David Cowell: “British exporters should be making hay (or at least silage)…”

by | Dec 2, 2016

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British exporters should be making hay (or at least silage):


The next ECB Council meeting is on the 8th December. We had expressed caution that at some stage the ECB would have to taper. Although we do not expect them to announce it in December, Draghi will have to begin getting his message across that at some point the ECB would no longer need to buy €80 billion per month to have the same effect. Having seen such a rise in rates, especially for the periphery, we think that Draghi should use the press conference to reinforce the current policy by announcing another six month extension to the programme to the end of September at least, which would be an uplift of €480bn to their balance sheet. But who knows?


I did think that at my advanced age, nothing would surprise me. I was however wrong. I read in the Times that 25,000 vegetarians and vegans have signed a petition demanding that animal fat be removed from the composition of the new £5 note. I must admit that I didn’t know that veggies and vegans ate £5 notes. Education is a wonderful thing.

For years, the financial services industry has seen dividing lines blurred when it comes to IFA contracts. The Uber case has opened quite a can of worms. IFA employment status classification will depend to a large degree on the amount of control that the organisation has over the individual when they are carrying out a job. A self employed financial adviser accepting client leads and servicing, while exclusively acting as an authorised individual for that particular firm, and which in turn provides support, pays regulatory fees, collects and pays out income, and assumes all regulatory responsibility for their actions, is more likely than not to be deemed an employee. With the HMRC looking for as many ways as possible to get people onto PAYE, it’s only a matter of time before they produce an employed assessment for some poor adviser and/or network. What price semi-independence?

The BoE stress tests revealed three banks that had some capital inadequacies under the stressed scenario, however neither Barclays or Standard Chartered were required to submit a revised capital plan to the Prudential Regulation Authority (PRA). Only RBS was required to improve its capital plan as it failed multiple hurdles of the test. This is Prudential regulation?


Barclays is also overhauling its stockbroking arm with the launch of a direct-to-consumer platform which will combine savings, current accounts and investments. The Financial Times reports existing Barclays Stockbrokers customers will be transferred to the new service, Barclays Direct Investing, next year. Another reorganisation? Barclays investment customers must be getting dizzy.

Pimco has agreed with the SEC to pay $20 million to settle charges that it misled investors about the performance of one its first actively managed exchange-traded funds (ETFs) and failed to accurately value certain securities. According to the SEC, Pimco’s Total Return ETF gained popularity with investors in its first four months, having launched in February 2012, due to performance based on buying smaller-sized bonds, known as ‘odd lots’. However, the regulator said that in monthly and annual reports to investors, they provided other misleading reasons for the ETF’s early success and failed to disclose that the resulting performance from the ‘odd lot’ strategy was not sustainable as the fund grew in size. Do you have the capacity to perform due diligence to this level before choosing passive funds?

The second round of the French elections will be between Fillon, who is essentially a Gaullist, and Le Pen of the Nationalist party. Hence, last weekend’s vote is seen from a market perspective to be a better outcome as Fillon seems to be in a better position to defeat Le Pen than the other candidates. His right of centre stance (he is said to be a fan of Thatcher) will be more market-friendly and his recent rhetoric indicates he has been observing the protest votes and is more likely to strike a chord with middle-France, the very voters who will be looking for change. The shock news that Hollande has pulled out of the Socialist race could mean that the left is somewhat in disarray. We remain focused on the forthcoming Italian referendum as it seems likely that the ‘lumpen proletariat’ will vote for no change, resulting in Italy disappearing down the hole in the middle. Beppi Grillo has said that he would take Italy out of the EU or at least out of the euro. With a ‘no change’ vote, they will have to leave the euro or go bankrupt. Leaving would mean that they could go back to their old ways of hiding behind devaluation of the lire.


The Maître-D in a rather posh restaurant was overheard whispering to one of the new waiters who was about to serve a poorly dressed couple, “Let them try to pronounce their order then tell them it’s off.”

Have a good weekend.

David Cowell, Director, Myddleton Croft Investment Managers



Leeds, 0113 274 7700



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