This quarter the focus is on the US election, Brexit, and the virus.

When we look at the US Election the polls seem to indicate a Biden victory, but as the voting system (Electoral College) favours the Republican party, we should not rule out a surprise.

If we consider Brexit, we are experiencing brinkmanship, and no-one can guess the eventual outcome, but it should mean an end to the “uncertainty”, whatever happens.

Finally, the virus. There are significant positives; we now have at least 10 vaccines in stage 3 and there could be some results by the end of October /early November. We now know a lot more about how to treat the virus compared to six months ago however, in the Spring politicians and scientists pulled together whereas come Autumn, this is no longer the case and we are bombarded by constant bickering.

I recently heard this cheerful thought:

Chris Kirk-Blyth of Manchester looks at Sir Patrick Vallance’s projection of 50,000 Covid cases a day by next month:

“Applying exactly the same method, the entire population will have had COVID and 11.5 million will be dead by Christmas Day. Shortly after New Year’s Day, all human life in the UK will have ended. Merry Christmas Everyone.”

Taking this a step further I would recommend the Speech from Andy Haldane called “avoiding economic anxiety” and he states:

“This filtering of good news, and accentuation of the bad, is a familiar pattern of human behaviour at times of stress and uncertainty. Psychologists call it “catastrophizing” –discounting the best and fixating on the worst, whatever the balance of risks.”

The purpose of all my blogs over the last few months is not to provide opinion but share thoughts from others who have wider insight to the world around us. We think this is the right approach as too many people have suddenly become experts, which is exhausting!

Invesco – Economic Views


  • Clearly not out of the woods yet, could be to do with more testing, but hospital admittance levels are rising
  • The UK is not alone – Europe, US and some EM countries are struggling
  • Impacting recovery across those economies where the virus is coming back
  • They believe there are 10 vaccines in third stage (different to JP Morgan) – 5 in the US and Europe, 4 in China and 1 in Russia
  • Super forecasters believe 10% of the US population will be vaccinated in the first half of 2021, most consumers believe there will not a vaccine before the end of the year. Interestingly, a large proportion of consumers in the West would not want the vaccine, whereas in Asia and China nearly 100% are willing to be vaccinated
  • There are significant pre-orders of the vaccine across the globe


  • Global recovery is running out of steam and the UK is seeing some of the sharpest declines especially in the service sector
  • August data was poor, only helped by the ‘eat out to help out’ scheme. The service sector is still 79% below February levels, whereas construction is down just 6%
  • Unemployment is expected to rise to 7.5% before the end of the year, not helped by the waning support from the Government for the economy which will impact growth
  • Biggest underperforming areas are energy and financials. Tech globally has outperformed energy by 73%. In the UK, energy has underperformed global energy by 15%, and financials have underperformed global financials by 25%. UK Financials like Lloyds and NatWest have been hit by the domestic bias, low and potentially negative interest rates, a weak economy and Brexit. HSBC has been hit by the relationship with China and the US/China dispute
  • Outlook returns for a 60/40 split of equities and bonds in the UK is expected to be around 4.6% return on equities, and 0.8% on Government Bonds in 2021 and then this to decline and by 2029 to be around 2.5% for equities and 0.1% for Government Bonds. To get returns investors will need to go up the risk scale
  • No deal Brexit would be a disaster for the UK, and they think the pressure is on Boris to get a deal. The deadline has now moved to the end of the month/ early November. Only thoughts are that one day we will not need to worry about Brexit


  • National polling now showing Biden with a 10% lead, and the betting average is significantly favouring Biden
  • Key states are Wisconsin, Michigan, and Pennsylvania and these all favour Biden but are very close
  • Increasing chances of a clean sweep with the Democrats taking a 52 / 48 majority in the Senate
  • Evidence from the past shows that any increase in tax will have little impact on the markets
  • Global markets seem to be pricing out post-election volatility, an approved stimulus package and a Biden victory and currently seem less concerned about the virus but what the market seems to really want is a vaccine   

JP Morgan Guide to the Markets

Vaccine news

  • There are now 12 vaccines in stage three trials with results potentially due at the end of October or early November
  • Governments have already ordered supplies and could start using once approved


  • The market does not want a protracted and disputed US election result
  • Markets seem to be favouring a Biden victory where they see a broader spending package, and polls seem to be supporting this view  
  • A vaccine and a clean sweep by Biden would be interesting for markets


  • Weak economic data in August shows the UK as the laggard across the main global economies
  • Worries about unemployment which is likely to increase significantly in the coming weeks

General global economic views

  • Manufacturing PMI data still shows a recovery, but the service sector is dropping back and likely to take some time to recover
  • Unlike the UK, Europe and the US are seeing better employment data
  • US Growth and China have been the big winners, the big loser is the UK and then the Eurozone and US value
  • China is now back to previous growth trends
  • In terms of a market bubble things to consider:
    • Interest rates are at near zero and these positively impact valuations of companies
    • Many companies are doing extremely well – they are growing, they have significant cash flow and there are no signs this is changing. If we consider many people shop online, they talk on Zoom and they game online
    • Microsoft is now nearly the same market cap as the total FTSE 100 and generates $1 dollar of free cash flow for every $3 dollar revenue
    • When we consider Tesla against the Big 6 auto firms, they have a clear lead in software, battery technology and electronic vehicles. The big 6 have not grown or developed for ten years plus
  • Considering value, it is worth remembering that energy is now competing against lower oil prices and a shift to renewable energy, and financials are in a world of low or negative interest rates which is negative for margins. These are the biggest element of value and we can see why value is out of favour across the global market
  • Emerging markets and especially Asia and China are leading in their exit from this crisis

BMO Global Asset Management – Responsible Investment Series

Why – Investors

  • Multitude of challenges that are facing the world – for example, need to consider how we travel around the world, and how products and services are distributed in a more efficient and sustainable way, thinking about a cleaner future and tackling areas like water scarcity
  • Different options including exclusionary (i.e. certain things like tobacco are excluded), but sustainability is at the heart of where society and the environment is heading
  • Investor demand is there and growing. There is the desire to align investments with values, and ensuring that capital is used as a voice to make change happen
  • Changes over the last ten years are now showing that investing in the right companies does reward investors 

Why – Companies

  • Environmental, social and governance (ESG) is fundamental for both business risks and opportunities. Companies cannot ignore them. COVID-19 is a good example of the social element and how companies treat employees. If companies treat them badly it has an impact on their brand, and how staff respond to clients
  • Companies that are fully engaged with responsibility tend to be growth and quality companies, and they are in the space that is part of a theme that will just grow and grow. There is evidence that these companies tend to perform better than their competitors  
  • HM Govt Survey showed that 2 in 3 people think financial institutions should avoid investing in companies that harm people or the planet. Millennials are twice as likely to think they have a social responsibility to ensure their pension is invested ethically
  • There is evidence that companies not engaging in ESG are now being outed (i.e. making the wider world know)

Other thoughts

  • Some areas to consider are changing regulatory landscape (Financial Sustainable Growth (Action Plan), and Draft Amendment to MiFIDII), UN 17 Sustainable Development Goals and Paris Climate Change Agreement
  • Research shows that responsible investments outperform conventional funds 76% of the time
  • Record inflows into responsible investment funds during 2020
  • Investment without engagement is irresponsible investment

Rathbones Economic Outlook


  • You need creative destruction within economies for them to develop and grow
  • The US is struggling to agree any follow up support package, and this will remain unresolved until after the election
  • The polls still point to a Biden victory, but they do not think Biden will get a clean sweep and that Trump could win
  • They do not see a tech bubble because the fundamentals are there
  • They do not think negative interest rates will be good for the UK, but they think they will come
  • They are negative on the outlook for the UK even without Brexit due to the response and dealing of the COVID crisis
  • They believe Boris will step down within the next few months


  • We are seeing a second wave in France, Spain, and the UK although, we are coming from a low base and potentially increased testing might be distorting things
  • The UK’s problem is that we are struggling to live with the restrictions imposed – i.e. the idea of wearing a facemask, who we can meet, the number of people we can see and the hygiene element
  • Whatever happens with a vaccine we will live with this for some time. The key thing to watch is hospitalisations and fatalities

Jupiter Economic Outlook

Economy and Brexit

  • We are starting to move forward economically but there is a difference between the manufacturing and service sector
  • Consumer confidence in the UK is falling slightly when you look at the real time data, like traffic congestion etc
  • The replacement scheme in the UK is much cheaper for the government but likely to see significant increases in unemployment in the coming weeks
  • With Brexit they have no view on whether a deal can be done but they feel it is easier for the UK to leave because we are not linked to the Euro, whereas if Italy left it would create massive economic instability across the region


  • Although we think the UK is the worst, we are not alone. The South of France has been in lockdown for some time, and Paris is having more stringent measures placed on it. In Spain, Madrid has been placed into a State of Emergency, Holland is starting to struggle and even Germany is considering curfews
  • Globally India, Chile and Peru are all struggling, and New York is looking to place further lockdown measures
  • Where there was political consensus at the start, this is now a deeply political subject and will form a major part of the US election
  • They believe the constant bickering between politicians and scientists in the west is not positive, and they are less focusing on a vaccine but more on a world that learns to live with COVID

Nomura Macroeconomic and Market Observations

Virus / Economy

  • We can get the virus down, or the economy up – but we cannot currently do both
  • Germany and Italy seem to have been better with the trade-off compared to France, Spain, and the UK
  • They worry about the UK; both the virus and a hard Brexit could be the final straw for the UK economy

Brexit /Scottish Referendum

  • They believe there is an increasing chance of a no-deal outcome
  • They also believe that within the next 12-18 months there could be a Scottish Referendum due to the growing popularity of Nicola Sturgeon

BlackRock Economic Outlook

Economies / US Election

  • In Western Economies they see an 80% recovery but the remaining 20% is unlikely to come through until the end of 2021
  • They believe there is more momentum for a recovery in Europe vs the US
  • Biggest risk is a contested election result in the US


  • Although the second wave is a worry, they point out that it is a very different environment to March because the knowledge is improved

Interesting articles

An open letter from Pfizer Chairman and CEO Albert Bourla – click here

COVID-19 vaccine: UNICEF to stockpile more than half a billion syringes by year’s end – click here

Climate change wiped out five human relatives, new study says. Are we next? – click here

For all the damage they case, viruses also help push evolution – click here

The impact of COVID-19 on mental, neurological and substance use services – click here

IMF: ‘Less severe’ but ‘still deep’ recession predicted – click here

Note: This is written in a personal capacity and reflects the view of the author. It does not necessarily reflect the view of LWM Consultants. The post has been checked and approved to ensure that it is both accurate and not misleading. However, this is a blog, and the reader should accept that by its very nature many of the points are subjective and opinions of the author. Individuals wishing to buy any product or service as a result of this blog must seek advice or carry out their own research before making any decision, the author will not be held liable for decisions made as a result of this blog (particularly where no advice has been sought). Investors should also note that past performance is not a guide to future performance and investments can fall as well as rise.