property first, there is normally a mix of retail, office and commercial property in most company portfolios, although some will specialise. Clearly many of these sub sectors have been affected by Covid-19. Retail has been decimated, even more so with restaurants. Many businesses that have partly or fully sent staff to work from home are now evaluating just how much office floor space that they will need in the future. The real problems have come where tenants have been unable to pay rents when due on the quarter day and the real pressure has fallen on property companies that although they may have quality locations, are burdened with too much debt. For example, Intu, the owner of Lakeside and the Trafford Centre, has fallen into administration as a result. Travelodge, the budget hotel chain has entered into a Company Voluntary Arrangement which could save it £144m in rent; not the best news for its landlords. Nevertheless, if one is careful and picks the type of tenant that is thriving and choose to invest in the sector through a diversified REIT, then some good and safer yields can be achieved. Warehouse REIT, which has recently raised £153m additional capital to invest has around 35% of its tenants involved in internet-based trading, where volumes have been strong in lockdown, has a yield of 5.8%. That leads on to a sector that has been favourably affected by Covid-19, that of the Food Retailers. The main businesses here, Tesco, Morrisons and Sainsbury were all designated essential operations and so did not close. Their on line sales rose strongly and that improved internet content may well continue. With restaurants and pubs closed for a considerable time and now not all open or running at reduced utilisation rates, the food that is normally consumed in the hospitality sector has been channelled through the retail food outlets. Interestingly, the discounters like Aldi and Lidl have probably lost market share in that period, as the big three have better on line offerings. The Food Retailers have also had a major saving due to the waiving of business rates. Tesco and Sainsbury combined would have a full saving approaching £1.25m. In fact, there has been some controversy about the correctness of that benefit, but the food giants are keen to stress the considerable costs that have needed to be incurred with social distancing, additional staff and the incremental support for on line sales. For those controversial reasons, we may not see dividends that reflect the benefits one might assume. Nevertheless, they will emerge from the pandemic stronger than before and with enhanced on line demand and capabilities. Barrie Newton

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The level of economic activity in the UK has improved materially since March. Many companies have reported that whereas three months ago they might have only been operating at 5 or 10% of capacity, the figure is now nearer 70%. This is quite a marked change and some businesses, such as in the Hospitality, Pubs and Restaurants sector have only recently reopened and are yet to establish activity levels. The pandemic is totally unlike a normal cyclical slowdown and recession, it is a natural disaster, but unlike other disasters such as earthquakes, no capacity has been destroyed. The real uncertainty is the question of demand, rather than supply. Let us look at some of the positives and the possible negatives of today’s situation. Positive influences include pent up spending power in many households. During the severe lock down, families were able to save quite considerable sums compared with that in their normal lifestyle. Nevertheless, this may not be quite the spending bonus it first seems, because in this period, many households have been busy paying down debt as a reaction to the uncertainty of the situation. They will, however, find some lower costs, such as petrol prices, where despite a good recovery in the price of a barrel of Brent crude, pump prices are well below what they were at the turn of the year. Another boost for business comes from the lowish Sterling exchange rates $1.24 to the pound and 1.10 for the Euro. This is excellent for exporters, although imports, especially of raw materials will cost more. Despite the latter, inflation is well under control and between only 1 and 2%. The Government has preserved jobs throughout the period and on into October with its furlough scheme. While it is easy to criticise some Government actions, the furlough initiative has been one of the major successes. The stock market has certainly reacted positively to this and other programmes such as deferral of corporation and other taxes. There are, nevertheless, several uncertainties that are around and likely to be so for several months to come. These include the fact that with 9 million workers under furlough, there is a fear that not all will have jobs at the end of the programme. Unemployment currently stands at 3.9%, representing 1.3m unemployed people. I would hazard a guess that 10% of the staff currently furloughed are at risk. That could well take the unemployment level to over 2 million. Not conducive to a strong recovery in an economy which is very much service led and driven by consumer spending. Most companies that I speak to have no idea what level of demand will finally return for their businesses and are preparing their workforce to meet a basic level of demand which is much lower than previously was the case. Then, of course, there are the behaviour changes that the pandemic has instigated. We can all see the increased use of the internet and on line shopping plus the use of Zoom rather than travel and arrange meetings, but there are other manifestations too, such as the increased consumption of alcohol at home and the use of streaming rather than cinemas. Despite the recent lifting of many restrictions, and pubs being patronised last weekend, there will be many people who will be too concerned to get on a train, visit a cinema or take an overseas holiday until they are confident that they are safe, because the virus is still out there and the risk of second spikes as real because irresponsible people have ignored guidelines with mass gatherings. These uncertainties promise that markets will be volatile and need great care in the near future. Barrie Newton

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