Goodbye Sir Keir, hello tomorrow. Sadly, I fear he won’t be missed greatly and with negligible legacy to remember though we must recognise that any such change creates opportunity for uncertainty. It may seem that a certain new MP is crowned without competition.
We can then only hope he will have better economics than the Administration preceding him – and control over uncooperative MPs and cabinet ministers who do not see the writing on the wall themselves. We must all hope the future is better than what has gone before and with a better economic settlement to stimulate growth, lower taxes, lower welfare and public spending and a strong position as seen from overseas.
Well, we’re home now and with plenty of interesting reflections of myriad forms to ponder, including how the economy in Australia is managing to fund everything it does too (excessive overspending and borrowing it seems – sounds familiar).
We didn’t see Koalas in the wild but saw many other iconic rarities including crocodiles and Southern Cassowaries in the oldest tropical rainforest in the world. We enjoyed a spot of whale watching from North Stradbroke Island (well a tail and some spurts at least!). I did espy a nice Grey Huntsman under some bark and some Spiny Ants which I disturbed inadvertently and which then vibrated their bodies to waft signals to their colleagues to come to defend the colony – as well as puffing their acid in the direction of the intrusion.… I’ve tried a Moreton Bay Bug and had a Kangaroo Burger, the former an endeavour to encourage a necessary sustainable population, as culling is necessary to contain numbers and thus their damage…
Global conditions
As the Ukraine War continues and now exceeds the length of the Great War (ignoring the earlier Crimean succession), the US had something of a wobble as inflation rates there are projected to exceed 4%. The new Fed man has warned that US rates are not falling anytime soon and that they may need to rise – resulting in a little new strength for the Dollar. The UK has held rates too. I shall repeat my ‘cause and effect’ comments – an over-priced US stock market will fall and then look to label reasons for such a movement.
Maybe the flotation of Space-X which ‘apparently’ secured interest at four-times the amount of stock on offer will be the portent not for further colossal gains in ‘US Tech’ but for a correction, as the world’s largest ever capital raise signals the peak. Interestingly this is for a company which has only made losses, so far, on relatively small sales – only started as fact – not cynicism!
After all, investment textbooks will remind executives that ‘equity’ is the most expensive capital… and the time to raise that is when the ducks are quacking – as surely they have been presently. When ‘investing’ like this is simply a gamble so disconnected from the daily reality, it is wise to take note and not simply keep enjoying the party in the ship’s upper ballroom (yes, just one more drink please waiter!) as the unknown, unseen iceberg lies ahead. Indeed, our two giant AI friends have filed for listing too and with rumours of £200billion of capital being raised.
It’s going to make the US tech bubble (and as a percentage of total market capitalisation of both the US and the world’s) even more out of kilter. People need to remember the difference between investment and the casino – it’s great to win on a speculative bet but not being there when reality prevails again. Remember Zoom and Peloton and more recently Palantir which were all darlings for a while? When the Bellhop is playing with stocks it is likely to be time to avoid what he’s tipping… my gosh, then there were ‘day traders’ and some seem to be back…
Meantime here at home the UK economy contracted by 0.1% – not something the Government has lauded, oddly enough. Monthly borrowing needs have exceeded expectations too – and with interest costs half as much again as only a year ago – reaping the burden of excessive welfare and public spending as growth has been impacted and tax revenues weaker as a result.
Meanwhile the not especially well-respected Bank of England Governor suggests our economy is perhaps 6% lower than had we stayed within the EU – this is highly arbitrary and is an unproveable figure even though it remains ’early days’ and what so many fail to understand is that the vote was not all about instant economic benefit to ‘us’ regardless – much more besides. I do hold, though, that the UK has failed to take advantage of some of the freedoms which Brexit created and which would have helped economically. Meantime, the Bank continues to suggest that its Quantitative Easing programme has remained neutral for the UK taxpayer – despite the colossal losses it has incurred by selling-off very dearly-bought gilts at much lower prices…
An interesting day of by-elections too. Conservatives romped home in Aberdeen with a colossal majority and the first Westminster by-election win for them in Scotland since 1967, SNP held Arbroath (not unexpected but where was Labour – down 18%?) and Andy Burnham took Makerfield. For the latter, Reform didn’t perform as hoped as many voters wanted Sir Keir Starmer out more than wanting Reform. I suspect the mayoral election there will see Reform romp home… We must not forget (as Labour pundits did) that the seat was only vacant to give Mr Burnham an opening to challenge the leadership, not at all an endorsement for great Labour policies and their implementation… time to buy YouGov shares maybe – they are cheap enough now, after all!
Gold
Over the last few weeks we learnt that of central banks global reserves, gold exceeds the more recent ‘best’ asset – US Treasury Bills. Figures of 27% versus 23% are quoted but of course the values gyrate and things change but two things are valid there. One, that gold has rocketed in price (before being down nigh a quarter since its peak) and is unlikely to rocket much more and maybe US Treasuries are fairly enough priced but if you are a despotic nation, do you want to hold an asset that may be frozen or sold from under you when you might need it? The world’s a different place to what it was a few years ago.
Remember too that nations’ gold reserves (well, apart from Gordon Brown’s less-gold UK) have risen in value lots – not ‘just’ from extra purchases but even then, such nations are holding the gold at home and not in central reserves like in the UK or the US as they can’t be trusted by them the same… Gold bulls point to further central bank purchases to help support the price but they need to remember that as the price rose, so the values of the colossal reserves they maintain already held have risen too – so less is needed in the future perhaps.
The butterfly effect
An early warning but if you are in the area, we are opening our garden on Saturday and Sunday 8/9 August from 10-4pm for Butterfly Conservation. That’s at www.trimstone.co.uk. It’s simply a £5 donation to BC and children free. More details to come!
The regulatory, consumer duty and client cash
Rathbones, incorporating Investec’s wealth business and managing assets over £110billion according to its latest figures (apparently the UK’s largest discretionary asset manager), will have sent a chill through the investment management industry. The ‘public’ will need to read between the lines in terms of ‘what has happened’ but it is not the last of the large firms which has had what could be considered as quite penal impositions against it and its business. Some might believe excessively so perhaps but that is opinion which few regulated businesses would dare to raise.
Those of us in the industry also wonder why many other big businesses (like the banks) still seem to act with impunity insofar as the Consumer Duty rules are concerned and their own practices. Other industries (like law and accountancy) would also do well to heed the implications where it seems Rathbones were not undertaking adequate precautions when accepting business from those demanding ‘Enhanced Due Diligence’ – we don’t ‘know’ exactly what or why but this could be prospective money launderers, politically exposed or sanctioned individuals and so on and don’t forget, the former includes tax evasion, both at home and globally.
It has also changed its position on retaining interest on client cash balances. We don’t – we distribute whatever we receive – however small. On the ‘other’ – yes, we are subjected to the same necessary regulations and rules but can confirm we don’t operate in the worlds in which they do either but yes, occasionally reportable issues for people do arise I am sorry to say, even if they are not liabilities or defaults as such but the Firm can be penalised not only for issues which could have arisen but also by demonstrating failures in its monitoring, considerations, reporting and so on. The penalties are in many ways worse for having inadequate provisions than for ‘bad’ things which may have happened – and that covers the whole regulatory morass now.
Mr Woodford
The FCA is pursuing Mr Neil Woodford and his UAE business for providing regulated activities whilst banned, despite Mr Woodford saying and publicising categorically that his activities are not regulated activities… will fur fly or facts be clear but incidentally, what’s the difference between unregulated guidance and formal regulated advice? Answers on a postcard please as it is not clear at all… Mr Woodford is reacting to this ‘regrettable’ position and notes that the firm has been in discourse with the Regulator for months…
What is curious too is that recently it was noted that the FCA cannot regulate unregulated businesses… all about the ‘regulatory perimeter’. I hold that it does have a regulatory obligation to police unregulated activities, in full… add to that that the Advertising Standards Authority has recently taken five gold firms to task for not noting that past returns might not be an indicator of the future and investors are not protected and have no regulatory recourse, after attacking some whisky investment schemes earlier. Is it becoming the FCA’s bolt-on regulator and teeth for non-regulated ‘schemes’?
Good news/bad news
Well, the Tate and Lyle takeover prospect is turning into a reality and another useful uptick in price for investors – so healthy news! SDCL Energy Efficiency Trust (another of the infrastructure entities concentrating on green energy) has slumped further as it cuts its latest dividend to conserve cash.
Saba has continued to add to its stake – if the underlying assets are worth the valuation then the shares are an even better steal than they were. Frustratingly we started buying too soon but shall continue… that said, our recent foray into Foresight Environmental has been rewarding despite its drop in income – so it’s not all bad news from the sector though short-term, that large Trust’s shares were sorely under-priced. I feel for ‘green’ investors who bought these things at the start, on promises of ‘ethical’ benefits. Incidentally, we are told SpaceX failed the MSCI ESG review on myriad criteria, scoring the lowest possible on ‘environmental, social and governance’ issues…
Taxing matters
A partner at UHY Ernst Young notes that HMRC is prioritising ‘enforcement’ against help to taxpayers (aside from Angela Rayner it seems… hmmm!). That is quite disturbing and at a time when more people are falling foul of new tax rules, late Self-Assessment filings and penalties and the new Digital Tax burden which is going to hit hard the self-employed and those people with property rents. This is also based upon the two-thirds’ rise in complaints to HMRC about errors and delays in the service. Apparently, the average telephone call waiting time for 2025/6 (as at February) was over 13 minutes… I cannot even consider a service – whether public or private – being able to feel that that is somehow ‘acceptable’.
I think all I’d say is contact a professional, sensibly priced tax adviser to help you as they may well be able to answer the queries and concerns better and more quickly and hopefully with more dynamic assistance to the issue too. Yes, it may cost you a few hundreds each year but the saving and peace of mind can be invaluable and that is before the guidance and advice hopefully to recoup far more in value over time too – at least that is one of our core objectives with our Tax Service which is available – please enquire.
I’d also like to see every public organisation, including the NHS, being obliged to have an email address and to respond to enquiries likewise. Yes, disingenuous and ‘problem’ messages and enquirers need to be filtered but otherwise, it is wholly unacceptable not to have such contact point. Even big private entities which don’t promote an email facility are not providing the service they should be doing. Please take it from this that yes, we answer the telephone and we acknowledge emails within days (hopefully addressing most enquiries promptly too aside from the more detailed of course).
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers
