Herewith my letter. There is much more I could have added but letters have to be brief. Of the UK bank lending to business, over 80% is for construction with over 80% of that construction being in London and over [...]
In the summertime when the FTSE 100 is fine, it can stretch right up and touch the sky…
The performance of the FTSE 100 share index appears to be fine so far after the UK’s Brexit vote, to paraphrase Mungo Jerry’s 1970 hit ,” In the summertime,” before the UK joined the EU, with global investors seeing US and other major indices rise too.
However, you need to temper that with a substantial fall in the value of the pound sterling, usually good for exporters yet less so for domestic orientated stocks like Lloyds Bank PLC. Nevertheless a rally from below the 6000 levels immediately to above 6700 at the end of July and the UK economy recording 0.6% GDP growth in Q2 2016 steadies the nerves a bit. The more domestic focussed FTSE 250 is nearly back at post-Brexit levels too. Almost too good and benign to believe.
For how long- who knows? Let’s hope the new Prime Minister Theresa May and her post-Brexit cabinet make a decent fist of the negotiations to follow the Brexit decision. I think it will be quite a tussle with questions over 2nd referendums in Scotland with a UK break-up possible, borders controls, immigration, and avoiding a plunge in demand all to the fore in the coming months.
However, hope springs eternal for now. Time to enjoy the summer with the forthcoming Rio Olympics, the Edinburgh Festival and the family holiday or whatever takes your fancy. Mind you I have increased my cash positions from 8% to over 14% of my portfolio just in case storm clouds gather while I’m at the Edinburgh Book Festival.
Themes for late summer and the coming Autumn try post Turkish-coup President Erdogan and Russia’s Putin becoming firm allies and the bruiser of an election really kicking off now in the US added to the US Federal Reserve ever pondering the next rate hike.
There’s as ever plenty more to thrills and spills come so enjoy the hot days of summer….