Tenzing pacific services

Market Update for August:
Can Cash Really be King?

Craig Market Update

“Uncertainty is the friend of the buyer of long term values.”

Stock and currency markets performance

August has come and gone, ending in negative territory. It was certainly a “game of two halves:”

August Stock Performance.
August Stock Performance.

Data table is from Google Finance

The currency markets saw the USD continue to move from strength into more strength:

August Currency Performance
August Currency Performance

Data table is from Google Finance

The first half of the month was very positive, with the S&P 500 moving up 4.3% to its peak at mid-month, only to give back nearly double of all those gains in the second half.

The markets are undoubtedly in a precarious place right now. The healthy correlation between a business doing well by growing its earnings and profits and its share price increasing is non-existent. Despite companies beating forecasts, the market sentiment is dragging their value down.

greedisgood

I watched a documentary last night about the 1980s that featured the famous clip of the Michael Douglas “Greed is Good” speech, from the movie Wall Street. The thinking back then was that markets are driven by two emotions: greed and fear. Right now it’s fear that is causing the irrational pattern mentioned above.

Inflation versus interest rates

Inflation and interest rate increases are still the main issues. Perhaps the gains during the first half of the month were due to the silence of Fed Chairman Powell during a summer holiday. His return with the same rhetoric about the intention to raise, raise and raise again until inflation is under control was responsible for the sell-offs in the second half.

 

market update for august

 

Inflation for the US in July was at 8.5%, down from its high of 9.1% in June. Granted, there’s still a long way to go, but we’re moving in the right direction. The consensus amongst Reuters economists is that the Fed’s next interest rate increase will be 0.5%, not 0.75%. If the market has factored in the latter, we may see some uplift, though I’d be looking more towards the end of October/beginning of November for the policies to have bedded in and a more rational market established.

GET A FREE, NO OBLIGATION QUOTE

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Energy supply issues

The situation with Russia and Ukraine creating energy supply issues is not helping matters. Germany, which relied heavily on Russian gas, was given the news that Gazprom (the energy corporation owned predominantly by the Russian state) will suspend gas delivery via the Nord Stream 1 pipeline. Previously this had been put down to a “technical fault,” though this was just a guise.

The resulting shortfall in supplies will require adaptation, so Germany is building its first Liquid Natural Gas (LNG) terminals. This is the kind of thing that happens when a difficult situation triggers positive responses, which in turn create positive results.

But as we await these changes, where do we park our cash?

Interest rates remain low, with a 12-month fixed rate for USD offering between 3 and 3.5%, nowhere near inflation-matching.

Cash can of course come in many varieties: there are some 180 currencies in the world. Seven of these are considered “major,” namely the USD, EUR, GBP, CHF, AUD, CAD and JPY.

august market update

During the last 12 months, every one of these currencies has fallen against the Greenback, with the Canadian Dollar losing the least at 4% and the Japanese Yen falling a huge 22%. The view that the USD is a safe haven in uncertain times drives this demand, along with the US monetary policy of faster, more aggressive interest rate increases.

Currency trading is of course a specialist area, though currency diversification does not have to be. The GBP has fallen 16% in the last 12 months, which means any GBP investor buying a USD denominated asset 12 months ago would be 16% up, with the S&P down 13% in that same period. Those who have diversified portfolios, particularly USD, are making good returns when compared to their home currency.

Going into a market like this in a cautious way, through strategies like Dollar Cost Averaging makes sense right now. We will recover and with a longer-term view and 20/20 hindsight bargains will be realised. With that said, the importance of holding assets outside of the stock market is also important, whether alternatives, property, private business or indeed good old cash.

Personal Finance Discovery Call

or
Craig MCavinue Tenzing
Open Hours:

Mon – Fri: 8.30 am – 6 pm, Saturday – Sunday: CLOSED

Johannes Heikkila

Advisor
From Finland
Expat for 1 year
Speak Finnish, English & Spanish

Speciality:
- Health Insurance
- Savings Plans

Robert Cunningham

Advisor
From the UK
Expat for 13 years in Thailand & Vietnam
5 years' insurance & financial services

Speciality:
- Health Insurance
- Life Insurance
- Savings Plans

Romain Camillo

Senior Advisor
11 Years in Insurance & Financial Services
Expat in thailand for 7 years
Joined Tenzing in 2020
Speaks French & English


Speciality:
- Health Insurance
- Life Insurance
- Savings Plans"

Nancy Dao

Advisor
From Vietnam
International Business from UK
Lived in Singapore
Speaks Vietnamese & English

Speciality:
- Personal Health Insurance
- Group Health Insurance

Hunter Deems

Advisor
10 years' experience in insurance and investments
Joined Tenzing in early 2020

Speciality:
- Investments
- Savings Plan
- Health & Life Insurance
Patrik Shore Tenzing Pacific Services

Patrik Shore

Senior Advisor
From Sweden & New Zealand
7 years' insurance experience
Joined Tenzing in 2019
Crim Science
Speaks English and Swedish

Speciality:
- Savings Plans
- Health Insurance
- Life Insurance

Geoffrey Mann

Advisor
From the US
Employee benefits & insurance compliance background
Joined the Tenzing team in 2019
Law degree from the US

Speciality:
- Personal Health

Nhu Nguyen

Senior Advisor
From Vietnam
Joined Tenzing in 2017
Fluent in Vietnamese & English

Speciality:
- Group Health & Life Insurance
- Personal Health"
Tenzing's advisor

Ian Comandao

Health Insurance Manager
From Philippines
MBA from Duke University
Expat for 20 years in US, China, Hong Kong & Vietnam Worked at Tenzing since 2018
Fluent in English, Tagalog, Mandarin

Speciality:
- Personal Health Insurance
- Group Health Insurance
- Business Insurance

Craig McAvinue

Director of Wealth Management
From the UK
25 years' expereince in investments & insurance
Expat in Thailand for 5 years
Chartered Accountant by trade
Holistic approach to consulting his clients

Speciality:
- Investments
- Savings Plans
- Health & Life Insurance

Quinn Miller

CEO & Managing Partner
From the US
Joined Tenzing in 2014
Expat for 10 years in Vietnam
Finance & Entrepreneurship Degrees

Speciality:
- Group Health Insurance
- Life Insurance
- Savings Plans"
  • 84 35857 2629
  • 84 35857 2629
  • quinn.miller@ten-pac.com

Quinn Miller

CEO & Managing Partner
From the US
Joined Tenzing in 2014
Expat for 10 years in Vietnam
Finance & Entrepreneurship Degrees

Speciality:
- Group Health Insurance
- Life Insurance
- Savings Plans"