Covid Returns!

Wednesday 22nd December 2021

In our article at the beginning of 2021 we had a positive outlook of Central Banks holding their nerve, a quicker move to Sustainable investing and finally how good the vaccine news had been with markets looking forward positively. 2021 has indeed been a good year for investors but we didn't expect the sting in the tail of Omicron taking some of the shine away on the path back to normality. This will undoubtedly dent seasonal revenues for retailers, and the travel and hospitality sectors, and we wait to see what impact Chancellor Sunak's new support measures will have.

Ironically Central Bankers' Christmas messages seem to be one of continuing the path to normality by phasing out quantitative easing and starting to raise interest rates. In the UK the sign had to be via raising rates as there is no money being pumped into the economy, unlike the USA where they are reducing the monthly allocation of money with expected interest rate rises next year. This tells us that Central Bankers see the current Omicron episode as short-lived and unlikely to have a material impact on the general upwards direction for economies around the world. Markets likewise initially fell, bounced back and are currently in a fear phase and going down again as they are starting to worry about more economic shutdowns. Politicians will have to assume the worst until science informs them of the actual impact on public health of Omicron, hence the media obsession of when, not if, we shutdown.

The hit to consumer and business confidence will be the key next year. If this strain of the virus is more contagious and less dangerous for most individuals (for whatever reason), it will be important for businesses that they can see the politicians acknowledging the evolution, and adapt accordingly. We may well be wrong but do see Omicron as a short term setback with better data on the 3rd booster jab's effectiveness; a variant that seems to cause less serious illness; the approval of an antiviral pill alongside improved scientific knowledge about Covid should mean even quicker medical answers to keep it at bay. One worry is the numbers of NHS staff who are currently ill, but there does seem to be waves of bugs and heavy colds which we think are probably having more of an impact than is reported on and would put a strain on the NHS regardless, at this time of year. There was a prediction of 100,000 covid cases a day in July when we opened up that never got close to materialising. Now it's 200,000. Let's hope the prediction is again wrong.

We think the outlook is for economic growth to continue which in turn leads to increased Company profitability, this will however be selective, with those Companies embracing technology and environmental changes at the forefront. Share prices won't make the double digit returns they have over the last 2 years and will be more volatile as the economic growth to an extent catches up with the share price growth we have seen.

Bailey Cook

We decided to continue with our Christmas Event a couple of weeks ago feeling that our clients all had their own views and common sense to decide if they would like to attend. Ironically a number were ill, but as mentioned already, not due to Covid, but with some pretty horrible bugs and colds. Indeed we think one of the consequences of being so guarded over the last couple of years is our immune systems being too protected from general bugs so when they do come, they are more severe. Despite the horrible weather it was an excellent evening that flew by, being a great venue and a big thanks to Nibbled our caterers who were excellent looking after everyone.

We look forward to welcoming clients to our bigger event and seminar at Longleat on the 12th May 2022 and in particular that it will be a new variant free environment.

We are disillusioned, as indeed think you all will be, with the constant media led doom and gloom. It made us think of producing some more regular, shorter, good news bulletins that we hope you will enjoy. A lot will focus on the most important follow up actions from COP26 and the climate changes that are so desperately needed.

So we end the year with some good news:

• China will plant 36,000 square kilometres of new forest (more than the size of Belgium) every year until 2025 as it bids to combat climate change and protect natural habitats. (source Reuters)

• Portugal has shut down its last coal-fired power plant, 9 years ahead of the 2030 target. It is the 4th country in the EU to stop burning coal - Belgium did so in 2016 and Austria and Sweden in 2020. (Source AP)

• And finally some fantastic vaccine news in England that the HPV vaccine has reduced cases of cervical cancer in young women by 90% since 2008. Cervical cancer kills more than 300,000 women around the world each year but the number is set to fall dramatically, with over 100 countries now using the vaccine as part of a global plan to eliminate the disease. (source BBC)

We look forward to seeing you next year and wish you all a Merry Christmas and a healthy and happy 2022.