| Welcome to the April Issue of the Dashboard Newsletter. After a rollercoaster start in the financial markets to the 2016 calendar year, the end to the first quarter was rather subdued. Markets settled down and news-flows slowed down. Once all the dust settled, we ended the first quarter pretty much where we started it. Markets are largely unchanged, as is our flag.
Now the focus moves to the second quarter of the year. There are some fairly material events due to take place in this quarter. Of particular interest to me is the referendum on Britain's continued membership of the European Union (also referred to as "Brexit"). This is due to take place on the 23rd of June, and it is the one political event that may cause disruption to financial markets. The referendum came about as a result of an election promise by David Cameron and the Conservative Party. Those in favour of Britain exiting the EU argue that an exit would strengthen their Sovereignty, ensure better control of immigration, and avoid what they consider to be unnecessary EU regulations and bureaucracy. Those against argue that the benefits of being in the EU outweigh these issues, and that an exit would risk the UK's prosperity, diminish it's influence in world affairs, and jeopardise National security. Many economists have tried to hypothesize what might happen in the event of a Brexit, but the fact is that it still remains unclear how things would unfold. A recent poll of CEO's of large corporations in Britain showed that an overwhelming majority would prefer Britain to remain in the EU. Similarly, most foreign leaders would also prefer Britain to remain in the EU. This suggests to me that markets would prefer Britain to remain in the EU too – an opinion that seems instinctive given that markets don't like change and uncertainty. However, polls show that the public are on the fence at the moment. The most recent poll shows 39% in favour of an exit, 39% in favour of staying in, and 12% undecided – too close to call. Markets have reacted with the Pound Sterling falling in value by 6% against the NZ$ in the past 3 months, and in similar magnitude against most other major trading currencies. Should Britain exit, you would expect the currency to fall even further – a material consideration for New Zealand investors. Hence my acute interest in this. My opinion on this matter is that it will follow the recent Scottish referendum pattern. This also seemed too close to call leading into it, but in the end common sense prevailed and it remained status quo. I believe the markets have priced this in, and they will be relatively muted with this outcome (aside from a potential strengthening of the currency). An exit on the other hand might create a negative shock – a theory I hope (and believe) won't be tested. In terms of the numbers over the past 30 days, mortgage and term deposit rates have both come down slightly (a delayed response to the surprise ORC cut to 2.25% in March). Markets have been mixed, but mostly strong with Japan the only market down, Australia flat, Europe fairly strong, and Hong Kong, America and New Zealand all very strong and up around 4%. The NZ$ had a stubbornly strong month, up against all its major trading partners – surprising given the OCR rate cut. Something of note that affects many New Zealanders is that the state pension went through its annual inflation adjustment on the 1st of April, and as such a married couple now gets $15 per week more than before. Each year I can't help myself saying tongue in cheek "don't spend it all in one place", but in the same breath we should not lose sight of the fact that this universal pension is a luxury that many countries do not enjoy. Here are the numbers: |
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In terms of your Select Wealth Management investment, you will be getting 2 reports in the next short while. The first is the quarterly performance report, and the second is the tax report. If you have any questions about either of these, please do not hesitate to contact me – I am here to help. Please also remember that you can opt to receive these online if you would prefer. It's a great service, and I strongly encourage that you use it (if you aren't already). Finally, I have some fantastic news about on our Save Lily campaign. I am really please to confirm that young Lily recently had her heart transplant and is now on the road to recovery. This is great news after the painstaking wait for a donor – a process that is terrible for all parties concerned. The surgery went well, and Lily and her family are now looking forward to returning to New Zealand to get on with their new lives. Check our progress at mifinancialplanning.co.nz/giving-back. Thank you to all of you that have referred family, friends and clients who need investment, insurance and financial planning advice – keep them coming. We really appreciate your support. Until next month, warm regards Dave and the team at Isaacs Financial Planning dave@mifinancialplanning.co.nz |
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This newsletter is intended for general distribution and does not constitute personal financial advice. Copy of my primary disclosure statement and secondary disclosure statement.