Good morning,

In a week where the US Government all but confirmed the existence of aliens,  the front-page news predictably revolves around Donald Trump.  The Democratic-controlled US House of Representatives has voted for a commission to investigate the Capitol riot.  In total,  thirty-five Republicans decided to telegraph their disapproval of Trump’s involvement by defying party leaders and voting with the Democrats in a 252-175 majority to establish an inquiry.  In almost incomprehensible scenes on January 6th this year,  Donald Trump allegedly incited a group of supporters at a rally,  to storm Congress to prevent the certification of President Joe Biden’s victory,  which unfortunately left five people dead.  This vote was seen as a patch test,  for what support remains for Donald Trump’s re-election drive in 2024.  The 10 Republicans who infamously voted to impeach Trump after the riots,  were joined by 25 more Republicans,  however it is unlikely that the format (a 10-member body even split between the two major parties), will get past the upper chamber, with Mitch McConnell calling it ‘slanted.’

Remaining in the US,  the Federal Open Market Committee (FOMC) released their minutes last night.  The message is clear,  cautious optimism,  a term we are becoming more conditioned to.  The US recovery is gaining enough momentum now,  that almost surprisingly,  the Fed’s bond-buying program is coming under review,  as it will need to be “scaled back” at some point.  For the time being,  despite there being clear inflationary issues,  policy makers are determined to convince us that these pressures are merely transitory and will subside. Otherwise,  the message was consistent with what we know,  that the virus is still one of the key decision drivers,  and that the economy was still far from the Committee’s longer-run goals,  however the current stance of policy and policy guidance remained appropriate.

In the UK,  the Pound is picking up momentum.  With the furlough scheme ending in September,  there has been a very visceral fear that the UK unemployment figure will rapidly rise,  however the employment landscape is undergoing a shift.  UK unemployment fell to 4.8% in March,  which was largely attributed to higher employment opposed to the extended furlough scheme.  This “Furlough to Full-Time” employment has been highlighted by the Bank of England economist,  Andy Haldane,  who then went on to predict that the UK growth was going to easily outstrip the US.  One of the main contributors to this, is what Haldane referred to as ‘accidental savings’,  derived from lockdown and the lack of spending that it created,  which is now going to be deployed into the UK economy,  inspiring a consumer boom.  This is wholly positive news and falls in line with the Bank of England forecasting a significantly lower peak in Q3, of 5.4% unemployed,  while supporting the growth narrative.  It would not be a surprise to find that the BoE and potentially the Fed,  could begin tapering in Q4,  although I am sure a lot of us are relieved that the next move on interest rates is likely to be up,  not down.

In more positive news for the UK,  Prime Minister Boris Johnson has intimated that the UK Government is becoming more confident that vaccines are effective against the Indian COVID-19 variant.  This has been a major issue in recent weeks,  as its rapid spread has called for the UK’s plans for lockdown easing to be slowed until the virus is brought back under control again,  however yesterday Johnson,  along with a leading epidemiologist,  have assuaged concerns by confirming it is spreading less quickly than initially feared, which keeps the UK on track to unlock fully by June 21st.

Looking to the remainder of the week, tomorrow we see PMI data for Japan,  France,  Germany,  the UK and the US,  along with European Consumer Confidence,  all of which will be important pre-cursers as to the condition of their respective economies.

In other news,  today is International Clinical Trials Day and,  this year possibly more than ever,  we believe this is a day worth acknowledging!  The first clinical trial took place in 1747 when, famously,  James Lind studied the effects of vitamin C on scurvy,  by giving a control group of sailors citrus fruits.  We’ve come a long way since then and in the last twenty years almost 400,000 studies have been registered,  which has allowed medical science to make some incredible breakthroughs that benefit all of us.

HCFX are really pleased to be supporting Cure Leukaemia,  who work tirelessly to do exactly as their name suggests.  Their work is in a field that affects so many of us and the lengths they go to in funding the work that they do really caught our attention… They are sending a team to ride the entire Tour de France one week ahead of the professionals, led by ex-England and Crystal Palace player Geoff Thomas,  who has himself recovered from blood cancer.  They set off in 30 days time and we have to say we don’t envy them in the slightest, but will be backing them all the way and look forward to bringing you some updates on such an amazing event.

Be well.

This Morning Report was brought to you by Alex Ayoub


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