{"id":2000,"date":"2020-06-17T11:05:08","date_gmt":"2020-06-17T11:05:08","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=2000"},"modified":"2020-11-18T09:52:12","modified_gmt":"2020-11-18T09:52:12","slug":"market-update-17th-june-2020","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2020\/06\/17\/market-update-17th-june-2020\/","title":{"rendered":"Market Update \u2013 17th June 2020"},"content":{"rendered":"<div class=\"wpb-content-wrapper\"><div class=\"vc_row wpb_row vc_row-fluid\">\n<div class=\"wpb_column vc_column_container vc_col-sm-12\">\n<div class=\"vc_column-inner \">\n<div class=\"wpb_wrapper\">\n<div class=\"wpb_raw_code wpb_content_element wpb_raw_html\">\n<div class=\"wpb_wrapper\"><iframe loading=\"lazy\" src=\"https:\/\/www.youtube.com\/embed\/dlIHbnO-kP4?rel=0&amp;wmode=transparent\" width=\"560\" height=\"315\" frameborder=\"0\" allowfullscreen=\"allowfullscreen\" data-mce-fragment=\"1\"><\/iframe><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"vc_row wpb_row vc_row-fluid\">\n<div class=\"wpb_column vc_column_container vc_col-sm-12\">\n<div class=\"vc_column-inner \">\n<div class=\"wpb_wrapper\">\n<div class=\"wpb_text_column wpb_content_element \">\n<div class=\"wpb_wrapper\">\n<p>If you ever needed proof that time in the market is more important than trying to time the market, we have had it over the past couple of days!<\/p>\n<p>On Monday (15 June 2020), the FTSE-100 fell heavily (to 5,952) as news headlines were dominated by stories of a potential second wave of coronavirus cases.\u00a0 However, roll forward to today and the FTSE-100 is trading at 6,300 \u2013 a rise of almost 6% \u2013 supporting our statement that the path of least resistance remains higher for equities due to government and central bank stimulus, coupled with the economic reopenings we are seeing around the world.<\/p>\n<p>This dramatic turn (which would have easily been missed if you were trying to time the market \u2013 as a bell doesn\u2019t simply ring at the top of the market indicating it is the best time to sell, or at the bottom, indicating it is the best time to buy), is due to a multitude of positive announcements:\u00a0 the US Fed said that they will start buying US corporate bonds; news that Donald Trump was considering plans for a new $1tr infrastructure bill (although we do have to caution that it may not get through Congress before the Presidential elections in November); and some very strong US and German economic data.<\/p>\n<p>US retail sales data for May was super impressive \u2013 not only did it completely smash consensus expectations, but the data reading for April was also revised up:\u00a0 sales in May were 17.7% higher than in April (the biggest monthly rise on record), while April\u2019s data was revised up to -14.7% from -16.4%.<\/p>\n<p>Although sales are still 6.1% below last year\u2019s level, the size and speed of the rebound is nevertheless amazing, especially as all categories increased in May.\u00a0 For example, sales of motor vehicles rose 44.1%; bars &amp; restaurants +29.1%; electronics +50.5%; clothing +188%; and furniture +89.7%.\u00a0 This clearly shows that as US states ease lockdown restrictions and reopen their economies, American consumers are happy to quickly go out and spend.<\/p>\n<p>As the consumer accounts for two-thirds of the US economy, this supports our view that this is not like a normal economic downturn as the coronavirus outbreak is a transient issue and as such, while we will suffer a sharp, deep and painful recession, it will be very short followed by a quick and strong bounce back \u2013 a \u2018V-shaped\u2019 economic recovery.<\/p>\n<p>Additionally, Germany\u2019s ZEW Survey (which gives an indication of economic sentiment and expectations) underscored our belief that the economy has bottomed and will recover in the second half of 2020, as the reading rose to 58.6 from 46.0.<\/p>\n<p>In the UK this morning, headline CPI inflation slowed to 0.5% from 0.8% (its lowest reading since June 2016), while the core rate (which excludes volatile items such as food and energy) fell to 1.2% from 1.4%.\u00a0 As with our warning over US inflation last week, our typical basket of goods is being distorted by the coronavirus lockdowns so may not fully represent the prices we are actually experiencing.<\/p>\n<p>However, looking at the individual elements, disinflationary pressures clearly exist which is likely to pressure the Bank of England (BoE) into further stimulus during their monetary policy meeting tomorrow (Thursday 18 June 2020).<\/p>\n<p>In fact, we wouldn\u2019t be surprised if the BoE gives a downbeat assessment on the UK economy tomorrow given the poor economic backdrop (last week\u2019s GDP data reading showed the UK economy contracted by 20.4% in April, while today\u2019s CPI inflation reading simply confirms its direction of travel, which has been one way since the end of 2017).\u00a0 Additionally, Brexit uncertainty is unfortunately back on the agenda.<\/p>\n<p>Consequently, we wouldn\u2019t be surprised to see the BoE act aggressively \u2013 either via an enlarged QE program or through negative interest rates.\u00a0 We will find out at 12 noon tomorrow (Thursday 18 June 2020).<\/p>\n<p><strong>Investment Management Team<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n  <\/div> ","protected":false},"excerpt":{"rendered":"<p>If you ever needed proof that time in the market is more important than trying to time the market, we have had it over the past [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"_links":{"self":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2000"}],"collection":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/comments?post=2000"}],"version-history":[{"count":2,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2000\/revisions"}],"predecessor-version":[{"id":2167,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2000\/revisions\/2167"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media?parent=2000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/categories?post=2000"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/tags?post=2000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}