UK Markets – What’S Going on and Why Is the USA Doing Better Than Us?

UK markets – what’s going on and why is the USA doing better than us?

Friday 16 October 2020 COVID-19 Markets The US The UK Income Sterling US Election Outlook

Review of Year to date

Impact of COVID-19

Key Market Drivers

Impact on Income Blair Mullen Divisional Director

Tel: 0292 034 7614 Email: [email protected] Outlook

5 Callaghan Square, Cardiff CF10 5BT

This publication is for FCA authorised individuals only and should not be distributed in whole or in part to retail clients.

Brewin Dolphin | 2020 YTD Update 2 COVID-19 Markets The US The UK Income Sterling US Election Outlook COVID-19: the human story so far

Confirmed COVID-19 Cases vs S&P 500 Total Return YTD As of 21 September 2020

15% 35 ,0 00,00 0

10% First UK Case 30 ,0 00,00 0 5% January 31st Easing of UK 0% lockdown begins 25 ,0 00,00 0 May 10th -5% WHO Declare Global Pandemic UK lockdown 20 ,0 00,00 0 -10% March 16th March 11th 15 ,0 00,00 0 -15%

-20% UK £330bn economic stimulus 10 ,0 00,00 0

-25% March 17th US $2 Trillion 5,00 0,000 -30% economic stimulus March 25th -35% 0 Tuesday, 31 Friday, 31 January Sat urday, 29 Tuesday, 31 March Thursday, 30 April Sunday , 31 May Tuesday, 30 June Friday, 31 July Monday, 31 Augus t December 2019 2020 February 2020 2020 2020 2020 2020 2020 2020

Global COVID-19 Cases S&P 500

Source: S&P 500 Total Return YTD 2020 - Thomson Reuters Eikon (Refinitiv), Data Retrieved 22 September 2020. Data used: S&P 500 (S&P 500 Index – CBOE, .SPX) Source: COVID-19 Global Cases YTD 2020 - Thomson Reuters Eikon (Refinitiv), Data Retrieved 22 September 2020. Data used: Global COVID-19 Cases (World, Coronavirus (COVID-19), Total Cases, Volume - XWCCOV=ECI) The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

Brewin Dolphin | 2020 YTD Update 3 COVID-19 Markets The US The UK Income Sterling US Election Outlook What has happened to Markets?

40% 31.5% 30% 26.1% 22.7% 20.9% 19.2% 19.6% 20% 18.3% 14.3%

10% 6.5% 4.2% 3.0% 0%

-10%

-20% -16.3% -21.0% -30%

-40% -37.2%

-50% UK Gilts FTSE All Share S&P 500 China Property Oil Gold Data as of 21 September 2020 2019 2020 YTD

Source: Thomson Reuters Eikon (Refinitiv), Data Retrieved 22 September 2020. Data used: UK Gilts (FTSE Actuaries UK Conventional Gilts All Stocks Index, .FTFS), FTSE All Share (FTSE All Share Index, .FTAS), S&P 500 (S&P 500 Index – CBOE, .SPX), China (MSCI China Price Index USD End of Day, .dMICN00000PUS), Property (MSCI United Kingdom IMI (STD) Liquid Real Estate Price Index GBP End of Day - .DMIUK0LRE2PGB), Gold (Gold Spot Multi-Contributor, XAU), Oil (ICE Europe Brent Crude Electronic Energy Future, LCOc1). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 4 COVID-19 Markets The US The UK Income Sterling US Election Outlook Putting markets in context: the US

Peak-to-Trough Market Declines Length of Market Declines Declines of the S&P 500 (Total Return, %) Declines of the S&P 500 (Months)

1929 1987 2000 2007 2020 34 31

-34% -34% 17 -49% -59% 4 1 -86% 1929 1987 2000 2007 2020

Source: ISI, Bloomberg, National Bureau of Economic Research, Haver Analytics, FMRCo (Asset Allocation Research Team) as of February 26, 2020. Data based on S&P 500 Index price returns. Duration ends with a complete retracement of losses. Recessions are defined by the National Bureau of Economic Research. Past performance is no guarantee of future results. You cannot invest directly in an index. The S&P 500®, a market capitalization-weighted index of common stocks, is a registered service mark of the McGraw-Hill Companies, Inc. and has been licensed for use by Fidelity Distributors Corporation. Retrieved at https://www.fidelity.com/viewpoints/market-and-economic-insights/bear-markets-the-business-cycle-explained Additional Source: Thomson Reuters Eikon, S&P 500 Index - CBOE, .SPX, Data Retrieved 17-07-2020 The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 5 COVID-19 Markets The US The UK Income Sterling US Election Outlook An Evolving Landscape

US and UK Indices Performance YTD

25% 21.0% 20% 15% 10% 5% 3.0% 0%

-5% -3.2% -10% -15% -20% -21.0% -25% S&P 500 NASDAQ Dow Jones Industrial Average FT SE All Share

Source: Thomson Reuters Eikon (Refinitiv), Price Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Data used: FTSE All Share (FTSE All Share Index, .FTAS), S&P 500 (S&P 500 Index – CBOE, .SPX), NASDAQ (NASDAQ Composite Index, .IXIC), Dow Jones Industrial Average (Dow Jones Industrial Average Index, .DJI). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 6 COVID-19 Markets The US The UK Income Sterling US Election Outlook An Evolving Landscape

S&P 500 Sector Performance YTD S&P 500 Sector Breakdown

Real Estate -10.9%

Information Technology 22.8% Financials, 9.8% Communication Services 5.1%

Util ities -10.7% Consumer Technology, Cyclicals, 34.4% 16.0% He alth Ca re 1.3%

Industrials -6.7%

Consumer Non- Consumer Staples -0.1% Cyclicals, 8.9%

Energy -46.9% Healthcare, Industrials, 8.4% Materials 3.1% 12.8%

Financials Consumer Cyclicals Consurmer Discretionary 17.2% Basic Materials Energy Consumer Non-Cyclicals Industrials Financial -22.1% Healthcare Util ities Real Estate Technology

Source: Thomson Reuters Eikon (Refinitiv), Price Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Sector data also provided by Thomson Reuters Eikon (Refinitiv), Data Retrieved 22-09-2020, S&P 500 Index - CBOE, .SPX. The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 7 COVID-19 Markets The US The UK Income Sterling US Election Outlook An Evolving Landscape

FAATMAN vs Banks & Financials YTD FAATMAN vs Banks & Financials YTD 100.0% 500% 80.0%

400% 60.0%

300%40.0%

20.0% 200%

0.0% 100% -20.0% 0% -40.0%

-100% -60.0%12 /3 1/201 9 1/31 /2 020 2/29 /2 020 3/31 /2 020 4/30 /2 020 5/31 /2 020 6/30 /2 020 7/31 /2 020 8/31 /2 020 12 /3 1/201 9 1/31 /2 020 2/29 /2 020 3/31 /2 020 4/30 /2 020 5/31 /2 020 6/30 /2 020 7/31 /2 020 8/31 /2 020

Banks Financials Facebook Am az on Apple Tesla Mic ros oft Alphabet Netflix Banks Financials Facebook Am az on Apple Mic ros oft Alphabet Netflix

Source: Thomson Reuters Eikon (Refinitiv), Total Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Sector data also provided by Thomson Reuters Eikon (Refinitiv), Data Retrieved 22-09-2020. Data used: US Banks (Dow Jones US Banks Index, .DJUSBK), US Financials (Dow Jones U.S. Financials Index, .DJUSFN), Facebook (Facebook Inc, FB.O), Amazon (Amazon.com Inc, AMZN.O), Apple (Apple Inc, AAPL.O), Tesla (Tesla Inc, TSLA.O), Microsoft (Microsoft Corp, MSFT.O), Alphabet (Alphabet Inc, GOOG.O), Netflix (Netflix Inc, NFLX.O). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 8 COVID-19 Markets The US The UK Income Sterling US Election Outlook The UK: a contrasting story

UK Indices Performance YTD Total Return

30% 26.1%

20%

10% 3.0% 0%

-10%

-20% -21.1% -22.9% -21.0% -30% -23.6%

-40% -37.2%

-50% FTSE 100 FTSE 250 UK Small Cap FTSE All Share Oil Price Gold S&P 500

Source: Thomson Reuters Eikon (Refinitiv), Price Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Data used: FTSE 100 (FTSE 100 Index, .FTSE), FTSE 250 (FTSE 250 Index, .FTMC), UK Small Cap (iShares MSCI UK Small Cap UCITS ETF GBP (Acc), .CUKS.L), FTSE All Share (FTSE All Share Index, .FTAS), S&P 500 (S&P 500 Index – CBOE, .SPX), Gold (Gold Spot Multi- Contributor, XAU), Oil (ICE Europe Brent Crude Electronic Energy Future, LCOc1). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 9 COVID-19 Markets The US The UK Income Sterling US Election Outlook The UK: a contrasting story

FTSE All Share Sector Performance YTD FTSE All Share Sector Breakdown

Technology -7.0%

Financials -29.7% Financials, 18.6% Health Care, Utilities -14.9% 12.9%

Telecommunications -33.8% Industrials, Consumer 11.8% Goods, 17.2%

Consumer Services -24.4%

Consumer Health Care -2.4% Basic Services, Materials, 12.9% Oil and 10.3% Consumer Goods Gas, -14.4% 8.9%

Indust rials -13.6%

Bas ic Materi als -3.5% Financials Consumer Goods Basic Materials Oil and G as Consumer Services Industrials

Oil and Gas -53.9% Health Care Utilities Telecommunications Technology

The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 10 COVID-19 Markets The US The UK Income Sterling US Election Outlook The UK: a contrasting story

Key Movers within the UK Year to Date, as of 21st September 2020 150.0%

100.0%

50.0%

0.0%

-50.0%

-100.0% 12 /3 1/201 9 1/31 /2 020 2/29 /2 020 3/31 /2 020 4/30 /2 020 5/31 /2 020 6/30 /2 020 7/31 /2 020 8/31 /2 020

FTSE All Share Royal Dutch Shell EasyJet Ocado AstraZeneca Lloyds Banking Group

EasyJet Lloyds Banking Group Royal Dutch Shell FTSE All Share AstraZeneca Ocado -63.9% -61.6% -55.1% -21.0% 16.5% 119.2% Source: Thomson Reuters Eikon (Refinitiv), Price Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Sector data also provided by Thomson Reuters Eikon (Refinitiv), Data Retrieved 22-09-2020. Data used: FTSE All Share (FTSE All Share Index, .FTAS), Royal Dutch Shell (Royal Dutch Shell PLC, RDSb.L), EasyJet (Easyjet PLC, EZJ.L), Ocado (Ocado Group PLC, OCDO.L), AstraZeneca (AstraZeneca PLC, AZN.L), Lloyds Banking Group (Lloyds Banking Group, LLOY.L). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 11 COVID-19 Markets The US The UK Income Sterling US Election Outlook Impact upon Income

Royal Dutch Shell Dividend History UK's Top 10 Dividend Payers Net Payment Data November 1982 - September 2020 Based on the Past 5 Years £0.45

£0.40

£0.35 Royal Dutch Shell Cut £0.30 BP Cut £0.25 £0.20 Vodafone Cut £0.15 Rio Tinto Cut £0.10 £0.05

BHP Cut £0.00 Lloyds Banking Group Suspended HSBC Suspended GlaxoSmithKline Flat Friday, 1 May 1987 May 1 Friday, 2020 May 1 Friday, Sunday, 1 May Sunday, 2005 May 1 Sunday, 2011 May 1 Monday, 1 May Monday, 2017 May 1 Tuesday, 1 May 1984 May1Tuesday, 1990 May1Tuesday, Saturday, 1 May 1993 May1Saturday, 1999 May1Saturday,

AstraZeneca Grew 2008 May1Thursday, 2014 May1Thursday, Wednesday, 1 May 1996 May 1 Wednesday, 2002 May 1 Wednesday, Friday, 1 November 1985 November1 Friday, 1991 November1 Friday, Sunday, 1 November 2009 Sunday, November 1 2015 Sunday, November 1 Monday, 1 November 1982 Monday, November 1 Tuesday, 1 November1 Tuesday,1988 November1 Tuesday,1994

British American Tobacco Grew November1 Saturday,1997 November1 Saturday,2003 Thursday, 1 November1 Thursday,2012 November1 Thursday,2018 Wednesday, 1 November 2000 November1 Wednesday, 2006 November1 Wednesday,

Source: Baillie Gifford & Co. and Eikon content from Refinitiv. Reflects dividend decisions as at 21 September 2020. Source: Dividend history retrieved from Thomson Reuters Eikon (Refinitiv) and accurately reflects as of 21-09-2020, Data Retrieved 22-09-2020. Data used: Royal Dutch Shell (Royal Dutch Shell PLC, RDSb.L). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 12 COVID-19 Markets The US The UK Income Sterling US Election Outlook Impact upon fixed income investments

Government Balance Sheets have Expanded Rates of Return from safe assets at all time lows Federal Reserve 10 Year Government Bonds Recent Balance Sheet Trends Bond Yields

£8,000,000M 3. 5 3. 0 £7,000,000M 2. 5 £6,000,000M 2. 0 £5,000,000M 1. 5 £4,000,000M 1. 0

£3,000,000M 0. 5 0. 0 £2,000,000M -0.5 £1,000,000M -1.0 £0M -1.5 9/7/2015 9/7/2016 9/7/2017 9/7/2018 9/7/2019 9/7/2020

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 UK US Eur ope

Source: The Federal Reserve Recent Balance Sheet Trends, The Federal Reserve, Data correct as at 21-09-2020, Data Retrieved 22-09- 2020, accessed from https://www.federalreserve.gov/monetarypolicy/bst_recenttrends_accessible.htm Source: 10 Year Government Bonds, Thomson Reuters Eikon (Refinitiv), Price Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Data used: UK (United Kingdom 10 Year Benchmark, GB10YT=RR), US (United States 10 Year Benchmark, US10YT=RR), Europe (Euro 10 Year Benchmark, EU10YT=RR). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 13 COVID-19 Markets The US The UK Income Sterling US Election Outlook How does Sterling fit into all of this?

Sterling YTD Performance Relative to Major Global Currencies

-2% -3.4% -4% -5.4% -6%

-8% -7.9%

-10%

-12%

-14%

-16% Wednesday, 4 Saturday, 4 April Monday, 4 May Thursday, 4 June Saturday, 4 July Tuesday, 4 Fr iday, 4 March 2020 2020 2020 2020 2020 August 2020 September 2020

US Dollar Euro Japanese Yen

Source: Thomson Reuters Eikon (Refinitiv), Price Return YTD as of 21-09-2020, Data Retrieved 22-09-2020. Data used: US Dollar (UK Pound Sterling/US Dollar FX Spot Rate, GBP=), Euro (UK Pound Sterling/Euro FX Spot Rate, GBPEUR=), Japanese Yen (UK Pound Sterling/Japanese Yen FX Spot Rate, GBPJPY=). The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness. Past performance is not a guide to future performance.

Brewin Dolphin | 2020 YTD Update 14 COVID-19 Markets The US The UK Income Sterling US Election Outlook The US Election

Presidents Tend to Lose When There’s an Election-Year Recession

Since 1900, only two presidents have won their second election with a recession occurring sometime in the last two years of their first term:

William McKinley (1901) Woodrow Wilson (1916)

Source: Accessed 17-07-2020 via https://www.foxbusiness.com/economy/wilbur-ross-left-wing-media-trying-to-trigger-a-recession The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

Brewin Dolphin | 2020 YTD Update 15 COVID-19 Markets The US The UK Income Sterling US Election Outlook Outlook

Pandemic Unemployment Speed of Government Control Recovery Stimulus

Brexit Trade Reform Tax

The opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin Ltd.

Brewin Dolphin | 2020 YTD Update 16 COVID-19 Markets The US The UK Income Sterling US Election Outlook Disclaimers

This publication is for FCA authorised individuals only and should not be distributed in whole or in part to retail clients.

The value of investments can fall and you may get back less than you invested. or if income is mentioned The value of investments and any income from them can fall and you may get back less than you invested.

Past performance is not a guide to future performance.

We or a connected person may have positions in or options on the securities mentioned herein or may buy, sell or offer to make a purchase or sale of such securities from time to time. In addition we reserve the right to act as principal or agent with regard to the sale or purchase of any security mentioned in this document. For further information, please refer to our conflicts policy which is available on request or can be accessed via our website at www.brewin.co.uk

The information contained in this document is believed to be reliable and accurate, but without further investigation cannot be warranted as to accuracy or completeness.

If you invest in currencies other than your own, fluctuations in currency value will mean that the value of your investment will move independently of the underlying asset.

The opinions expressed in this publication are not necessarily the views held throughout Brewin Dolphin Ltd.

Brewin Dolphin | 2020 YTD Update 17 2nd Floor, 5 Callaghan Square, Cardiff CF10 5BT Tel: 029 2034 0100 https://www.brewin.co.uk/cardiff

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