Hello and congratulations; you’ve made it to the end of the week and with such style and finesse. Well done you! And to celebrate that fact, why don’t you take five, sit back and enjoy this week’s News, Views and Truths?
This week’s first piece of news comes from that vast topic of entertainment, cryptocurrencies. The proverbial e-gold-rush, tempting all and sundry to throw rational thought completely out of the window in search of a quick and hopefully monumental profit.
This is a salutary tale of password protection and planning for the future. Mr Gerald Cotton died on the 9th December 2018 while travelling in India as a result of complications to Crohn’s disease; he was travelling in India at the time in order to open an orphanage.
What on earth has this got to do with cryptocurrency I hear you ask? Well, Mr Cotton was the founder of QuadrigaCX, Canada’s leading cryptocurrency exchange, holding at the time of his death around £110m for clients across the globe.
Exchanges of this type are built around security; they succeed or fail based upon the ability to hold client funds anonymously and protect the value against nefarious attempts to hack the system. As such, QuadrigaCX’s success was built upon this reputation of stringent security, something which Mr Cotton was rightly proud of.
However, on his death, a problem arose; he didn’t tell anyone the password to his laptop that allowed administrative access to client funds. Mr Cotton had sole responsibility for handling all funds and as a result, no other members of the team are able to access them. To date, technical experts have been unable to bypass the encryption.
Moral of the story? Don’t invest in cryptocurrencies.
Closer to home, the Bank of England announced that they are cutting 2019 growth forecasts for the UK from 1.7% to 1.2%, on course for its weakest year since the global financial crisis. Naturally Brexit is to blame for the sharp downward recession, with Mark Carney adding that there is a 25% chance of a recession this year.
He continued, “The fog of Brexit is causing short-term volatility in the economic data and, more fundamentally, it’s creating a series of tensions.”
Yet literally minutes after, the European Commission released its growth expectations, with the area as a whole revised down to 1.3%. Of major note however was the downward revision of Germany, the region’s powerhouse, with an expected growth rate of 1.1%; Italy is down to 0.2%.
Not only is this put down to Brexit, but also the slowdown in China who are the largest market for their automotive exports. Germany is the euro zone’s largest economy. This means that any deceleration will likely be bad news for the rest of the 19-member bloc that share the euro. The Commission’s expectations for German growth in 2018 were also lowered from a previous 1.7% to 1.5%. The institution said in the report that the slowdown was caused mainly by “weakening export growth and growing consumer restraint.”
Yet one important point to note is that the stock market is not the economy. Although over the long run the stock market and the economy do move in the same general direction, the stock market is not, in real-time, a very good indicator of how the economy is performing. That distinction belongs to the labour market.
And the UK labour market is very, very good.
The number of people in work in the UK has reached a record high of 32.54 million, latest figures from the Office for National Statistics show. Unemployment was flat, with a small increase of 8,000 between September and November for a total of 1.37 million.
Average earnings, excluding bonuses, increased by 3.3% in the year to November, as wage rises continued to outpace inflation. The number of job vacancies rose by 10,000 to a record high of 853,000.
The Office of National Statistics (ONS) Head of Labour Market, David Freeman said: “The number of people working grew again, with the share of the population in work now the highest on record. Meanwhile, the share of the workforce looking for work and unable to find it remains at its lowest for over 40 years, helped by a record number of job vacancies.”
The unemployment total is 68,000 lower than a year ago, with the jobless rate 0.2% down on this time in 2018.
And as I have been saying this week to clients that I have spoken to directly, try not to focus upon the media negativity which is seemingly unending. All this talk of Brexit uncertainty and yet employers continue to take people on. The number in work and the proportion in work continued to hit a new record, as it has done now, more or less continuously, for years. And the bulk of the new jobs were full-time; there are now a record 24 million full-time jobs in the UK.
You cannot spin that to be a negative. This is a Project-Fear-Free-Zone.
So, to finish, a playlist which focuses upon positivity. Have a great weekend and I will see you next week.