Bank of England considering negative rates

The Noise

  • UK markets responded favourably last Monday to news that Oxford University’s vaccine trial was producing promising results. Drug-maker AstraZeneca said on Thursday that it had secured orders for at least 400 million doses of an as-yet-unproven COVID-19 vaccine and would begin delivering them in September.

  • The Bank of England has publicly disclosed that it is considering the introduction of negative interest rates for the first time in its 324-year history to help stimulate an economic recovery. Andrew Bailey, the Bank’s governor, stressed however that the Bank needed time to consider the implications of doing so before action would be taken.

  • The The Italian Prime Minister said that the country is taking a “calculated risk” as it moves to further ease its Coronavirus lockdown measures. Mr Conte announced that shops and restaurants are due to reopen from 18th May providing social distancing is enforced. Swimming pools and sports centres will reopen on 25th May.


The Numbers



The Nuance

As snippets of vaccine-related news continue to sway markets, this demonstrates the significant uncertainty investors are facing as to the possibility and timing of a vaccine being commercially available. Economies continue to take tentative steps towards reopening businesses, but investors must consider the potential for a second wave of infections. Whilst the path ahead remains unclear, we focus on investing in companies with excellent foundations which we are confident can perform well even against a tougher market backdrop before a full solution is reached.

Economies continue attempts at restarting with China leading the way and European economies following. The recent steps backwards in China to cope with a second outbreak show the challenges that policymakers face. Over the course of the week, we have made some minor changes to our portfolios as the market presents opportunities. We took profits from our late-March opportunistic purchase of the technology consulting company Accenture, and reinvested in the Switzerland-based pharmaceutical company, Novartis. While not directly involved in searching for a vaccine, it has a strong market position with innovative medical technologies which the market, in its narrow focus on COVID-19, is overlooking.


Quote of the week

"Life is a lot more fun when you don't care how weird you are.” Lennon Thomas, avid Dungeons and Dragons fan.

For those of you unaware, Dungeons and Dragons is a fantasy role-playing game and Mr Thomas, who lives near Cardiff in Wales, is certainly a fan. In fact, he’s such a big fan that his commitment to the game led directly to armed police being called on him. Perhaps that’s not unsurprising when you consider that the 20-year old decided to go out for some exercise dressed in a full medieval knight’s outfit, carrying a three-foot long sword. Apparently he had worn it out for his walk around the lake “to get used to the weight”. After armed police confronted him at gunpoint and determined that he posed no threat, Mr Thomas said “perhaps it was a little stupid of me to bring the sword as from a distance it does look realistic.”


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