Alpha Portfolio Service Brochure
According to the Office of National Statistics (ONS), some 1.5million people or 5% of workers in England are likely to lose their jobs due to automation. Worryingly, 70% of the roles at high risk of automation are currently held by women. Part-timers workers and the young are the next most at risk.
We are in the midst of the fourth industrial revolution. Some previously secure ‘jobs for life’, such as banking have evaporated, due to the growth of the internet and changing consumer habits. However, the real risk to jobs is coming from technology. For example, it is estimated that Amazon has over 100,000 robots, representing some 20% of its workforce
Greater automation and adoption of self-learning computer robots offer companies the chance to increase competitiveness, but pose the greatest threat to workers. Experience, qualifications and promotion all take time but are more likely to protect you from the rise of the machines.
Talking of which, the Bank of England is looking to appoint its next Governor as Mark Carney is due to step down in January 2020. Amongst other things, candidates will need ‘the ability to use sound judgement to make decisions in a timely manner against a background of uncertainty’. Sounds like a normal day in the office for our investment team!
What have we been watching?
Another quiet week in the UK with many still on an extended Easter break. Climate activists blockaded the London Stock Exchange by gluing themselves across the entrances. Haven’t they heard of electronic share trading or more importantly the growing trend of Environmental, Social and Governance (ESG) investing?
There were encouraging updates from the US earnings season and solid first quarter US economic growth saw a new closing high for the US S&P 500 share index. White House advisor Larry Kudlow was the latest official to note that the US and China are closing in on a trade agreement. Trade talks are set to resume on April 30th with hopes of a draft agreement in place by the end of May. However, the US and EU trade dispute remains outstanding which, together with continued ‘soft’ economic data, this time from Germany, was reflected in the Euro dropping to its lowest level against the US Dollar since mid-2017. Asian markets were spooked by weak economic data from South Korea and questions over China’s commitment to further economic stimulus measures.
To add to PM Theresa May’s Brexit challenges, Nicola Sturgeon has said she wants to hold a second referendum on Scottish independence by 2021 if the country is taken out of the EU. The PM did however gain some breathing space with senior Conservatives ruling out changing rules to allow an early leadership challenge, but have asked for more clarity about how long she will remain in office. However, grassroot Conservative members sound hugely frustrated at the handling of Brexit. The Conservative are expecting to lose up to 1,000 council seats in Thursday’s local elections. The latest polling also shows the Conservatives slipping behind Labour, as Farage’s Brexit party picks up support. Sterling remained under $1.30.
In Europe, German business sentiment dipped slightly in April which probably should not come as a surprise given Brexit and US/EU trade tariff uncertainty. In Spain, the governing socialist party won the country’s third election in four years, but have fallen short of a majority. However, the far-right party Vox is set to enter the Spanish parliament with over 10% of the votes.
In the USA, the economy grew by 3.2% in the first quarter of 2019, easing fears of a slowdown. However, consumer spending did slow to 1.2% on an annualised basis. The data suggests that the Federal Reserve’s patient monetary policy stance seems appropriate.
The Bank of Japan updated its monetary policy guidance confirming that interest rates will remain ‘extremely low at least through early 2020’.
South Korea’s economic growth shrank in the first quarter of 2019 with the biggest quarterly contraction since the financial crisis, while exports declined for the fourth month in a row.
Following more encouraging economic data there were suggestions that the Chinese authorities might now begin to scale back stimulus measures. However, this may depend upon a successful resolution of trade talks with the US.
Brent oil dropped back to $71 following further pressure on OPEC from the US administration even though it was President Trump’s sanctions against Iran that had pushed the price up in the first place!
Finally. First, it was ‘leaves on the line’ as an excuse for late running trains. Now, Network Rail is blaming helium-filled party balloons which are getting tangled in high-voltage overhead wires, causing delays while electricity is switched off and the lines made safe. Last year 619 such incidents were recorded.
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