Your news update May 2019 - Now, for tomorrow - MHA Carpenter Box
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ADVISORY TAX ACCOUNTS AUDIT WEALTH
Your news
update
May 2019
Now, for tomorrow
Introduction
Welcome to our May Newsletter.
With Spring in full swing, let’s enjoy some fun facts about May before heading into the monthly
news. The month launched with May Day, celebrated in England for over 2,000 years and traditionally
involving morris dancing, crowning a May Queen and dancing around a maypole. In 1545, a 100 foot
high maypole was constructed; this was later purchased by Sir Isaac Newton to prop up a telescope…
that’s Renaissance recycling for you!
In the world of finance, the Bank of England has raised growth forecasts to 1.5% for 2019 and is
keeping interest rates at 0.75%. The bank is also expecting house prices to fall by 1.25% due to Brexit
uncertainty. The government is also on the lookout for a new bank governor and is hoping to secure a
name this autumn, as Mark Carney will step down next on 31st January 2020.
Let’s enjoy the rest of Spring then with a couple of in-depth reads. We hope you enjoy this month’s
content.
Roy Thompson DipPFS
Head of Department
MHA Carpenter Box Wealth Management
E: roy.thompson@carpenterbox.com
www.carpenterbox.com/wealth 2
United
Kingdom
Industry
The Organisation for Economic Cooperation and
Boots warned of possible stores closures and Development (OECD) confirmed that the UK is
Debenhams announced 24 stores that would the leading destination for foreign investment
close next year – which you suspect will not be in Europe, and the third most significant in the
the last of their closures. world behind the US and China.
Against that Tesco lifted its dividend to
shareholders as profits rose 30%, and sales
surged at Primark. The Sainsburys/Asda merger Perhaps the most encouraging news came from
was blocked on competition grounds and the Organisation for Economic Cooperation
shopper numbers for March were up on last and Development (OECD) which confirmed
year – although March last year was the month that the UK is the leading destination for
of the ‘Beast from the East.’ However, shoppers foreign investment in Europe, and the third
remained cautious with their spending: it will be most significant in the world behind the US and
interesting to see what the figures for a late, very China. According to the OECD the UK held more
warm Easter reveal about high street spending. inward investment stock at the end of 2018 than
Germany, Spain and Poland combined.
Away from the shops and in the factories UK
manufacturing hit a 13 month high, largely Market
on companies stockpiling to protect against
a no-deal Brexit – which seems to be looking So was the FTSE-100 index of leading shares
increasingly unlikely. cheered by this news? Yes it was. The FTSE
ended April up 2% at 7,418. The pound was
Economy virtually unchanged against the dollar and
closed the month at $1.3041.
UK car manufacturing was down for the 10th
straight month, mirroring the problems which
the car industry is having in Europe. House price
growth was also at a six year low and London’s
Crossrail project could now be delayed until
2021.
But there was plenty of good news as well, with
unemployment falling by a further 27,000 in
the three months to February and the economy
beating expectations to grow at 0.5% in the first
quarter of 2019.
www.carpenterbox.com/wealth 3
Brexit and
Europe
Brexit
Meanwhile the forecast for German growth in
April brought us the news that Brexit has been 2019 has been slashed to just 0.5% – roughly
delayed perhaps until 31st October – which is, of a quarter of the level the German Government
course, Hallowe’en and was a predictable gift for was predicting a year ago. As Europe’s car crisis
the headline writers. continues to worsen in the face of driverless
vehicles and the end of the internal combustion
With the original deadline of 29th March having engine, these are nervous times for the economy
been pushed back to 12th April the longer which effectively powers Europe.
delay was agreed after Theresa May once more
failed to get her Withdrawal Agreement through On the political front, Spain held its third
parliament. As we write she is – to the fury of election in four years, which resulted in victory
the Conservative grassroots – in discussions for the Socialist party of Prime Minister Pedro
with the Labour Party in the hope of an even Sanchez. However they only polled 29% and
more watered down Withdrawal Agreement will need partners to form an effective coalition
being passed by the Commons. government. The most significant development
was the 24 seats won by the right wing, anti-
We will know a lot more by this time next immigration party Vox – the first time a far-right
month but – as always with Brexit – it is almost party has won seats for decades.
impossible to predict what we will know.
Away from the ballot box and on the stock
Europe markets the German DAX index was up 7% in
April to end the month at 12,344. The French
As we will see below, both the major European stock market was up by 4% to 5,586.
stock markets enjoyed good months in April.
But look below the surface and the month which
brought the Notre Dame fire also brought some
worrying straws in the wind for the French and
German economies.
French President Emmanuel Macron has finally
agreed to cut taxes in response to the Yellow
Vest protests but, worryingly, France is very
firmly on course to overtake Italy as the world’s
fourth most indebted country, with its public
debt now just a whisker behind its southern
neighbour.
www.carpenterbox.com/wealth 4
United
States
Industry Market
April in the US got off to what now seems to On Wall Street the Dow Jones index enjoyed
be the normal start to the month, as Facebook a good month, rising by 3% to close April
reported another ‘data breach.’ Only ‘millions of at 26,593. All eyes now turn to the eagerly-
user records’ though, so nothing to worry about. awaited stock market debut of Uber, which will
begin trading in May. Expectations are that
Speaking of big numbers, Jeff Bezos, boss the company will be valued at around $90bn
of Amazon and the world’s richest man, got (approximately £70bn) although the company is
divorced. The settlement to his ex-wife was an now warning that it ‘may never make a profit.’
eye-watering $35bn (roughly £27bn). It says
much for how Amazon has performed recently
that this still leaves Jeff Bezos holding his
title as his modest little company comfortably
announced record figures. Net income for the
first three months of 2019 more than doubled to
$3.6bn (£2.76bn).
Economy
In the wider US economy the month had got off
to a good start as 196,000 jobs were added in
March – ahead of expectations and well up on
the disappointing 33,000 jobs in February. And
there was more good news later in the month
as the US trade deficit continued to shrink as
exports to China rose, and it was confirmed that
the US economy had grown more quickly than
expected in the first quarter of the year, growing
at an annualised rate of 3.2% which was well
ahead of analysts’ forecasts.
www.carpenterbox.com/wealth 5
Global
Far East But it was Japan’s Nikkei Dow index that led
the way, posting a 5% rise to end the month at
April got off to a good start in the Far East with 22.259.
the news that Chinese factory output had picked
up in March, perhaps reflecting the steps which Emerging Markets
the Chinese Government had previously taken to
boost the economy. In what may well be a sign of things to come our
first story in the Emerging Markets section of the
The Chinese equivalent of our Purchasing Bulletin comes from Africa. April saw Jumia –
Managers’ Index rose to 50.8 in March from 49.9 dubbed Nigeria’s version of Amazon – become
in February – with any figure above 50 indicating the first tech start-up from Africa to float on
that the economy is expanding. Official Wall Street, with the company valued at $1bn
manufacturing figures also pointed to a jump in (£770m).
activity, and the positive news was confirmed in
mid-month as figures showed that the Chinese Meanwhile voting is underway in India, the
economy had grown by 6.4% in the first three world’s biggest democracy. The polls opened on
months of the year, ahead of expectations of 11th April, with current Prime Minister Narendra
6.3%. Modi likely to win again. The campaign has been
dominated by jobs, as India’s unemployment
We have written previously about China’s rate continues to rise: some estimates suggest
massive ‘Belt and Road’ project which will see it that the country needs to create 8-10m new
extend trade and influence through much of Asia jobs a year to tackle the problem. Whether
and the developing world. The infrastructure this is possible in an age of AI and increasing
project aims to boost China’s global trade links automation must be open to doubt.
and it was being heavily promoted to developing
world leaders at a summit in the last week of Also open to doubt is whether anyone in Russia
April. It is fair to say that the $1tn (£775bn) will be able to go online without Vladimir
project is not without its detractors – with the US Putin’s permission. All the stages have now
in particular critical of China’s ‘debt diplomacy’ been passed for Putin to sign the controversial
– but as long as Xi Jinping is in power we can ‘sovereign internet’ bill into law, which will give
expect the ‘Belt and Road’ initiative to hold sway. the Kremlin wider control of the internet and
which critics describe as a form of censorship.
Despite all this China’s Shanghai Composite
index was the one market that barely moved As far their stock markets went, all three major
during April. It dropped back just 13 points in Emerging Markets saw very slight gains in April.
April to 3,078. There was though, more positive Both the Indian and Brazilian markets rose by 1%
news from the other major Far Eastern markets. to 39,032 and 96,353 respectively. The Russian
The Hong Kong index rose by 2% to 29,699 while market was up by 2%, closing the month at
the market in South Korea was up 3% to 2,204. 2,559.
www.carpenterbox.com/wealth 6
In other
news
Robot cleaner
A Japanese firm has invented a robot which tidies a child’s bedroom.
We are not experts in artificial intelligence, but it appears that tidying your son or daughter’s bedroom
is a much more difficult job than navigating a driverless car around a busy city.
Robots are good at repetitive jobs – and they never get bored. So if you take a job like welding a
car chassis in a factory, doing the same job day after day after day, a robot will be far superior to a
human. But where robots struggle is with chaos – patterns that are not orderly. And what could be
more disorderly than your child’s bedroom?
But in a basement in Tokyo, a tech start-up is trying to fix that. Preferred Networks are applying
machine learning and AI to ‘disorderly situations.’
Essentially, it is the same technology that will be in driverless cars – but what the robots have to do
here is identify every object. Is that really just a piece of crumpled paper, or is it your child’s latest
masterpiece? Are those underpants meant to be on the floor? And what about all these discarded
sweet wrappers…
Talk to us
Should you have any immediate concerns about how these market movements affect your
finances, please contact us on 01903 534587 or email wealth@carpenterbox.com
Follow us on Twitter: @carpenterboxwm
www.carpenterbox.com/wealth 7
Worthing Gatwick Brighton Contact Us Amelia House 2 Peveril Court The Projects E: wealth@carpenterbox.com Crescent Road 6-8 London Road 8a Ship Street Worthing Crawley Brighton W: www.carpenterbox.com/wealth BN11 1RL RH10 8JE BN1 1AD T: 01903 534587 T: 01293 227670 T: 01273 043678 MHA Carpenter Box is a trading name of Carpenter Box Limited, a limited company registered in England under company number 02360917. Our registered office is: Amelia House Crescent Road Worthing BN11 1RL where a list of the directors’ names is available for inspection. Registered to carry on audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales. Registered with the Chartered Institute of Taxation as a firm of Chartered Tax Advisers. MHA Carpenter Box Wealth Management is a trading name of Carpenter Box Wealth Management LLP which is authorised and regulated by the Financial Conduct Authority. FCA Registration No: 489484. Carpenter Box Wealth Management LLP is registered in England and Wales Company No. OC 338257. The registered office is Amelia House, Crescent Road, Worthing, West Sussex BN11 www.carpenterbox.com/wealth 1RL. The FCA does not regulate tax advice. 8
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