{"id":2097,"date":"2020-10-14T11:31:27","date_gmt":"2020-10-14T11:31:27","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=2097"},"modified":"2020-11-18T09:26:46","modified_gmt":"2020-11-18T09:26:46","slug":"market-update-14th-october-2020","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2020\/10\/14\/market-update-14th-october-2020\/","title":{"rendered":"Market Update \u2013 14th October 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\/fE4Xev0rzZ4?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>Although this week\u2019s US Presidential debate between Donald Trump and Joe Biden has been cancelled, it hasn\u2019t stopped the ongoing stimulus shenanigans and rapidly approaching election from continuing to be a large influence on global equity markets.<\/p>\n<p>As Joe Biden (a Democrat) continues to widen his lead in the opinion polls, the chances of a contested and drawn-out election result have reduced significantly, which in turn, has positively helped equity market sentiment.<\/p>\n<p>Unfortunately, we believe there is a downside to this confidence:\u00a0 while there is a good chance that an election win by Joe Biden will result in an even bigger fiscal stimulus package than the one that was being negotiated, it is unlikely to be implemented until well after his inauguration on Wednesday 20 January 2021.<\/p>\n<p>\u2018Politicians fiddle while the economy burns\u2019 springs to mind, as we believe that the US economy needs a new fiscal stimulus package sooner rather than later in order to help those households and businesses that have been hard-hit by the coronavirus outbreak and associated lockdowns \u2013 as waiting until the New Year will mean the rapid \u2018V-shaped\u2019 rebound that we are currently seeing in the US economy (the world\u2019s largest economy) will moderate to a \u2018Nike Swoosh\u2019 shape.<\/p>\n<p>Interestingly, two big US banks (JPMorgan and Citigroup) yesterday (13 October 2020) reported Q3 profits that were much better than major analysts had expected, thanks to lower bad debt provisions.\u00a0 As we said in our market updates on 15 April 2020 and 15 July 2020 (<strong>please\u00a0<a href=\"https:\/\/www2.wealthatwork.co.uk\/mywealth\/2020\/04\/15\/market-update-15th-april-2020\/\">see here<\/a><\/strong><a href=\"https:\/\/www2.wealthatwork.co.uk\/mywealth\/2020\/07\/15\/market-update-15th-july-2020\/\"><strong>\u00a0and here<\/strong><\/a>), when the US banks set aside massive bad debt provisions earlier in the year, we thought they were potentially \u2018kitchen sinking\u2019 (meaning those earlier provisions could be future profits if those bad-debt losses don\u2019t fully materialise \u2013 and so far most Americans are continuing to make their credit card and loan repayments).<\/p>\n<p>Brexit is the other key theme impacting equity markets this week.\u00a0 While it may feel like d\u00e9j\u00e0 vu, given all the political bluster from both the UK and EU as we approach yet another Brexit deadline, it is important that the two sides come to a trade agreement, even if it is fudged, given the challenges ahead for both the UK and European economies thanks to the coronavirus outbreak.<\/p>\n<p>The challenges facing the UK were clearly visible in yesterday\u2019s employment data, which showed employment fell by 153,000 \u2013 five times the 30,000 expected by the major economists (we assume they must have missed all those companies that have announced redundancies over the past couple of months).\u00a0 As a result the unemployment rate rose to 4.5% \u2013 while this is still low by historical levels, it is the highest reading since April 2017.<\/p>\n<p>Given the new tighter localised coronavirus restrictions being put in place, coupled with the ending of the government\u2019s Job Retention (furlough) scheme at the end of this month, unemployment is likely to rise sharply.\u00a0 In fact, sadly, we wouldn\u2019t be surprised to see the unemployment rate at 7% or 8% in the coming months \u2013 hence our view that it is only a matter of time before the BoE provides further monetary stimulus and cuts interest rates to below zero.<\/p>\n<p><strong>Investment Management<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n  <\/div> ","protected":false},"excerpt":{"rendered":"<p>Although this week\u2019s US Presidential debate between Donald Trump and Joe Biden has been cancelled, it hasn\u2019t stopped the ongoing stimulus shenanigans and rapidly approaching election [&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\/2097"}],"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=2097"}],"version-history":[{"count":2,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2097\/revisions"}],"predecessor-version":[{"id":2119,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2097\/revisions\/2119"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media?parent=2097"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/categories?post=2097"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/tags?post=2097"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}