2011

Please find attached this week’s Bulletin Market Bulletin 14 11 2011which contains the following points:

Italy took centre stage in the markets as the issue of their rising sovereign debt yields came to the fore. French bond yields also came under fire following a mistaken downgrade by Standard & Poor’s rating agency. However, a new government for both Greece and Italy and ECB intervention in the bond markets pushed the FTSE 100 up 0.3% in the week to close at 5545.38.

The yield on Italy’s 2-year and 10-year bonds crossed the psychologically important 7% mark last week which was the point as which Portugal, Ireland and Greece had to be bailed-out. Thankfully ECB intervention caused the yields to fall back and Italy managed to raise €5 billion in an auction of one-year securities paying an average rate of 6.09%.

Data from China showed that inflation is falling and growth is strong so where is the eurozone aid that was suggested some weeks ago? According to independent sources in the Chinese government it is tied up in a political deadlock after Europe spurned all of Beijing’s demands.

EU leaders have many routes to take, none of which are easy but the sudden change in Italy’s fortunes, considering just how big it is, may just force EU leaders to take decisive action and implement policy that could bring Europe out of its debt crisis.

Finally, with European sovereign debt in the press we take a look at the UK Gilt market, exploring why yields are so low compared to Europe and Ian McVeigh, UK Equities Team Director at Jupiter Asset Management, gives his view.

Regards

Neil

Neil Gubbins

ST. JAMES’S PLACE
WEALTH MANAGEMENT
11 Hamilton Place
Mayfair
London W1J 7DA

T: 020 7495 1771
M: 07739 263334
www.sjpp.co.uk/neilgubbins

Financial Market Bulletin 07/11/2011

Please find attached this week’s Market Bulletin 07 11 2011 which contains the following points:

Better than expected economic data from the US and UK was, once more, overshadowed by the ongoing eurozone sovereign debt crisis causing equity markets to give ground and end the week mostly lower.
Greece’s announcement of a referendum on the latest bail-out package was unexpected and sent stock markets into reverse – the idea was subsequently shelved and the Greek Prime Minister narrowly won a vote of confidence. This proved short-lived too – Mr Papandreou resigned over the weekend and discussions are taking place to find a new cross-party leader pending elections.
The G20 summit in Cannes proved a damp squib with leaders failing to agree on funding sources for the EU bail-out fund – hopes that China might contribute were also dashed. The last port of call was the IMF but here too there was opposition from the US and in its final communiqué the G20 talked of providing more solutions next February.
One major agreement though was for Italy to informally open up its books and allow IMF officials to monitor its austerity programme – unfortunately this backfired when Prime Minister Berlusconi said the sell-off in the Italian bond markets was a “passing fashion”. Investors, fearing that IMF involvement was a precursor to a full bail-out reacted by selling off bonds, causing yields to rise to record levels.
Despite the ongoing crisis, professional investors are reminding people that there are many high quality international businesses that are doing well and that growth in the emerging world continues to offer huge opportunities – Jupiter investment Management’s CIO John Chatfeild-Roberts gives his views.

Regards

Neil

Neil Gubbins

ST. JAMES’S PLACE

WEALTH MANAGEMENT

11 Hamilton Place

Mayfair

London W1J 7DA

T: 020 7495 1771

M: 07739 263334

www.sjpp.co.uk/neilgubbins

Market Bulletin

Please find the latest Market Bulletin 30 08 2011 which contains the following points:

Equity markets rebound on better than expected US consumer data and hopes for further stimulus packages in the US.
Global banks remain in the spotlight as data sends conflicting messages on their ability to raise capital – a strong banking system is crucial to economic expansion.
The price of gold falls $200 as investors move back into equity markets.

Kind regards.

Neil

Neil Gubbins
ST. JAMES’S PLACE
WEALTH MANAGEMENT
11 Hamilton Place
Mayfair
London W1J 7DA

T: 020 7495 1771
M: 07739 263334

www.sjpp.co.uk/neilgubbins

If you wish to view the St. James’s Place Partnership email disclaimer, please click here

UK Budget Update

Just received this – thought it might be of interest:-

This afternoon I delivered my second Budget. I wanted to write to you immediately to explain our plans and set out some of the key measures.

Last year’s Emergency Budget was about rescuing the nation’s finances and paying for Labour’s mistakes. Today’s Budget sticks to the plan, and focuses on reforming the economy to ensure jobs and growth for the future. I am also doing what I can help to families with the cost of living – including an immediate cut to fuel duty.

I know times aren’t easy for families at the moment, so this Budget announced help, including:

• An immediate cut in fuel duty by 1 pence per litre and a delay of April’s inflation rise in duty to next January. This means fuel duty is 6 pence lower than it would be under Labour. We are paying for this by putting up taxes on the oil companies while the oil price is high to create a Fair Fuel Stabiliser.
• An increase in the personal allowance from £6,500 to £8,100 over the next two years. This will mean £326 extra for working people and it will lift over a million low paid people out of tax altogether.
• £250 million to help 10,000 first time buyers get on the housing ladder.
• A freeze in Air Passenger Duty this year.
• Money for councils so virtually every council in England will freeze council tax next month.
• A new scheme to allow Gift Aid to be claimed on the contents of charities’ collecting tins and street buckets, and support for largest donations with radical reforms to Inheritance Tax – if you leave 10 per cent or more of your estate to charity, then the Government will take 10 per cent off your inheritance tax bill.

As well as helping in the short term we need to reform our economy to create growth and jobs in the future. The hard truth is that Britain has lost ground in the world economy.

Under Labour manufacturing halved, and growth depended on unsustainable public spending, debt and financial services. We need a new model of growth based on investment, manufacturing and exports – a Britain that makes things again. This Budget started that process, with measures that include:

• An additional 1p cut in corporation tax. In April this year corporation tax will fall from 28% to 26%. It will continue to fall by 1% in each of the following three years reaching 23%. Britain will be competitive again.
• Doubling Entrepreneurs Relief to £10m and sweeping changes to the generosity, simplicity and reach of the Enterprise Investment Scheme, with an increase in the income tax relief available from 20% to 30%.
• An extension of the small business rate relief holiday for another year.
• An additional £100m for new science facilities and more generous tax credits for small business research and development.
• 21 new Enterprise Zones with business rate cuts and new broadband to promote growth across the country.
• A review of the revenue raised by the temporary 50p rate of income tax.
• 50,000 additional apprenticeships and 100,000 work placements for young people.
• £3bn for a Green Investment Bank, which will generate an additional £15 billion in private sector investment in green projects and low carbon energy.

The Confederation of British Industry has already endorsed our approach saying: “This Budget will help businesses grow and create jobs.”

So this is our plan – reforming the economy to create jobs and supporting families. This Budget will put fuel back in the tank of Britain’s economy.

George Osborne
Chancellor of the Exchequer

Japan – Investment Update

It has now been five days since the magnitude 9.0 earthquake hit Japan. Following falls of 6.2% on Monday and 10.5% on Tuesday, the Nikkei rebounded to close up 5.7% in overnight trading. Since the earthquake struck the MSCI World has fallen by 3.2% and the FTSE 100 by 3.3%; however, the markets look to be stabilising.

Despite the overall falls in Japanese markets, and notwithstanding the tragic human cost to this event, our managers have a broadly positive outlook for the recovery of Japan. The following is a summary of further views obtained from our investment managers as the situation has unfolded.

Richard Oldfield – High Octane

Richard Oldfield, the manager of the High Octane fund, has a holding of approximately 21.3% in Japan. On Tuesday he provided the following comment:

“Our only action to date has been to increase marginally the investment in Hitachi. Hitachi has been affected most in share price, it appears to us, because they have some factories in the region of the tsunami, and because they have a nuclear operation (in joint venture with GE of the US). Ex-earthquake, earnings this year were likely to be around ¥50 with considerable room for further improvement. We regard the share price, at ¥360, as highly attractive.

Needless to say, the position is highly uncertain, with the situation at the nuclear facilities still unresolved, and risk of more explosions, radioactive leaks, and casualties. But however ugly the immediate prospect, in time what has happened in Japan in the last week will be seen as interruption. The government and Bank of Japan will presumably do all they can to stimulate the economy – which, involving monetary and fiscal stimulus, we would regard as likely to weaken the yen rather than, as in the immediate aftermath, to strengthen it because of funds being repatriated to Japan. Companies will lose production, in some cases and in some areas for a prolonged period, but nonetheless this too is an interruption. Meanwhile share prices are 20% lower than they were a few days ago so that the valuation, in terms of price to book value and other measures, of companies is even more attractive for the long term investor. We are therefore inclined to invest more in existing Japanese holdings or in other companies. We will be evaluating this carefully over the next day or two. Additional investment in Japan also involves disinvestment from somewhere else, and one of the main difficulties will be deciding what, if anything, to sell.”

Bernard R. Horn Jr – Worldwide Opportunities

Bernard R. Horn Jr., the manager of the Worldwide Opportunities fund, has a total holding of around 7.2% in Japan.

In a telephone call with Bernie yesterday afternoon he stated that he is keeping a very close eye on the situation in Japan and paying particular attention to the uncertainly over events surrounding the nuclear power plants. Bernie went onto say that “of course, an event like this will cause almost every sector to suffer but most of the stocks held within the fund are defensively positioned and should recover as Japan re-builds itself”. In terms of the portfolio holdings, only Nippon Yusen sustained damage to a tiny proportion of its shipping fleet.

Overall, Bernie said that the fund is well positioned in the global market by currently having an elevated cash level, at around 9.7%, as a result of selling top performing stocks. Bernie now sees this free cash as an excellent opportunity to buy selectivity. Moreover, some stocks outside of Japan are actually benefiting, such as Thai Oil and Samsung, as Japanese manufactures temporarily slow down production.

THS Partners – THSP Managed and International

Cato Stonex, Mark Evans, Robert Smithson and Ali Miremadi manage our THSP Managed and International funds which have a limited exposure to Japan of around 1.4%. THSP made the following comment yesterday:

“Whilst the Japanese holdings have fallen the investments still represent a small part of the portfolio (under 4%) and their effect on the overall performance is therefore extremely modest. However, the general market has also weakened significantly, which has obviously been reflected in our portfolios. Since the start of the year, the market had performed well and a retrenchment was likely. A combination of the news from North Africa and the disaster in Japan have magnified and accelerated this process. As a final word, we note that every crisis produces opportunities and we are investigating some of the value opportunities that have appeared.”

Japanese Equity Team – Invesco Perpetual Managed and Strategic Managed

The Invesco Perpetual Managed and Strategic Managed funds have approximately 3.1% in Japan. The Japanese Equity Team at Invesco Perpetual made the following comment yesterday:

“The devastating earthquake and tsunami that hit Japan on Friday has clearly had a huge human cost, the full extent of which will only become clear over the next few weeks. In terms of the economic impact, we believe that there will be some short-term negative consequences, but that the longer-term recovery remains in place. The economy has been experiencing a rebound in activity following the contraction in the fourth quarter of 2010, with key indicators, including export volumes and levels of domestic investment picking up. The economy’s full recovery from this brief lull is now likely to experience a short-term interruption, but we do not expect there to be a significant impact beyond this timeframe.

The area hit, around the city of Sendai in the Tohoku region, has limited production facilities, which are concentrated in central Japan. While the current disruption to power supplies has extended further across the country, we expect this to be quickly resolved and for activities outside of the area directly affected to return to normal. The Tohoku region accounts for around 8% of Japanese GDP, approximately half of the Kobe area, which experienced Japan’s last comparable earthquake in January 1995. Industrial production fell into negative territory in February following the Kobe earthquake, but was positive again by March.

Japanese authorities have been quick to respond and the Bank of Japan has announced that it will add a further ¥5 trillion to its asset purchase programme and is providing ¥15 trillion (approx. $183bn) of liquidity to financial markets. It is also encouraging that, despite the likelihood of a special budget to help finance the reconstruction work necessary, bond prices have remained firm. The reconstruction effort in itself may also have a positive impact on the economy. Monday’s trading in Japanese financial markets saw significant weakness. Volatility during the current situation is to be expected, but on fundamental grounds we continue to see significant value in Japanese equities. In our view, the recovery in developed markets, most notably the US, and the ongoing growth in Asia are more significant drivers of profitability among Japanese companies. Growth in these regions is likely to remain supportive and we believe that the traditional transmission of export strength into the domestic economy will again be evident.”

The information contained herein represents the view and opinions of our fund managers, and not those necessarily held by St. James’s Place Wealth Management.

Regards

Neil

Neil Gubbins

ST. JAMES’S PLACE

WEALTH MANAGEMENT

11 Hamilton Place

Mayfair

London W1J 7DA

T: 020 7495 1771

M: 07739 263334

www.sjpp.co.uk/neilgubbins

British Consulate to Speak on Pensions

Tonight (3^rd March) Laura Leeman, from the British Consulate in Alicante, has kindly volunteered to make a presentation on UK Pensions to members and friends of Marina Alta Business Club in Jávea.

Whilst primarily aimed at expatriate British workers and businesses based in Spain – Members of the Consulate’s UK Pensions’ Office have also expressed an interest in meeting and talking to some of our friends who are already in receipt of UK pensions, so Laura has agreed to cover pension issues from both perspectives.

So if you are a British citizen and have ever made National Insurance contributions via a UK based employer – however briefly and however long ago, then this talk is likely to contain information that may be useful for you. After the talk, Laura has also volunteered to chat informally to anyone who wishes to raise a pension concern.

As this is a special event - the club evening will be open to non members and guests – so if you know some-one who might find the talk useful, please feel free to forward this email.

The event will start at 7:30pm for an 8 o’clock start – at Peri Pera Café in Jávea Port (very near the Dolphin Roundabout – next to the zebra crossing & opposite the vet – on the road to the Police Station and Sports Pavillion).

Thank you – I hope to see you there.

Gaile

Monday Market Bulletin

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Colin Evans and Neil Gubbins

St Jame’s Place Wealth Management

Please find attached this week’s Monday Market Bulletin 23 08 2010 which contains the following points:

Global equity markets received a welcome boost from resurgent Merger & Acquisition activity last week with BHP Billiton’s $39bn for PotashCorp of Canada. Although rejected investors expect rival bids to emerge
The relentless rise in demand for both soft commodities as well as oil and metals reflects increased demand amongst the growing middle class in emerging markets but is pushing up inflation in the West. It is also leading to potential shortages as East Asian countries seek to build reserves
Another outcome has been to fuel investor demand for products to capture these opportunities – Emerging Market funds (and our own Alternative Assets Fund) can be part of this strategy
But poor economic data from the US and Japan weighed on sentiment resulting in equities drifting as investors opted for the safe haven of government bonds where yields continued to fall
Contrarian fund manager Andrew Green of GAM, shares his thoughts on the economic outlook and explains why he continues to favour Japan

Kind regards,

Neil

www.sjpp.co.uk/neilgubbins

Neil Gubbins ST. JAMES’S PLACE WEALTH MANAGEMENT

11 Hamilton Place, Mayfair, London W1J 7DAT: 020 7495 1771 – M: 07739 263334

To Contact Colin please email colin.evans@sjpp.co.uk

the £ and the € (and the $)

GBPEUR/GBPUSD

Following on from last week, the Pound rallied back above the 1.20 level against the Euro on Thursday, approaching the highest rate in 18 months, after a report from the Nationwide Building Society showed that UK house prices climbed to the highest level in almost two years. Sterling also gained to within a cent of the three week high against the U.S Dollar, as the report fuelled optimism that the economic recovery is gathering momentum.

Prudential Plc confirmed last week that the collapse of its proposed acquisition of AIG Inc’s main Asian unit will cost roughly £450 million and that the failure may also cost the Chief Executive Tidjane Thiam his job. The insurer was due to pay AIG in Dollars after raising the cash in Pounds and the UK currency had risen above $1.47 versus its U.S counterpart on speculation that the transaction was destined to fail.

In terms of economic data, the Pound was buoyed by reports that UK construction expanded in May at the fastest pace since September 2007, led by homebuilding. An index of building activity, based on a survey of purchasing managers, rose to a reading of 58.5, from 58.2 in April, as the overall improvement in the manufacturing sector continues to support the economic recovery.

The UK economy expanded 0.3% in the preliminary estimate for the first quarter, more than initially forecast, after an upward revision in manufacturing and construction. Bank of England policy makers voted unanimously to keep the £200 billion bond-purchasing program on hold last month, but reserved the right to continue quantitative easing should the recovery stall.

Elsewhere, UK mortgage approvals rose to the highest level in four months in April, as banks free up lending conditions and the conclusion of a transaction tax on home purchases for first time buyers helped improve demand. Lenders granted 49,871 loans to buy homes, compared with 49,008 in March, the highest reading since December.

The Pound has climbed 5.7% against the struggling Euro this year, amid reports that signaled the UK economic recovery is gathering momentum, while European economies falter and remain mired in the sovereign-debt crisis. Analysts at Citigroup Inc believe that the Euro may decline further against the Pound, after it closed above 1.20 on Tuesday.

The Pound briefly rose above $1.47 against the U.S Dollar on Thursday, as UK stocks rallied for the first time in three days. The FTSE 100 Index climbed, amid speculation that the U.S economic recovery is spreading, while investors also speculated that shares in BP Plc had fallen too far. BP gained for the first time in four days, as it struggled with efforts to stop the oil spill off the Gulf of Mexico.

The leak has wiped out a third off the value of BP stock since April 20th and the company is bracing itself for a huge clean up bill from the U.S government. The FTSE 100 rose 1.2% yesterday and the Pound subsequently strengthened against the Dollar, as the correlation between stock market sentiment and Sterling’s performance against the U.S currency remains intact.

By the close of trading on Friday, the Pound had recorded its second weekly gain against the Euro and the UK currency climbed to a fresh 18-month high over the weekend of 1.2132. The Pound also gained against the Dollar last week, the first advance in over a month, but the volatile swings in risk sentiment has brought the rate back down towards $1.43 this morning.

Niels Christensen, a foreign exchange strategist at Nordea Bank AB, said that “people are becoming a little more positive on the UK. We’ve had some good data and that has left sterling with a positive sentiment.” The UK currency rose 0.7% against the Euro on Friday, bringing the weekly gain to 2.9%, as concerns over the European sovereign debt crisis persists.

The focus this week will be firmly fixed on the Bank of England interest rate announcement on Thursday. The latest round of positive economic data are unlikely to result in any changes to the Bank’s judgment on the medium term outlook for growth and inflation. Consumer prices rose to 3.7% year-on-year in April, but is expected to fall back towards 2% over next year.

EUR/USD

The Euro fell below $1.20 for the first time in more than four years against the U.S Dollar on Friday, amid speculation that Europe’s sovereign debt crisis is spreading. Investors promptly flocked to the safest currencies, as stocks also tumbled. The Yen and the Dollar rose against all of the 16 most actively traded currencies, as a lower-than-forecast U.S nonfarm payrolls report fueled speculation that the U.S recovery may be slowing.

American companies hired fewer workers in May than predicted, indicating that the government still needs to support the labour market to spur the economy. Payrolls rose by 431,000, boosted by a jump in hiring of temporary census workers. The jobless rate fell to 9.7%, from 9.9% in April, and the report will be of some concern to investors.

U.S stocks plunged and Treasuries rose, as the report raised concern that the U.S economy may be susceptible to the European debt crisis. The Standard & Poor’s 500 Index dropped 3.4%, closing at the lowest level since February 8th. The Dollar rose to a high of 1.1877 against the struggling Euro, as risk aversion stalked the market and investors are already betting on a further deterioration of the single currency.

Jonathan Lewis, founding principal of Samson Capital Advisors LLC, said that “the euro is caught in a permanent, apparently unresolvable slide because of the tempo of bad news coming out of Europe. The market is so bearish on the Euro, it’s looking under any rock to find information that supports that conclusion.”

Market Analysis by Adam Solomon

If you need any further assistance, or require a quote – please do not hesitate to contact MABC’s manager, Gaile manager@mabc.biz , who can put you in touch with our Currency Exchange members.

With thanks to Tom Trevorrow from TOR FX for the above article

Monday Market Bulletin

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Colin Evans and Neil Gubbins

St Jame’s Place Wealth Management

Please find attached this Monday Market Bulletin 07 06 2010 which contains the following points:

European focus turns to Spain and Hungary
What future for the euro?
BP’s dividend comes under the spotlight
Trouble for the man from the Pru
Positive news flow and stronger company fundamentals remain the themes for long-term investors

Kind regards

Neil

www.sjpp.co.uk/neilgubbins

Neil Gubbins ST. JAMES’S PLACE WEALTH MANAGEMENT

11 Hamilton Place, Mayfair, London W1J 7DAT: 020 7495 1771 – M: 07739 263334

To Contact Colin please email colin.evans@sjpp.co.uk

EURO-ZONE 750Bn AID PACKAGE AGREED

The Euro pared the sharp decline from the previous week and rallied to a high of 1.3086 during the overnight trade as policy makers in the region announced a EUR 750B rescue package to support the economies operating under the fixed-exchange rate system.

At the same time, the European Central Bank announced that it will intervene in the market for government and private bonds in order “to ensure depth and liquidity in those market segments which are dysfunctional,” while the Bundesbank said it will start purchasing government bonds today.

According to the details of the aid plan, governments in Europe will make EUR 440B available for the ailing economies, with an additional EUR 60B coming from the European Union’s budget, while the International Monetary Fund will provide as much as EUR 250B in funding as government officials struggle to bring their public finances back in-line with the stability pact. In addition, the Federal Reserve announced that it will reinstate its currency-swap lines with its major counterparts as the Greek crisis weighs on the global financial system, and said that it will provide the “full allotment” of U.S. dollars through January 2011. Nevertheless, the economic docket showed Germany’s trade surplus widened to EUR 17.2B in March from a revised EUR 12.7B in the previous month to top forecasts for a rise to EUR 14.0B, led by a 10.7% jump in exports, while the Sentix investor confidence survey for the Euro-Zone weakened more-than-expected in May, with the index slipping to -6.4 from 2.5 in April. As global policy makers take unprecedented steps to support the financial system, the efforts should help to alleviate the downward pressures on market sentiment however, the new measures may only provide a short-term relief as the ECB expects to see an uneven recovery this year.

The British Pound halted the six-day decline and advanced to a high of 1.5029 following the Bank of England interest rate decision as the central bank held the benchmark interest rate at 0.50% and maintained its asset purchase target at GBP 200B. Nevertheless, the BoE is scheduled to release its Quarterly Inflation Report on Wednesday at 9:30 GMT, and a shift in the central bank’s economic assessment is likely to spark increased volatility in the exchange rate as investors weigh the prospects for future policy. Government officials in the U.K. may highlight the stickiness in consumer prices as inflation exceeded the central bank’s upper limit of 3% for the second-time this year, and the British Pound may push higher over the week if BoE Governor Mervyn King no longer expects price pressures to drop below the 2% and drops his highly dovish bias for price growth.

If you would like to discuss your requirement buying into any of the 16 most actively traded currencies do not hesitate to give Marina Alta Business Club a call and they can put you in touch with me.

Tom Trevorrow Senior Trader TOR FX

NEWS FLASH

NEWS FLASH – Pound rallies in anticipation of a Lib Dem/Conservative coalition government

GBPEUR/GBPUSD

The Pound has dropped 4% against the Euro since the close of trading last night, while the UK currency has slumped to the lowest level in over a year versus the U.S Dollar, amid a combination of extreme volatility in financial markets and the political uncertainty surrounding the result of the General Election.

Britain officially has a hung parliament for the first time since 1974, with the Conservative Party recording the largest majority. Gordon Brown has indicated that Labour was seeking a coalition government with the Liberal Democrats, but the leader Nick Clegg has said this morning that the Conservatives should get the first chance to form a coalition.

The Pound has been in free-fall against majors this morning and the level of volatility is unlikely to subside until a sustainable government is in place. However, Clegg’s admission that he would prefer to discuss a pact with the Conservatives is somewhat of a surprise and may provide some stability to the foreign exchange market.

Market Analysis by Adam Solomon