{"id":2364,"date":"2021-02-04T12:24:52","date_gmt":"2021-02-04T12:24:52","guid":{"rendered":"http:\/\/www.wealthatwork.co.uk\/jpm\/?p=2364"},"modified":"2021-02-04T12:24:52","modified_gmt":"2021-02-04T12:24:52","slug":"market-update-4th-february-2021","status":"publish","type":"post","link":"https:\/\/www2.wealthatwork.co.uk\/jpm\/2021\/02\/04\/market-update-4th-february-2021\/","title":{"rendered":"Market Update – 4th February 2021."},"content":{"rendered":"
[vc_row][vc_column][vc_raw_html]JTNDaWZyYW1lJTIwd2lkdGglM0QlMjI1NjAlMjIlMjBoZWlnaHQlM0QlMjIzMTUlMjIlMjBzcmMlM0QlMjJodHRwcyUzQSUyRiUyRnd3dy55b3V0dWJlLmNvbSUyRmVtYmVkJTJGYVBpRHFXZEktVTQlM0ZyZWwlM0QwJTIyJTIwZnJhbWVib3JkZXIlM0QlMjIwJTIyJTIwYWxsb3clM0QlMjJhY2NlbGVyb21ldGVyJTNCJTIwYXV0b3BsYXklM0IlMjBjbGlwYm9hcmQtd3JpdGUlM0IlMjBlbmNyeXB0ZWQtbWVkaWElM0IlMjBneXJvc2NvcGUlM0IlMjBwaWN0dXJlLWluLXBpY3R1cmUlMjIlMjBhbGxvd2Z1bGxzY3JlZW4lM0UlM0MlMkZpZnJhbWUlM0U=[\/vc_raw_html][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Global equity markets have renewed their upward momentum this week after last week\u2019s (please see here<\/strong><\/a>) social media frenzy-induced volatility dissipated and allowed markets to focus again on Joe Biden\u2019s fiscal stimulus plans and the global economic recovery.<\/p>\n

In fact, last week\u2019s indiscriminate buying of heavily shorted companies such as GameStop spurred on by the chatroom, WallStreetBets on Reddit, while fascinating to watch, at the end of the day appears to us to be nothing more than a modern day \u2018pump-and-dump\u2019 boiler room style scam. \u00a0As we said in our last Weekly Market Summary, these companies\u2019 share prices had become completely disconnected from their underlying fundamentals and would not be able to defy gravity for very long \u2013 and sure enough the party quickly fizzled.\u00a0 For example, shares in GameStop, which touched $483 last Thursday (28 January 2021), \u00a0has fallen over 80% as it closed last night well below $100.<\/p>\n

While an old-style boiler room scam (which is illegal) involved unscrupulous people buying shares, then cold-calling people with exaggerated claims about the company and then selling their shares for a big profit, the internet has created chatrooms which allow these exaggerated claims to be made anonymously.\u00a0 Unfortunately, this is not illegal \u2013 but as many novice retail investors have discovered, it is financially very painful.<\/p>\n

The only positive is that given the significant losses most retail investors would have incurred, this may mean these chatrooms will find it very hard to pull-off another GameStop style buying frenzy.\u00a0 Nevertheless, if you are ever tempted by a chatroom stock recommendation, please always speak with your Adviser first.<\/p>\n

However, here at my wealth<\/strong>, we don\u2019t believe in speculative trading, nor do we like highly concentrated portfolios (i.e. just a handful of stocks). \u00a0Instead we believe that risk management is just as important as investment performance and returns.\u00a0 This means that while we will never shoot the lights out with our investment performance, our portfolios should hopefully allow you to have a good night\u2019s sleep!<\/p>\n

Economic data so far this week has been consistent with our view that the global economy continues to recover.\u00a0 For example, the US ISM manufacturing reading of 58.7, while below last month\u2019s reading of 60.5, remains well above 50, which is the line separating expansion and contraction, so the underlying message is clear:\u00a0 the US economy\u2019s solid growth is continuing.\u00a0 Additionally, the US ISM employment reading encouragingly rose to 52.6, its best reading in the current coronavirus era, while the ISM services reading improved to 58.7.\u00a0 This all suggests to us that tomorrow\u2019s (Friday 5 February 2021) non-farm payroll data may show a much better improvement than the 100,000 gain being forecast by the major economists.<\/p>\n

Likewise, the 0.7% contraction in the Eurozone\u2019s Q4 GDP was much less than the major economists expected, suggesting to us that economies have adapted well to the latest impact from coronavirus lockdowns.<\/p>\n

Later today (Thursday 4 February 2021), the BoE\u2019s monetary policy meeting concludes.\u00a0 We firmly believe the next move in UK interest rates will be down given the weak employment market and recent retail sales data – both of which will get much worse before it gets better.\u00a0 Unfortunately, we aren\u2019t expecting the BoE to make any changes today due to the BoE\u2019s wait-and-see mentality, given the recent Brexit trade agreement and the current rapid rollout of the coronavirus vaccine coupled with the fact that policymakers currently appear to favour increasing QE (given the pace of government issuance).\u00a0 Consequently, we will be closely analysing how the nine policymakers vote.<\/p>\n

Investment Management Team<\/strong>[\/vc_column_text][\/vc_column][\/vc_row]\n <\/div> ","protected":false},"excerpt":{"rendered":"

Global equity markets have renewed their upward momentum this week after last week\u2019s social media frenzy-induced volatility dissipated and allowed markets to focus again on Joe Biden\u2019s fiscal stimulus plans and the global economic recovery.<\/p>\n","protected":false},"author":1,"featured_media":2367,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"_links":{"self":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2364"}],"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=2364"}],"version-history":[{"count":1,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2364\/revisions"}],"predecessor-version":[{"id":2366,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/posts\/2364\/revisions\/2366"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media\/2367"}],"wp:attachment":[{"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/media?parent=2364"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/categories?post=2364"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www2.wealthatwork.co.uk\/jpm\/wp-json\/wp\/v2\/tags?post=2364"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}