The 3M’s – May 2021

  • By Darren Scoon
  • 19 May 2021

The rule of three is an age-old writing technique that implies that things that come in threes are inherently more satisfying and effective to readers. We have a natural, ingrained tendency to gravitate towards and respond positively to things that come in threes.  With this in mind I’ve shamelessly formatted the new update as the 3M’s.


Monthly Chatter

Market Movements

Monthly Insights


Monthly Chatter

I’ve been busy over the last few weeks, firstly  like most of us I actually went to the barbers, they didn’t laugh too much at my lockdown efforts but it’s certainly a bit better now!

On the home front Megan has now started her new job and is really enjoying it, still working from home which seems to be the future but the training programme is impressive and Josh is finally back playing football so he’s very happy.  Carol and I enjoyed a short break last week at St Andrew’s and are already planning our next one!

From a business perspective I’m back seeing clients face to face which has been great, actually leaving the home office and putting on more formal attire, thank goodness for the elastic waisted trousers!

Internally we’re doing lots of work with our investment partners to ensure that the solutions we offer remain best of breed, this is normal maintenance for us so you shouldn’t be expecting change but I’m always keen talk about what we’re doing, to share with you the things you don’t see, the inner workings if you like, so I’ll try and discuss our processes as the months progress,  it’s not all seeing clients, drinking coffee and eating biscuits, although that’s my favourite part!


Market Movements 

The last month has seen considerable volatility and market movements predominantly as a result of inflation fears in the US.

Inflation is the hidden factor in financial planning, how much will £1 be worth in 20 years?  There is concern that inflation is rising but it’s too early to panic but markets have adjusted a few times as a knee jerk reaction.

It’s “as violent as a mugger, as frightening as an armed robber, and as deadly as a hitman.”  So said Ronald Reagan about inflation. This was back in the 1980s when the US and indeed the UK economy had been beset for years by rising prices and weak economic growth: stagflation, as it was called. Then followed a difficult couple of decades in which inflation was gradually brought back under control.

With inflation beginning to rise on both sides of the Atlantic, is it time, again, to dig out quotes such as the one above, will inflation become a big economic problem, all over again?

Well let’s begin with the UK, where the consumer price index – the main measure of prices, targeted by the Bank of England – rose from an annual rate of 0.7% in March to 1.5% in April.

This was the biggest month on month percentage point rise in well over a decade, but it remains below the Bank’s 2% target. And while the increase was perhaps a touch bigger than expected, it’s not altogether surprising: most economists expected a big rise.

In part this is evidence that the economy is beginning to pick up again, something we are also seeing from monthly economic growth statistics. More spending on household goods, on furniture and clothing helped push up the overall index.

Yet look closer and it’s clear not every sector is lifting prices. Services inflation rose only slightly between March and April.

They tend to rise when people start spending. The question is what happens next. Do rising prices prompt employers to lift wages, in turn pushing up prices further, and risking an inflationary spiral? Does everything stay under control? Both outcomes are quite possible.

But if prices continue to rise, it might in turn push the Bank’s MPC to consider raising interest rates sooner than most people expect (which is to say next year).

The US, on the other hand, may be facing a different situation. There, more fiscal stimulus from President Biden means the economy is operating even hotter than on this side of the Atlantic. The US CPI rate recently jumped to 4.2%.

And worldwide, with developed countries all planning trillions of dollars worth of investments in renewable energy projects to aim for net zero carbon emissions by 2050, demand is pushing prices of commodities to unprecedented levels.

For most of the past generation, inflation has been so low most people have forgotten the damage it can wreak if allowed to get out of control. It became a somewhat under-discussed topic.In the coming years, we are likely to find ourselves talking about it far more.

When we produce your financial plans we already factor inflation so we’re comfortable with the current situation but obviously keeping a watching brief.

How’s all this affecting things well it’s been bumpy.  The FTSE 100 slipped again this morning dragged down by heavyweight commodity stocks, while a bigger-than-expected jump in inflation stoked fears that the central bank may tighten its monetary policy earlier than expected.

The blue-chip index fell 1%, with miners declining 2.1% after metal prices slipped. Oil majors BP and Royal Dutch Shell slid more than 1% each. The domestically focussed mid-cap FTSE 250 index fell 0.4%.

Official figures showed British consumer price inflation more than doubled in April to 1.5%. The Bank of England hopes that the surge in inflation will be temporary as the economy recovers from last year’s COVID-19 slump.

A jump in regulated electricity and gas bills, and clothing and footwear prices pushed up the inflation reading. Prices charged by manufacturers also rose by 3.9%, while inputs prices increased by 9.9%, the most since February 2017.

“A successful vaccine rollout has paved the way for the reopening of the economy, and now consumers are eager to make up for lost time,” said Ambrose Crofton, global market strategist at J.P. Morgan Asset Management.

“Surging demand and supply bottlenecks were always going to lead to a jump in prices. The big question is how persistent these forces prove to be and judging by economists’ forecasts, the jury is still out.

Global stocks fell this morning with technology stocks under pressure and investors torn between worries over inflation and optimism over economies pulling out of the Covid-19 pandemic.

Markets are waiting on the minutes of the Federal Reserve’s latest meeting due later.

A weak day in Asia saw the Nikkei 225 drop 1.2% and Australia’s S&P/ASX 200 AU:XJO benchmark lose nearly 2%. The Stoxx Europe 600 XX:SXXP slid 1.3% to 437.15, with commodity and tech stocks driving losses.

Dow futures fell 200 points, while those for the S&P 500 and Nasdaq-100 futures were down 0.7% and over 1%, respectively. Major U.S. stock indexes finished lower on Tuesday, as enthusiasm over a strong batch of retailer earnings competed with concerns over lofty valuations and signs of some inflationary pressures. Weaker-than-expected housing data didn’t help.

“ Markets appear caught between concerns over rising cases and the spread of the India variant of coronavirus, and optimism over the so-called reopening trade, making it difficult to read the direction of the next move,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.

Global yields were also rising, with that of the 10-year German bund up 1 basis point to -0.08% and the yield on the 10-year Treasury note up 2 basis points to 1.6599%.

The minutes of the Federal Open Market Committee meeting of Apr. 27-28 will be released later on Wednesday, with investors looking for any hints the central bank could be considering a shift in its accommodative monetary stance.

Adding to worries over global inflation, U.K. data showed consumer prices rose 1.5% on the year in April, twice the rate of inflation reported in March, according to the Office for National Statistics.

Oil prices were also under pressure, with crude and Brent futures dropping 1% each. Those losses came after data from the American Petroleum Institute reportedly showed an unexpected rise in U.S. crude supplies, and amid reports of potential progress on Iranian nuclear talks.

Technology names were under pressure, with heavily weighted semiconductor equipment provider ASML Holding dropping over 2%. Shares of German business software group SAP fell 1.4%.

Shares of John Laing surged 11% in London, after New York private-equity firm KKR & Co. KKR said it has  agreed to buy the U.K.-listed infrastructure investor and manager for £2 billion ($2.84 billion) in cash.

Investors will get more earnings updates from the retail sector ahead of the open, with Lowe’s, Target and TJX all on tap. Multinational tech group Cisco and clothing retailer L Brands are among the names reporting after the close.

And Bitcoin prices were hovering just above $40,000, after dropping below that level earlier on Wednesday, following the People’s Bank of China’s warning that digital currencies can’t be used as payments.


Monthly Insights 

‘Wellbeing’ is such a big buzz word lately.  Mental wellbeing, physical wellbeing, social wellbeing. Well, it’s time to throw financial wellbeing into the mix too.

So, what is financial wellbeing?  In basic terms it’s getting control of your day-to-day finances; making sure you have financial security and financial freedom, not just for today, but for your future too.

It’s about ensuring the money you have is working hard for you, whether that’s investments and savings or your pension fund and that your outgoings are as efficient as they can be.

So, in a nutshell ‘financial wellbeing’ is about security, it is about knowing you are in the best possible financial position and feeling positive that you are making the right commitments for now, and tomorrow.

One of the biggest misconceptions is that financial advice is only needed later in life which couldn’t be further from the truth.  Once you are earning or especially when you are thinking of becoming a homeowner, you need to be making sure you are protecting your financial wellbeing.

Setting out in the world on your own, or with your significant other can be scary and money can be a great source of concern.  It is therefore so important to have peace of mind, and even better if it’s backed up by a professional.

All of this can seem daunting, especially when faced with lots of financial jargon.  That’s why we’re here to help and we work on a referral basis so if you know people who haven’t yet started on the same financial journey as you we’ll be happy to hear from them, feel free to share this link!

As you know our process involves holistic and bespoke planning, rather than a ‘one size fits all’ approach, but that doesn’t stop us giving you some handy tips that you could hopefully apply in your day to day lives and guess what there’s 3!

Know your budget
Before the month begins and that glorious pay check is paid into your account, do you know what your bills are and what you’ll have leftover roughly for some retail therapy, or to spare for a deposit on a holiday? Knowing how much money you have left over after all the bills are paid and you’ve done your food shopping can be liberating, and sharing your budget with your significant other can really make you understand each other’s circumstances too.
Tip: It’s a little old fashioned but it works! Write down all your outgoings, include any significant payments you have coming up (new car, holiday)?  Make sure you know the disposable figure you have left to play with each month.

It’s not a competition!!
Don’t concern yourself with what others earn. They might earn more, but how do you know their outgoings aren’t hitting them harder?  They may earn less, but maybe they’re still at home with Mum & Dad with the ability to ‘spend, spend, spend!’  Everyone has different priorities, and it’s important to remember that your self-worth is not measured by your salary. Comparing yourself to your friend who earns a bit more is not going to make you, or them, feel good.
 Spend some time on focusing on your own financial goals.  ‘Knowledge is Power’ and if you can fully understand what will make you feel secure money-wise, and what your end goal is, then you can set out a journey to get you there.

The rainy day fund…
How many times have you heard this phrase? I repeatedly heard it from my parents, but your parents (and mine) are right! You may think you can’t afford to save up for any emergencies, but I’m positive you absolutely can.  £10.00 a month even?  I resisted this for a very long time, turns out it is a crucial part of being a ‘grown up.’  More than anything, when you really need it for that car emergency or general unexpected expense, it is a fantastic feeling knowing you have accounted for it. Plus, it means you don’t have to miss out on the other plans you had for your money that month.
You should now have worked out what your disposable cash for the month is.  How much of this could go into your rainy day fund? Even the most minimal amount could help when you really need it.

So think about your own financial wellbeing and if you need us then get in touch.