WINTER
2016 WORLD ECONOMIC & MARKET OUTLOOK: October 2016 Graham O’Neill
5 TIPS FOR MANAGING STRESS IN THE WORKPLACE EXTREME WEATHER: CONSIDERATIONS FOR YOUR BUSINESS Caroline McEnery
HOW TO CULTIVATE AN ENTREPRENEURIAL SPIRIT IN YOUR SMALL BUSINESS WHAT GOOGLE KNOWS ABOUT YOU: FIND OUT WHAT YOU NEED TO KNOW LEGAL BRIEFS MEET THE TEAM
TABLE OF CONTENTS Donald Trump Election Victory
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How To Cultivate An Entrepreneurial Spirit In Your Small Business
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Business Briefs
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World Economic and Market Outlook:October 2016 - Graham O’Neill
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How To Deliver Persuasive Presentations
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Extreme Weather: Considerations For Your Business - Caroline McEnery
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5 Tips For Managing Stress In The Workplace
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8 Steps For Savvy Saving
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What Google Knows About You: Find Out What You Need To Know
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Meet The Team
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Range of Services
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WELCOME
to our Winter Newsletter
Over the last few months the focus has been on Brexit, however, attention has now turned to Donald Trump’s election as the next US President. In this edition, Graham O’Neill has given an overview of how Trump’s election has impacted the markets. He has also written a second article on the overall market outlook from a global perspective. We hope you find these and the others articles and news pieces in this newsletter of interest to you and your business. Please do not hesitate to contact us with any queries.
Dervilla and Sarah.
TRUMP ELECTION VICTORY – NOVEMBER 2016 Graham O’Neill - DIRECTOR AT INDEPENDENT RESEARCH CONSULTANCY LIMITED Whilst the election of Donald Trump as US President was a surprise to many, the extent of the markets positive reaction has been even more of a surprise to most participants. The Republicans now not only have the Presidency, but also control of both Houses of Congress, so markets will need to be reassured that the probusiness agenda will not be de-railed. After a campaign dominated by sound bites and rhetoric investors are waiting to see what might be termed a ‘hard’ or ‘soft’ Trump emerges. The latter would be a pro-business agenda without protectionism, but at this stage no one really knows. It still remains too early to talk about the medium and long term with the wider team of the President elect not yet in place. Markets have unsurprisingly moved away, not just from government bonds, but bond substitutes in favour of more economically sensitive names. This could be a long lasting move, as one of the more easily implemented pieces of Trump policy will be fiscal expansion. As well as an upward move in bonds, there has at last been a pickup in longer term inflation rates looking at the five year five year forward number. The US currency has also been strong, especially against emerging market currencies, which does increase the risk in some of these areas together with the potential of a protectionist threat and the imposition of tariffs. Trump watchers need to follow the 3 Ps. The first is Policy, will he follow through on the pre-election rhetoric or tone it down. The second will be the People appointed, will they be high quality or ‘yes men’. The third is Personality and whether there is an egotistical President or a watered down one. Whilst markets have latched on to what was a more conciliatory acceptance speech only time will tell. There have been negative comments from the ghost writer of his autobiography, who was very scathing about ‘The Donald’ saying he had a short attention span and was focused on promoting himself. As well as economic uncertainty the relations of the US with overseas countries also faces a period of uncertainty. Trump had promised to dismantle the Iranian deal and has been critical of Saudi Arabia. In regard to oil and other commodities he is keen to expand domestic production. In the short term Iran might be as well pumping as much oil out as it can. While some commentators have dismissed pre-election campaign pledges as mere rhetoric, Trump will need to satisfy his core supporters. For example, in one area of Virginia every county voted Trump and these people are hardly core Republicans or Conservatives. In fact, many are dependent on government largess in terms of some form of social welfare in a State where the average wage is a mere $13,000. Trump will
need to satisfy popular support to be more than a one term President. His election has also left the country deeply divided as did Brexit, and in fact in a number of States the Trump majority was wafer thin. The strength of the US currency should be a positive for some markets such as Japan, whilst a negative for Asia and the emerging world, especially if it means an end to the rate cutting cycle in a number of countries such as India and Indonesia together with Turkey. Some commodity prices have been very strong on the Trump election, such as copper and iron ore, but whether US infrastructure demand can make up for a slowing Chinese economy is an unanswered question. There has been huge dispersion between US equity market sectors. Unsurprisingly interest rate sensitive parts of the market have been hit hard, including Reits, Consumer Staples and high growth Technology names hit by a higher discount rate on future earnings. Small caps have outperformed as they are more of a domestic play and less sensitive to a rising US currency. Technology names have been hard hit, not only on the discount rate argument, but also fears that their overseas supply chains might be disrupted. Banks have justifiably risen with hopes of an improvement in net interest margins with higher rates and a steepening yield curve. The markets look right in marking down the price of government bonds, but whether the euphoria towards equities is justified remains to be seen. Prior to the election equity markets and the US in particular were trading at relatively rich levels compared to history and it is not necessarily the case that what is bad for bonds is good for equities. To make up for a worsening discount rate on company earnings the ‘e’ side of the equation needs to expand, or in other words there needs to be a return to robust profits growth in 2017 and beyond. This is a call that cannot be made with certainty at present, other than to note that the present bull market has been driven by the expansion of the PE ratio rather than company earnings and further multiple expansion looks unlikely. Prior to the election consensus forecasts for company earnings in 2017 showed a marked pickup and for this to be delivered the transition to a Trump Presidency needs to be achieved without disruption to business.
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HOW TO CULTIVATE AN ENTREPRENEURIAL SPIRIT IN YOUR SMALL BUSINESS Economies rely on the entrepreneurial strengths of small businesses, which is why companies should encourage innovation. Even after years of experience, companies should stay on the cutting edge of innovation, where they change and even break the rules and encourage new business creation. Staying one step ahead of the game and of current trends, is a great way to set yourself apart in business. One way of doing so, is to work with other small businesses, helping them to deliver new and innovative solutions by putting your indepth market knowledge to use. Here are some more ways in which you can cultivate an entrepreneurial spirit:
HAVE FUN When starting a business, you should endeavour to follow your passion. That will ensure that you have fun, which is a priority on the journey of entrepreneurship. Passion is the driving force behind every successful business.
INNOVATE Continual development of new ideas and products will encourage your business to go from strength to strength. As a small business, you have carte blanche to do so, as there’s nobody to report to or seek approval from. You can let your creative juices run wild with new ideas and innovative designs.
TAKE CALCULATED RISKS & EMBRACE CHANGE Technology changes the way companies speak to their audience, which is why it is important to stay ahead of the latest trends that are driving your sector forward.
SUPPLY/DEMAND While coping with increasing pressure, be sure that your overall service quality does not suffer. Customers are the lifeblood of your business, and you must do everything in your power to meet their demands.
DON’T BE (OVERLY) CONFIDENT A fruitful business requires quality products to survive, and this needs to be backed by customer service excellence. Don’t rest on your laurels, as competitors will strive to improve on their offering, and you may fall behind them.
By following the five steps above, you can ensure that your business flourishes and that your brand remains entrepreneurial. Be positive, dynamic and innovative on the path to success.
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BUSINESS BRIEFS ‘QUICK-SERVE’ RESTAURANTS DEVOUR ONE THIRD OF IRELAND’S FOOD SPEND
Pubs, meanwhile, accounted for 18% or €1.3 billion, of the consumer spend (excluding alcohol), with food-led pubs seeing the biggest return.
Quick-serve restaurants (which encompasses everything from fast food chains to more upmarket eateries like the Chopped salad store) now account for a third of all spending in Ireland’s foodservice industry while coffee shops are the fastest growing segment of the market, a report by Bord Bia has revealed.
According to Bord Bia,the value of the foodservice industry here grew to a record €7.5 billion in 2016, and is forecast to grow to over €9 billion by 2020.
Spending in this sector is expected to hit a record €2.6 billion this year, making it the largest single component of the industry.
UNEMPLOYMENT HITS ANOTHER POST-CRASH LOW OF 7.7% Ireland’s unemployment rate fell to another post-crash low of 7.7% in October, bringing the official figure to 168,000 which is an annual decrease of 1.5%. The seasonally adjusted jobless rate for males was 9% while the rate for females was 6.2%. The State’s youth unemployment rate
KERRY GROUP VOLUMES RISE 3.2% DESPITE ‘WEAK’ MARKET Business volumes at Irish ingredients firm Kerry Group are up 3.2% in the year so far, driven by surges in both its nutrition and consumer foods businesses. Kerry Group said global market conditions ‘‘remained weak’’, with currency volatility and a changing marketplace hitting business. Consumer trends are tipping towards healthy foods, which has led to significant product churn with the company looking to develop more innovative products. Pricing declined by 2.2% in the three months to the end of September, against a background of a 4.5% drop in raw material
HOUSING MARKET EXPECTED TO DOUBLE BY 2020 It was another strong quarter of growth in mortgage lending in the third quarter according to data from the Banking & Payments Federation of Ireland. Mortgage drawdowns totalled €1.6bn, up 17% on the year. Of
The report found the strongest growth was in the coffee shop channel, although this was from a low base.
The industry has benefitted from better-than-expected economic growth, buoyant consumer confidence, recovery in tourism and the continuation of 9% VAT for hospitality, Bord Bia said.
was 15.1% in September, down from the 15.9% recorded the previous month. Although emigration has played a significant role in keeping unemployment down since the financial crisis, labour market conditions have improved in tandem with economic recovery. Minister for Social Protection Leo Varadkar said the figures, alongside positive exchequer data, was “proof positive” that the economy was still on track despite Brexit uncertainty.
costs. The Dairygold-owner said consumer demand in its foods business remained strong despite the Brexit vote. Kerry reported an adverse currency translation impact of 4.5%, a significant amount of which was attributed to the massive drop in the value of sterling. Meanwhile, Ornua, formerly the Irish Dairy Board, has expanded in the US. The company said yesterday that it has acquired the CoreFX Ingredients division of US-based MCT Dairies, along with a powder ingredient production facility in Orangeville, Illinois. The acquisition, made in partnership with Denis Neville, formerly of MCT Dairies, is Ornua’s first specialty dry ingredients production facility in the US.
this, €1.4bn was for new lending towards house purchase or €3.4bn year-to-date. The figures show that mortgage approvals continue to grow at a rapid pace, up 38% in the third quarter, signalling a strong final quarter for new lending. Davy Stockbrokers have re-iterated that they are happy to leave their full-year forecast for house purchase at €5bn in 2016, up 13% from €4.4bn in 2015.
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IRISH TECH FIRMS RAISE €734M IN FIRST NINE MONTHS OF 2016 Investment in Irish technology firms has more than doubled over the last two years, according to new figures which show that companies raised a record €734 million from investors in the first nine months of this year. The VenturePulse survey from the Irish Venture Capital Association (IVCA) shows funding rose 77% versus the €415 million recorded for the same nine months last year. The level of investment in Irish tech firms has risen sharply in recent years, climbing from €314 million for the first nine months of 2014. In the third quarter of 2016, companies raised €248 million as against €108 million a year earlier, according to the IVCA. The life sciences sector put in a particularly strong performance, accounting for 54% of all funds raised in the nine months to the
OVERSEAS INVESTMENT IN IRISH REAL ESTATE FACES PERFECT STORM Real estate investment in Ireland has become dramatically internationalised since the Global Financial Crisis in 2008 according to a report by Goodbody Stockbrokers. Foreign activity in the Dublin investment market is running at 71% of transactions year-to-date, with US based investors making up the majority of this. While US investors were taking advantage of a strong US dollar position, historically discounted assets and the dramatic de-leveraging of Irish banks, they also chased yield in what is an open and accessible market. Goodbody have warned they now face into a perfect storm domestically and the impact on their appetite, and indeed capacity, for foreign investment is likely to be restrained. Demand
NEW €12M NETWORK LAUNCHED TO ASSIST IRISH AND WELSH LIFE SCIENCE BUSINESSES INNOVATE A new €12 million life science network has been announced to assist Irish and Welsh businesses to innovate. Celtic Advanced Life Science Innovation Network (CALIN) is a collaborative programme led by Swansea University’s Medical School and is funded by the European Regional Development Fund through the Ireland Wales Cooperation programme. It aims to engage and assist over 240 Small and Medium-sized Enterprises (SMEs) throughout Ireland and Wales by offering open access to a unique strategic international partnership involving 6 world leading higher educational institutions and global healthcare leaders Unilever and GE Healthcare. Through CALIN, Welsh and Irish businesses will have access to a powerful knowledge base and technological infrastructure enabling accelerated innovation and access to a network of key stakeholders including those involved in supply chains, route-
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end of September. The latest figures also show seed funding for early-stage companies is recovering after declining in recent years. Earlystage companies raised seed capital of €57 million in the first nine months of this year, equivalent to 8% of all funds raised. This compares with €25.5million or 6% of all funds raised in the same period last year. Director General of the IVCA, Regina Breheny commented that the Irish venture capital community is continually the main source of funding for innovative Irish SMEs both through direct investment and as the local lead investor for international syndicates who invested €123 million in the 3rd quarter. Total investment for the first nine months of 2016 was €328 million compared to investment by international syndicates of €225 million in the same period in 2015. Overall, she said that since the onset of the credit crunch in 2008 in excess of 1,350 Irish SMEs have raised venture capital of €3 billion.
for commercial space is likely to be weakened across developed markets as business confidence recedes. Ireland has an occupier base, particularly in the Docklands that is highly skewed towards US multinationals (DTZ estimated 41% of offices lettings in Dublin were to the Tech/IT sector in 2015). These occupiers rely on the accessibility and openness enjoyed by both markets, all this is now at risk given Trump’s rhetoric on US businesses abroad. According to Goodbody Stockbrokers, ‘‘The impact of a less open US market under President Trump is likely to have significant consequences on the demand for global real estate investments by US investors. This will hit pricing and yields. Any efforts to repatriate US businesses will dampen occupier demand in Europe, and this will hit rental values. Conversely, an uncertain US market may concentrate investors’ minds towards what seems now a relatively stable, in perspective, European market.’’
to-market and end-user healthcare providers. CALIN’s aim is to drive smart sustainable growth in advanced life sciences in both Ireland and Wales, by undertaking a large number of collaborative R&D projects, and through these generating new jobs and attracting investors into the cross-border regions. The six higher educational institutions are University College Dublin, National University of Ireland Galway, Tyndall National Institute, University College Cork in Ireland and Bangor University, Cardiff University and Swansea University in Wales. All R&D activities will include a collaborative partnership between an SME and both an Irish and a Welsh university over a 1-3 year period depending on the nature of the development programme. The network will offer R&D, technological development and innovation support to SMEs, which will drive the international competitiveness of both regions. Together the internationally recognised centres of excellence will foster long-term crossborder research and industrial partnerships, building a platform of excellence for wider interactions in Europe and beyond. Minister for Public Expenditure and Reform, Paschal Donohoe said that this programme shows how EU Funding can contribute to successful cross-border cooperation.
WORLD ECONOMIC & MARKET OUTLOOK OCTOBER 2016 Graham O’Neill - DIRECTOR AT INDEPENDENT RESEARCH CONSULTANCY LIMITED
Overview: •
Markets have rallied strongly post Brexit vote
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Post GFC unconventional monetary policy has delivered strong returns with low volatility
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Policy makers likely to shift to higher emphasis on fiscal policy
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Zero rates are not working for large sections of society & business
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Positive effects of unconventional monetary policy close to limits
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Cheap money to remain but market may anticipate policy shift
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Equities may now become more fundamentally driven with earnings primary driver
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Relative performance of sectors could shift
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UK has survived initial Brexit impact due to currency depreciation-but hard choices remain
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US economy growing but market fully valued
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China stabilised after fiscal response to slow down ahead of 2017 Party Congress
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Asia beneficiary of change in central bank policies & earnings seem past the worst
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Emerging Markets no longer homogenous group
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In an era of high correlations portfolio construction & fund selection vitally important
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Market Rally
Zero Rates
Since the Brexit vote markets have rallied strongly with many investors perhaps complacent about the influence central banks can continue to exert on asset markets. More recently there has been higher levels of volatility post comments by some US Federal Reserve governors indicating they would like to see higher interest rates and the ECB stating there was no intention at present to further extend the QE programme.
There may also be a realisation that zero rate policies do not work for large sections of commerce or society, with both banking and insurance company business models struggling in the current environment of ultra low rates and flat yield curves. Consumers may also actually be forced to save more as the capital needed to generate returns from low risk investments in particular has increased substantially.
The actions of central banks have been of huge benefit to holders of financial assets as unconventional monetary policy has delivered recently to investors high returns, low volatility and profitable correlations. At the back end of last year there have been some signs of a return to more fundamentally driven markets, but investor’s perception of the market implications of Brexit were for rates to stay lower for longer and this day to be put off. Whist this was true in the third quarter there are now reasons to question how long this goldilocks period for investors will last. If the US do raise rates and the EU does not significantly extend QE, financial valuations will be more influenced by economic and corporate fundamentals. Another factor for investors to consider is the crowded portfolio positioning driven by a thirst for yield and focus on high quality and visible corporate earnings.
The current level of interest rates does not really suit retirement, yet not everyone will be able to continue working forever. US officials are also undoubtedly concerned about their lack of ammunition in any further economic downturn and whilst not ruling a possibility of further unconventional measures out in this eventuality, there is probably a desire to try and normalise rates to some degree when the opportunity arises. There has also been debate at the Fed about whether the inflation target should be made more flexible in an attempt to raise the level of equilibrium interest rates in the economy.
Investors may have become complacent about the surplus levels of global liquidity which were always intended to be temporary. The sluggishness of the post crisis economic recovery meant this temporary situation has lasted a lot longer than investors had initially expected and led some to believe that the prop of easy monetary policy for markets would never be removed. There have been comments from central bankers suggesting that there now needs to be more of a focus on fiscal policy to boost growth with the belief that monetary policy is now fully utilised with little scope to increase stimulus by this means.
Central Banks Post the Financial Crisis central banks across the world, and especially in the States and UK, believed that a focus on asset values would result in higher growth and the avoidance of deflation. There was a belief that boosting asset prices would encourage consumption, partly due to historical evidence showing that periods of high economic growth had always coincided with high asset prices. There was also a belief that this wealth effect would filter down through the general economy and also encourage investment as the cost of capital for companies was lowered. Policies progressed from low interest rates to zero rates and then the large scale purchase of market securities, which in Japan has even included equities where some companies now seem on the route to nationalisation with the BOJ now owning 15% of their equity. Investors looked to exploit central bank policy by not only purchasing what central banks bought but also trying to anticipate where they might go next. This partly explains the market reaction in the immediate post Brexit period. Central bank activity also repressed volatility in financial markets, which resulted in the fulfilment of the initial desire of central banks to encourage investors to take more risk. There is an argument that this has now gone too far and investors who should by the nature of their financial position be low risk, encouraged into assets with potential significant downside in capital values. In recent years investors have been used to a period where stocks and risk free government bonds moved in tandem, which in itself detracted from the benefits of risk reducing diversification. As we go into the fourth quarter of the year central bank policy divergence is likely to once again come to the fore, as the US alone seems set on a path of monetary tightening in 2016. Whether any other major central banks will follow suit in 2017 remains to be seen. Even though the latest set of economic data from the States indicated a slight softening in the economy in August, comments from a number of Fed officials have suggested that they view the labour market as now becoming uncomfortably tight. Officials at the US Fed may also be concerned about the levels of increased risk taking by financial institutions with comments in particular directed at the high valuations in the US commercial property market.
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Policies from the Bank of Japan have proved counter productive, as an initial move to lower interest rates into negative territory produced an unexpected reaction in terms of a stronger currency and weaker stock market.
Global Liquidity There has also been a belief that both the ECB and Peoples Bank of China can continue to loosen policy and aid global liquidity, which in turn would continue to support or boost asset prices. Thus recent comments by the ECB not to increase the level of QE came as an initial shock to markets. There may now be a return to the sentiment that prevailed in the early months of this year that the omnipotence of Central Banks had come to an end, and their ability to deliver to investors high returns combined with low volatility is over. On days of market weakness both government bond and equity prices have come under pressure in tandem, which of course makes portfolio diversification virtually impossible to achieve in the short term.
Post Crisis Post the GFC monetary authorities quickly realised that unconventional policies would be necessary to prevent a continued downward spiral in the global economy. History shows that downturns that impact the banking sector tend to be longer lasting and more damaging than the traditional type of recession. Whilst the financial markets have delivered a V-shape recovery to investors, the actual economic recovery has been much more muted. This slow recovery has occurred notwithstanding the unprecedented nature of the monetary measures adopted which progressed from ZIRP (zero interest rates) QE and then NIRP (negative interest rates) eight years on from the crisis. Overall the response to these efforts to jump start the global economy has been disappointingly subdued. The US, of the major developed economies, has been acknowledged to have had the most robust recovery, but even here the pace of economic recovery has been sub-par. In none of the eight years of the Obama Presidency has growth exceeded 3%, which is a first for a US President. This is not to say that Obama has been responsible for the sluggish recovery, but reflects the hand he was dealt when he took office in 2009. Whilst the recovery on the ground was subdued financial markets had been encouraged with the prospect of a prolonged period of low growth and inflation, providing an environment where exceptionally low interest rates persisted for several years. Thus bonds and equities have rallied significantly ahead of the gains in the economic cycle.
2016 2016 has seen the omnipotence of Central Banks questioned by markets and now there is an increasing recognition, including by the Central Banks themselves that unconventional monetary policy has reached close to its limits. This is not just in terms of its ability to generate self sustaining economic growth, but also in terms of the unfavourable consequences of negative and zero interest rates for the health of financial institutions. Banks, insurance companies and pension funds do not have business models that work in today’s interest rate environment. Furthermore, the adverse effect that these exceptional monetary measures have had on income and wealth inequalities is now being more widely realised. QE has been referred to as “welfare for the wealthy�.
Mood Change
momentum and become something more substantial, with the current populist backlash against economic orthodoxy providing political cover for further fiscal measures. Whilst the actuality of spending increases to date may be modest, the anticipation of more to come is likely to affect asset pricing. Any move towards fiscal rather than monetary stimulus to boost economic growth is likely to have negative implications for long term bonds with yields set to rise. This is because investors will believe that higher growth will result in higher inflation and also higher deficit spending and therefore more bond market issuance. The changed stance by the Bank of Japan demonstrates that Central Banks realised that negative long term interest rates are harmful to many parts of the economy, especially banks, insurance companies and savers. This can also be seen by the public debate on going between different members of the Federal Reserve in the States where it is clear that some Fed Governors believe that keeping interest rates at current levels will do more harm than good.
This is not to suggest that interest rates will return to what investors historically would consider normal levels any time soon. There has however been a mood change in the markets, with a realisation that there has been a change in the narrative with statements from the recent G20 Summit calling for a greater emphasis on some form of fiscal stimulus in the policy mix. The period of outright reliance on monetary policy to place the global economy on a sound footing now seems over. Some commentators now acknowledge that QE itself might actually be deflationary as it keeps zombie companies afloat and therefore hinders capacity reductions in industries with persistent over supply. Economic commentators such as Martin Wolf in the Financial Times and Laurence Summers have commented that the world seems to be in a period of demand deficiency. Thus despite current high government debt to GDP ratios, arguments have been made that the impact of low interest rates on debt servicing costs gives room (something referred to as fiscal space) for still higher levels of borrowing, particularly if such debt is used for investment. Many governments around the world can now borrow at sub 1% interest rates and spending on infrastructure should increase the productive capacity of the economy. The resulting faster growth that ensued would then facilitate the repayment of debt. For the first time post the Financial Crisis the global focus on fiscal austerity is beginning to fade. Certain countries such as China, Japan and Canada have demonstrated increased public investment is planned or is already underway. In the UK, some easing in fiscal policy is expected in the autumn statement with the abandonment of the aim to produce a budget surplus within this parliament. This is necessary to offset some of the negative economic impact of Brexit. In Europe, under the terms of the Maastricht Treaty there is limited scope for fiscal expansion, but Germany itself is coming under increasing pressure from the ECB to soften its stance. The most dramatic change in monetary policy to date has been seen in Japan which set a cap on 10 year bond yields and vowed to overshoot its 2% inflation target on purpose. The Bank of Japan announced that whilst it would continue with its bond buying programme, it would buy fewer long term bonds which should make it easier for banks to earn profits as financial institutions should benefit from the carry available from holding longer dated fixed interest securities. In the US both Presidential candidates favour greater spending, together with tax cuts, although how this is eventually implemented will depend on Congress. Despite the statements of the G20 Summit there has yet to be a globally coordinated fiscal response to the aftermath of the Financial Crisis. Different economic conditions exist across the different regions of the world. As a result the overall economic impact on world growth of existing plans for increased levels of fiscal stimulus are likely to be relatively modest. Estimates range from a 0.3% - 0.7% boost to global growth over the next couple of years. Fiscal measures announced to date have been as much aimed at sustaining the existing levels of growth as an attempt to push them to a higher level. Even though the short term implications for growth from these measures are limited, any shift in policy can have important implications for financial markets. The likelihood is this gradual shift will gain
Cheap Money Remains Even though a slight shift in policy mix is now apparent and will be reinforced over time, this does not mean the era of cheap money is over. Central Banks everywhere will remain accommodative by historical standards, even in the States. Whilst US interest rates are likely to rise once this year, the medium forecast of the Federal Reserve for 2017 interest rate increases has been pared back to two. There are powerful secular forces such as the demographics of an ageing population in the developed world, together with high debt levels that will restrain economic growth going forward. In a lower growth environment the extent of the rise in longer term yields will be limited. Many Central Banks are committed to bond buying programmes over the next couple of years at least, although they may look to concentrate their purchases on the shorter end of the curve to help their banking systems. Nevertheless the negative price impact for a 1% rise in yields on a low coupon 10 year bond is not insignificant. With bonds yielding so little there is little in the way of carry to offset any negative move in capital values.
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Equities Equity investors will hope that an easing of fiscal austerity will result in faster growth in corporate earnings and with this impact to be particularly felt in economically sensitive sectors. Against this, if longer term bond yields rise there will be a negative impact on today’s high level of market valuations. The multiple expansion of this bull market, which has driven most of the gains, has come through applying an ever lower discount rate to future earnings streams. Equity markets may have to struggle with the dilemma of a higher discount rate on earnings compared to a hopefully higher level of earnings growth going forward. Gauging which one of these factors will win out, which will decide whether markets can continue to make further positive progress, is hard to judge. A perhaps obvious point is that a gradual upward move in bond yields will be more easily absorbed than a sharp disorderly change. In the last 12 months investors have seen the impact on equities from periods of volatility in bond markets when yields have briefly spiked higher.
Sector Impact There may be a large impact on the relative performance of sectors within equity markets. In particular the so called bond proxies which constitute large parts of Healthcare, Consumer Staples, Utilities and Reits could be vulnerable. In many cases valuations have been pushed to what would be considered historic extremes in these sectors by investors desperately searching for safety and yield. If a greater reliance on fiscal measures does succeed in boosting global growth rates, sectors more exposed to economic activity such as Industrials, Materials and Energy together with value stocks in general could begin a period of outperformance. Financial stocks would benefit from a steepening of the yield curve if this occurs and this has already started to happen in Japan. In that country whether the gains prove to be transitory will depend on whether investors believe deflation has been truly beaten. Another important factor is investor positioning and after such a subdued recovery many investors are overweight in more defensive names than sectors. Financials in particular, if hopes do grow of a more normal economic recovery, are coming off a period of large relative underperformance and are a part of the market many investors remain underweight.
UK Economy The initial shock of Britain’s vote to leave the EU has now passed and there are some signs of business and consumers regaining composure in the short term. The Bank of England’s strong policy response cutting rates and boosting QE has had the short term positive effect of devaluing the currency significantly. Historically many stock markets perform strongly in local currency terms after a devaluation and the UK has been no exception to this. It should also be remembered that over half of the population which voted were in favour of an exit, so their confidence levels are unlikely to be impaired by the Brexit decision. Whilst in the immediate aftermath of the Referendum indicators of economic activity plunged to their lowest levels since the Financial Crisis, there are signs of a bounce back in both manufacturing and services. In general retail spending and house prices have held up, although the former has yet to suffer from the increase in inflation that will occur from a fall in the currency. Recent economic data has seen a shift in forecasts from many investment banks with now a slowdown in growth rather than outright recession predicted. Whilst this is good news in the short term, it is not necessarily a guide to the long term prospects for the UK. Companies will need to be convinced that the UK will be a stable environment to do business and business leaders and external countries have warned new Prime Minister May about the importance of retaining access to the single
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market. Part of the market optimism may be based on a belief that a soft rather than a hard exit from the EU will occur. The Japanese government has detailed the concerns of subsidiaries operating in the UK which has been a strong beneficiary of FDI from that country. If negotiations drag on, uncertainty will be a drag on corporate capex in the UK and at the moment there is no clarity on the process, time table or likely outcome of the exit. The EU itself has a record for leaving deals to the 11th hour. Some of the concerns are tariffs on trading goods which is not just an issue for exporters, but for manufacturers whose supply chains cross Europe and therefore could see levies on both inputs and outputs. Furthermore if manufacturers did not meet the EUs rules of origin there would be more stringent customs procedures and potential exclusion from free trade agreements between the EU and other countries. Concerns for the service sector are wider and the worries over passporting of financial services have been well documented. Intra EU service trade has been aided by the adoption of one Regulator and divergence of regulatory regimes between the UK and the rest of the region would hamper this pillar of strength in the UK economy. The scale and complexity of the task that lies ahead should not be underestimated and it is to be hoped by the end of the year a clear strategy will emerge post the Conservatives October Party conference.
US Stocks After the strength of the US stock market in recent years, prospects for further gains must rest entirely on higher earnings, rather than increased monetary stimulus as the Fed contemplates when rather than if the next interest rate rise will occur. Market confidence suggests that some participants believe brokers are too bearish and that profit forecasts for US companies are therefore too low. The S&P 500 currently trades at around 18x next years projected earnings according to Bloomberg data, which is the highest level since 2002. Thus the US market on reported adjusted earnings is now at a higher level than it reached during the credit bubble, although at that time it traded at a higher multiple on trend or cyclically adjusted numbers. The market multiple now exceeds that of when the Federal Reserve was providing excess liquidity with its QE programme. Over the past months the previously market leading S&P 500 Dividend Aristocrats Index has lagged behind the market with classic income producing sectors such as utilities and reits giving up leadership. Even companies undertaking share buybacks have started to lag the markets. The last earnings season, which was poor, showed a slowdown in buybacks which suggests that companies may be running short of spare cash. We are now in an extended cycle which began in 2009 but S&P earnings have now declined for four consecutive Quarters. In the past earnings declines of this magnitude have been accompanied by bear markets and whilst there have been two periods in the last 12 months which have seen market corrections of more than 10% larger declines have been avoided. An expected earnings recovery in 2017 is given as a reason to buy into US stocks. It is true that earnings in the second quarter compared with a year earlier showed a slower rate of decline meaning the second derivative has improved. A lot of optimism is placed on the Energy sector with the huge fall in the oil price hitting US corporate earnings at the aggregate level. Thus in the second quarter whilst earnings as a whole were down around 2.5% on revenues that slipped by 0.5% excluding Energy, earnings rose 1.8% backed by a rise of 2.5% in sales. In Q4 this year the oil price adjustment will drop out of year on year calculations. For 2017 Energy earnings are projected to rise substantially. There are also positive expectations for fourth quarter earnings on a year on year basis. Dollar strength will also slip out of year on year comparisons which will help the numbers on US multi nationals. Despite this, estimates for the third quarter are actually still falling and including Energy consensus forecasts are for a slight fall of 0.4%. Whilst earnings in the second quarter did beat expectations these had been trimmed back significantly over the prior six months.
One further concern for investors is that company margins which have been historically high are now coming under pressure with some indications of erosion due to a pickup in US wages. US retail sales have also disappointed suggesting a sluggish economy and explaining the significant underperformance of the US Consumer Discretionary sector over the past 12 months. As the Fed is likely to hike at some stage, albeit modestly, it is more likely the market rating (QE) will decline which means investors will be reliant on earnings growth for future market gains.
China A further plus for the global economy in recent months has been the stabilisation seen in the Chinese economy. Whilst this has been good news in the short term, it does mean that hard decisions have been put off to some degree about capacity reduction in heavy industries such as steel and coal. Chinese SOEs remain hamstrung by their heavy debt burden and industry consolidation will result in job losses. Politics in China are awash with rumours ahead of the naming of the new Politburo in October 2017. Ahead of this there is unlikely to be any measures taken that will reduce growth in the short term. After this China could refocus on reform resulting in a slowdown in the economy. This could also have geopolitical indications as very often a country seeing economic pressure will cite an external threat as a reason behind the need for austerity. There remains the possibility of increased tension in the South China Seas at some stage, where external expansion could lead to conflict with the United States. Both US Presidential candidates are likely to take a harder line with China than the Obama administration has done.
Asian Consumers After a difficult period post the 2013 ‘taper tantrum’ Asia is now leading a gentle recovery in emerging market GDP growth rates. India is seeing a pickup in domestic consumption aided by significant increases in salaries granted to public sector workers earlier this year, together with a good start to the monsoon. Some countries in South East Asia (ASEAN) are also seeing a pickup in their economies. Within the ASEAN region Indonesia is the largest economy and this grew by 5.2% in the second Quarter of the year, which was its fastest year-onyear expansion for 10 Quarters. The Philippines has continued to grow strongly, expanding by around 7% in the second Quarter. India itself now ranks 7th after France in Global GDP ranking and posted an official 7.9% growth rate in Q1. With the slowdown in other parts of the world Asia has actually reaffirmed its position as the fastest growing global region. After a period in which the relative growth rates of Asia and the developed world converged, the reverse is happening this year with emerging Asia outperforming the global economy by a wider margin. This may have an influence on fund flows, as over the last five years most global investors have been turning cooler on emerging markets. Asia has now come to terms with a fall in export earnings and the decline in commodity prices, together with the slackening and rebalancing of demand from China. Some Asian economies have benefitted from increased FDI flows as Chinese labour costs increased. Whilst across the region exports were barely positive in the second quarter domestic demand has grown at its fastest rate since the final quarter of 2012. Within the ASEAN region and India consumers in general are under leveraged and there remains scope for greater credit penetration in these economies. This is combined in many countries with a robust population growth and rising incomes. Within Asia, consumers in South Korea and Malaysia have relatively high debt levels, whilst debt appears to have peaked at the consumer level in Thailand. Over the next few years selective parts of Asia look likely to once again top the leader board in terms of global growth and the Asian consumer story remains far from over.
Latin America & Africa Whilst the region has been in the global spotlight due to the Olympic Games in Rio, Brazil and the rest of South America have been a point of focus for investors all year as there have been flows to emerging market debt. Although the Brazilian economy is in recession, political change and a belief that the worst has now passed, means this has been one of the world’s best performing markets year to date. Investors in both debt and equities in the region were attracted by record low valuations and a hunt for yield. Like many parts of the emerging world today these Latin American markets are no longer a homogenous group. Therefore the challenge for investors and fund managers is to work out which are the most attractive ones. The type of factors influencing performance in a market will be how investors perceive it has learned from past crisis or mistakes, together with the current quality of its policy mix and whether structural reforms are being undertaken to boost productivity. The level of domestic demand with the ability to resist external shocks are also important. The best return will come from countries that are fundamentally strong or seeing an improvement in fundamentals, but which are highly out of favour. This explains why the Brazilian market has rallied so strongly, with investors encouraged by the impeachment process which demonstrated the independence and strength of its democratic institutions. Brazil had been a clear sufferer in the commodity market downturn, but prices have now in the main stabilised. There is now a belief that the corruption crisis is past its worst and the fact that powerful political names have been implicated, including the President, has also increased investor confidence. The country has a flexible exchange rate policy and the decline in the Real means Brazilian firms are once again competitive. Monetary policy was tightened to bring inflation expectations back under control and the level of real interest rates remains higher than most parts of the world. Political leaders are now realising that the middle class in Brazil wants greater transparency and an economic framework that boosts living standards over the longer term. Columbia too has benefitted from the reduction in the risk premium with its creditworthiness strong and the cease fire between government forces and the rebel Farc movement ending one of the world’s longest running insurgencies. This breakthrough should help transform the economy. The countries previous dependence on oil and coal is waning as other sectors develop. Heretofore there has been a Central Bank which has reacted to rising inflation by raising rates. Other countries have a less favourable policy mix with Venezuela having well documented problems with a domestic economy in free fall and hyper inflation approaching. There is therefore a significant difference between the best and worst performing economies and markets in the region and strong active managers should be able to exploit these opportunities. In Africa hopes have faded from the optimism prevalent at the start of the decade when there was talk of ‘Africa Rising’. The two largest sub-Saharan markets, which dominate African equity benchmarks, both have serious problems and are close to recession. South Africa has suffered from the end of the mining boom and corruption which has hindered development in the post-apartheid world. Nigeria has suffered from a serious decline in oil revenues and a reluctance to devalue the currency which resulted in a shortage of US$ in the country. Whilst many smaller African countries continue to grow, including Kenya, Rwanda, Ethiopia and the Ivory Coast, these are too small and illiquid for investors to access easily.
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SUMMARY If the world does turn to looser fiscal policy to boost growth, a theme that emerged from the recent G20 summit, this could have implications for the relative valuation of assets within markets. A world where both inflation and growth are higher would be negative for government bonds and bond proxy equities where investor positioning is significantly overweight. There is a need for investors to remember that there is now general consensus about low rates for longer and a change in belief by Central Banks that extreme monetary policy measures were becoming counter-productive could lead to levels of increased volatility and sector rotation in markets. Political leaders and Central Bankers have observed the rise in populism fuelled by the correct belief that QE has done little to help most individuals. Any change in market perception on inflation or interest rates could lead to a very interesting fourth quarter for financial assets. QE has flattened the yield curve, increased fiscal stimulus could steepen it, changing the market’s performance drivers. One important point to note is that a market where both bonds and equities move in tandem makes true diversification hard to achieve and careful fund selection and portfolio construction is necessary to mitigate against this. In the fixed interest space strategic bond funds prepared to take measures to defend capital values by shortening duration may well fare best. Within absolute return, funds not reliant on bonds as a sole hedge against equity volatility may achieve the best diversification benefits. In equities, whilst a cautious stance seems justified certain lagging markets/sectors have the scope to deliver positive returns over time.
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GRAHAM O’NEILL Director at Independent Research Consultancy Limited. Graham is an investment researcher of international note and has been working in this area for over 20 years. He began his career in the stock broking industry before becoming an institutional fund manager where he practiced both in Ireland and the UK where he worked in senior roles with a number of institutions including Royal Life holdings, Guardian Royal Exchange and Abbey Life. Throughout his career, he has managed multi-million Euro funds and developed innovative investment fund concepts. Seeing the need for non biased, critical analysis of the investment industry, Graham began work as an independent investment researcher in 1992 and since then, principally, he has provided services to financial institutions. Graham is also a director of RSM Group, a leading UK investment research company. Through his research process, Graham filters through the broad range of Irish and International investment fund managers for those investment managers who consistently perform best. He conducts in the region of 150 teleconference meetings and on site interviews with asset managers in UK, Europe, China, Hong Kong, Singapore and Australia. Following on from these meetings, Graham produces detailed research notes.
HOW TO DELIVER PERSUASIVE PRESENTATIONS It doesn’t take a rocket scientist to deliver a good presentation. We all know the dos and don’ts: look your audience in the eye, don’t read from a script, and keep the slides simple. However, when it comes to persuading decision makers to buy into your proposal, the basics won’t cut it. A strong outline is the key to ensuring your idea is approved. Use this simple checklist - a range of questions to ask yourself - to find out whether you’re defusing objections from the start, and to ensure that the ‘‘yes’’ is more likely.
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WHAT’S THE PROBLEM YOU WISH TO SOLVE
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CAN YOU SIMPLIFY THE STRUCTURE
Remember that you’re overly familiar with the idea, and even the most complex facets are obvious to you. However, people hearing about it for the first time may be lost in translation. Consider ways in which you can simplify or clarify the information. You could use phases or numbered steps that enable your audience to grasp the complex solution. This should also inspire more confidence in your proposed path and provide an overarching structure for the rest of your presentation. Even experienced sales people talk about the solutions they offer right at the start of the presentation. Remember that outsiders who have not been involved in the development process of the project, and therefore, they may not be privy to the problem you are trying to solve. Unless you explain it to them upfront, you may risk losing them early on, as they may not understand the relevance of your proposal.
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WHY SHOULD THEY MAKE A DECISION NOW
The problem you are trying to solve may be relevant, but if they have successfully avoided it thus far, they may not see the value in changing now. It’s up to you to show them why they should act now to avoid the problem worsening. Explain the cost of inaction.
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CAN YOU INCLUDE A STORY?
While anecdotes seem frivolous to some, storytelling is actually an advantageous factor that you should include in your toolkit. You don’t have to tell elaborate stories, but pairing a simplistic anecdote with concrete examples of how your solution helped others, will create a visual connection with the rest of your presentation.
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HAVE YOU INCLUDED A POWERFUL CALL TO ACTION?
HOW WAS YOUR IDEA VETTED
You may have worked on this project forever, however, your audience may not appreciate the depth of the effort. Contextualise it by highlighting the evidence of your competence and the seriousness that went into finding this solution to their problem. You could mention all the researchers who were interviewed to establish the best practices you recommend, or the pilots that were run to test your concept. This is a crucial element that you should build into the outline early on.
For you, the next step after a powerful presentation is obvious, however, most professionals fail to include a call to action in their presentations. It may not be that obvious to your audience though. Consider what you want them to do - invest in your company, or approve the budget to launch your product - and include a strong invitation as a call to action. Clarify for them which action they should take to show support.
NEXT TIME YOU DO A PRESENTATION, FOCUS MORE ON THE MEAT OF YOUR PRESENTATION, RATHER THAN THE THEATRICS AND THE AESTHETICS. YOUR CONTENT DETERMINES WHETHER YOU’RE GOING TO MAKE THAT SALE OR NOT.
By covering the bases above, you will be much more likely to achieve the desired results. 13
Extreme WEATHER
Caroline McEnery - Manager, The HR Suite
Severe weather challenges all of us and activities that we take for granted can become difficult or even hazardous when severe weather occurs. Ireland’s previous extreme weather events have in some cases impacted on employers’ ability to operate businesses, their ability to be able to provide work and employees’ abilities to make it to work. As we all know extreme weather can happen at any time of the year here in Ireland. In recent years we experienced extreme storms which highlighted the need for employers and managers to be proactive in managing this aspect of workplace disruption. Inclement weather refers to any kind of extreme weather - usually snow or ice, which might create hazardous driving conditions or significantly impair normal operations. It might also include severe storms, flooding or other natural perils. In general, organisations must continue certain operations during periods of bad weather due to the needs of clients, customers and other factors. However, it is advisable that all Companies have a plan which clearly defines how the organisation intends to deal with difficult weather situations. With winter now upon us organisations should consider some of the main aspects of their business that can be effected during adverse weather.
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PLACE OF BUSINESS How could the place of work be affected i.e. the site and buildings. Is the location at risk of storm damage including flooding? Are water pipes insulated (including in and around vacant buildings)? Employers should check premises over weekends and holiday periods and review the companies’ insurance cover. Contact insurance advisors in relation to any concerns you may have about your premises.
EMPLOYEES Can management introduce options that could minimise disruption e.g. working from home, teleworking or shift-work. Ensure the business has up-to-date employee contact details and that responsibility is assigned for planning and making preparations. Employers and management need to consider what has to be put in place to ensure employee safety across the place of work.
CUSTOMERS AND SUPPLIERS Have a plan for communicating with customers e.g. social media communication updates etc. Liaise with key suppliers with regard to arrival times of supplies and services. Ensure you consider customer and supplier safety within their access areas in the business. Assess how surrounding pavements and access points can be cleared in the event of snow and ice and make preparations for suitable equipment being available. Consider these key considerations for implementing a plan should the severe weather impact on your organisation this year. Common queries are outlined below that The HR Suite would receive from Clients in relation to disruptive weather.
ROSTER CHANGE In a normal situation employees would be entitled to notice of at least 24 hours of a roster change. However, if adverse weather has affected your business and you have to change your roster to facilitate a later opening time etc. this time requirement does not apply in such unforeseen circumstances.
LAYOFF If the organisation has suffered due to adverse severe weather and is unable to function due to repair work and restoration efforts - the employer can put employees on a period of ‘layoff’ as there is no work available. It is clear that this would be a temporary situation and that the employee can expect to return to work in the future once work has been completed to make the site safe and workable. In such a case the employer is not obliged to pay employees.
PAYMENT There is no legal entitlement for an employee to be paid where they cannot attend work because of extreme weather conditions.
ANNUAL LEAVE Employers can ask employees to take annual leave for days of bad weather, in which case employees would be paid. In a normal situation there would be a month’s notice of the employer’s intention to have employees take annual leave, however the employee may agree to a shorter time frame given the unusual situation.
UNPAID LEAVE If the employee cannot attend work due to difficulties in travelling to work etc. this is a matter for agreement between the employer and the employee. In some cases, the two parties may agree that it can be taken as a day of unpaid leave.
The HR Suite can advise you and your organisation how to be proactive in managing the potential disruptive nature of severe adverse weather that could face your business. If you require further information, please do not hesitate to contact one of our HR Advisors on 066 7102887.
ABOUT THE AUTHOR
Caroline McEnery Manager, The HR Suite
The HR Suite is managed by Caroline McEnery who has over 20 years’ experience in providing HR Services to business throughout Ireland. Caroline is a member on the Low Pay Commission and is also an adjudicator in the new Work Place Relations Commission. She has also completed a Masters in Human Resources in the University of Limerick, she is CIPD accredited as well as being a trained mediator.
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TIPS 5 for for
Managing Stress IN THE WORKPLACE
The workplace can be challenging at the best of times, what with reaching targets, and getting along with co-workers. Everyone has their own objectives, and not everyone understands that there is no ‘I’ in team. Stress takes a toll on your enjoyment of your career and also on your health. If you don’t handle it well, workplace stress can have a negative impact on your personal brand. So how do you do manage workplace stress?
LEARN TO SAY NO Whenever you say yes to one request, you say no to something else. When you start running at a deficit in your work hours, you will naturally start allocating your personal time to additional work, volunteering and favours. Before long, you lose control of your time. You don’t have to say yes all the time. Learn to say NO to things that do not promote your objectives and those of your team.
BEAT CHAOS WITH ORGANISATION By planning ahead and adding leeway for changes, you can manage workplace stress. Allowing for extra time, gives you the opportunity to plan ahead and you can put plan B into place, in the event that plan A fails. It will alleviate stress about what could possibly go wrong, but it will also make it easier to deal with anything that might go wrong.
TAKE A BREATHER Instead of wolfing down lunch absentmindedly while hunched over the computer, stop right now and get out. Take your lunch and go enjoy it outside. Combining some exercise with fresh air will clear your mind and help you relax, so that you can make it easily through the 3pm slump. Also, exercise can boost sleep, which is crucial for handling stress, and stress can prevent you from getting adequate sleep. If you’re having difficulty sleeping and handling stress, then you must consider adding more exercise to your day.
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LEARN TO DELEGATE
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BREATHE DEEPLY
Much of the stress we face, is caused by the fact that we try to do everything ourselves. Perhaps it is because we think we’re the only ones capable of properly completing tasks, or because we don’t want to burden others. However, by delegating, you will provide someone else with the opportunity to learn while relieving your own stress at the same time. Your working relationships will be helped by this display of stress, and that, too, will have a positive effect on reducing your stress.
Deep breathing while focusing on each breath, will help manage your stress levels. Inhale deeply through your nose for five counts, and then exhaling through your mouth for a count of five, can help alleviate stress. Finally, no matter how important your job, you need to take a break from time to time. Take a break or a holiday to recharge your batteries and restore your creativity levels.
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8
Steps SAVVY SAVING to
Accessing money is not as easy as it was before, so it’s important to make it work for you. It’s tougher than ever to access money, whether you’re looking for a credit card, home loan or vehicle finance. By applying financial discipline and personal organisation, you can develop a savings culture, which is much more significant than saving money for the things that matter or for a rainy day. How you plan on saving depends on what you are saving towards. A deposit on a home of €300,000 (including property valuation, mandatory deposit, legal fees, etc.) would require an amount of €48,000 to get a foot in the door. If that’s your money goal, you need to now put the structure in place to save up towards that amount. You will need the following documents:
STEP
NET INCOME
Start by calculating your net weekly or monthly income (after taxes and deductions). The amount is usually equal to approximately 2/3 of your gross income. That will now be referred to as your financial base.
STEP
IDENTIFY EXPENSES
Identifying your expenses and other costs puts you in control of your finances. If you don’t keep track of your money, it will disappear. Use your receipts, bank statements and credit or debit card statements to keep a track. Your card statements may tell you where you spent money, but it doesn’t show what you purchased, which is very important. Be sure to request a receipt every time you buy something.
STEP
KEEP A RECORD
After 3 months of accurately recording your income and expenses, you will establish a spending baseline.
STEP
REVIEW
On a monthly basis, review your spending. Break your spending up into two groups, namely needs and wants. Needs are those essentials you need to live and work, such as food, fuel (electricity, petrol). Clothes are a need, but style is a want. Transport is a must, but a luxury statement car is a want. As you review your spending, consider whether a particular purchase satisfies an essential need (food or shelter) or whether it makes a statement.
• Income statements or payslips • Bank statements • Debit and credit card statements • Receipts
STEP
• A budget planner
MILLENNIALS ARE DEBT AVERSE According to a variety of global studies, millennials seem to be adverse to obtaining personal debt. Many of them witnessed the problems their friends and family faced in the wake of the 2008 global financial crash. Debt is risky, but when it comes to buying big ticket items such as homes and cars, it is a necessary evil. For that reason, consumers are advised to combine carefully selected debts with a lifelong savings culture as a guide for growing your own personal wealth. This will help protect you from unexpected financial crisis. If you’re buying a home, ensure that the purchase still allows sufficient financial breathing space for your family to continue saving towards a rainy day fund, retirement and the like. When life happens, you can gain strength from a healthy financial cushion that can cover your short and medium-term financial commitments. Being able to weather financial storms and protect your home, family and wealth, places you in a stronger position to handle life’s challenges.
CUT AND SAVE
Now that you’ve decided whether each expense is a want or a need, it is time to start cutting down. Use your big money goal as a motivator to slash unnecessary expenses, and you’re guaranteed to see a sizable difference in your savings.
STEP
AUTOMATE YOUR SAVINGS
Automating your savings is critical in keeping away temptation. Set up an automatic pay deduction that goes into a savings account. This will automatically reduce the cash available to spend on things you really can do without.
STEP
SET A TIMELINE
When do you want to achieve your goal by? Create a plan and put it in place. If you are able to save €1,000 per month, it will only take you 48 months to reach the €48,000 goal. Double your savings and half the time.
STEP
MAKE ADJUSTMENTS
Review your plan regularly, and make the necessary adjustments. Continue monitoring your money goals, and your progress, and adjust it when you receive a promotion at work - or win the lottery! If, for whatever reason, you fall short financially, try to reduce your automated savings amount, but don’t abandon it, if you can help matters. Keep a track of your finances and if you stay strong, you will find a way to remain on track.
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What Google Knows About You FIND OUT WHAT YOU NEED TO KNOW If online privacy is a concern for you, read this article to find out how to enhance yours. If you, like the rest of the world, use Google Maps, Gmail, Chrome and other Google Apps, the search engine probably knows quite a lot about you and your activities. It may not really bother you much, as the services are free and giving up some privacy is the price you pay in return. However, if you’re not sold on giving up a whole lot of information in return for targeted advertising, read on to find out what Google knows about you and what you can do about it.
MY ACTIVITY Go to myactivity.google.com to see exactly what Google knows about you. It includes information about your app usage and web activity. You can see everything you’ve done, listed by service, date and topic. Drill down further to view each item, or bundle it. Either way, you will note that they have amassed quite a bit of information: • YouTube activity will include a list of the videos you watched, including the dates.
Delete
You have two options when it comes to deleting your information: delete by date, or delete everything. If you delete everything, it may affect some of your services, such as having commuting options sent to services including Google Now. You can delete everything by going to myactivity and clicking on the three vertical dots in the top right corner. Select Delete activity by and choose the product you want to wipe clean. You can also Select All. Click on Delete to confirm your selection, and click on the confirmation requests from Google.
• Maps will show you all the places you searched and the directions you obtained. • Google Now will provide information on upcoming appointments before you ask, and it will also tell you how long it will take you to get home. • Other Google Activity will show you the places you visited with your device switched on, based on location history. While you’re the only one who can see your activity, you may not be comfortable with sharing information, such as your locations. This is especially frightening when you consider the prospect that someone might gain access to your account and find out all your personal information. Use Activity Controls to stop tracking certain activities, which paint a detailed picture of your life.
Here’s what you can do about it. When you turn off Web & App Activity, a warning will be displayed: “Please note that even when this setting is paused, Google may temporarily store searches in order to improve the quality of the active search session.” That means that while you will no longer be tracked, some of your activity will still be temporarily stored. Use the Incognito browsing mode in Chrome to get around the issue above. Your IP address will still show up on services you access, but it will remove traces of the activity on your laptop, PC or phone.
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Controls
You can tell the search engine not to track certain activity by clicking on Activity Controls. Here you will find a list of services, such as Web & App Activity, Device Information, Location History and others, along with a small slider next to each item, which you can turn off to stop tracking activity.
By far the easiest method to circumvent Google tracking your activity is to avoid logging into Chrome using your Google account, and to logout of your Google Account when you are done using Gmail or Drive. In doing so, your browsing activity won’t be associated with your Google account. Of course, this is easier to do on your laptop or desktop computer than it is on an Android phone, however, using a combination of the controls above, and paying careful attention about allowing access to your activity will go a long way to giving you more privacy.
MEET THE TEAM Dervilla Whelan
Sarah Keane
(BBS, CTA) Managing Director
(BAAF, FCA, CTA, QFA) Director
Dervilla Whelan is the Managing Director of DLS Capital Management Ltd and also one of the founding members of DLS Partners. She was previously a taxation partner in Baker Tilly O’Hare (now part of Baker Tilly Ryan Glennon) and is a graduate of Trinity College, Dublin and the Institute of Taxation in Ireland. Her key skills include advising clients on all aspects of their financial affairs, including advising on the appropriate structures required for all types of investments and pensions. Dervilla is heavily involved in the Family Office service for our high net worth clients. Dervilla’s involvement with both DLS Capital Management Ltd. and the tax practice, DLS Partners, ensures that her clients benefit from a holistic approach to all of their financial affairs
Sarah Keane is a graduate of Dublin City University in Accounting and Finance and a Fellow of the Association of Chartered Accountants (FCA). She is also a member of the Institute of Taxation in Ireland (CTA), and the Professional Association for Financial Services in Ireland (QFA). Her key skills include advising clients on all aspects of financial planning, including retirement planning strategies, taxation and investment advice. Sarah is highly experienced in the preparation of investment financing strategies for individuals and companies. Sarah is also heavily involved in the Family Office service for our high net worth clients.
Graham O’Neill
Stephen Cahill
Graham is an investment researcher of international note and has been working in this area for over 20 years. He began his career in the stock broking industry before becoming an institutional fund manager where he practiced both in Ireland and the UK where he worked in senior roles with a number of institutions including Royal Life holdings, Guardian Royal Exchange and Abbey Life. Throughout his career, he has managed multi-million Euro funds and developed innovative investment fund concepts. Seeing the need for non biased, critical analysis of the investment industry, Graham began work as an independent investment researcher in 1992 and since then, principally, he has provided services to financial institutions. Graham is also a director of RSM Group, a leading UK investment research company.
Stephen Cahill is the Tax Manager at our Tax Practice, DLS Partners. He graduated from DIT and is a member of both the Association of Chartered Certified Accountants (ACCA) and the Irish Tax Institute. Stephen is responsible for all areas of Tax, including, VAT, PAYE, Income Tax, CGT and Corporation Tax. He also is involved in the preparation of Financial Accounts for sole traders and limited companies and assists in the preparation and review of monthly management accounts for larger corporations.
Independent Consultant
(BSc (Marketing), ACCA, CTA) Tax Manager DLS Partners
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RANGE OF SERVICES RETIREMENT PLANNING
FINANCIAL PLANNING
•• •• •• ••
•• Financial Planning is central to our
•• ••
Tax-effective funding for retirement. Income Planning for your retirement Personal Fund Threshold calculations Protecting the underlying value of your pension fund throughout retirement Advice on the most tax effective drawn down of your pension vehicles Taking transfers from Defined benefit Pension Schemes
•• •• ••
PENSION STRUCTURE ADVICE •• Personal pensions •• Self Invested Personal Pensions •• Company/Executive pensions •• •• ••
••
- Defined Benefit Schemes - Defined Contribution Schemes Small Self Administered Schemes Personal Retirement Saving Accounts (PRSA’s) AVC’s
FAMILY OFFICE SERVICE •• Preparation of Quarterly Net Worth Statements
•• Preparation of a comprehensive
INVESTMENT ADVICE •• •• •• •• •• •• •• •• •• ••
Managed Funds Exchange Traded Funds Unit Trusts Investment Trusts Tracker Bonds Deposits Employment and Investment Incentive Schemes (EIIS) Structured Products Qualified Investment Funds (QIF) Renewable Energy Investments
service offering We compile fact finds based on client’s personal and financial details We produce a Financial Plan for each client, showing their current financial position and their future financial objectives. The Financial Plan will encompass all areas of a client’s financial position, e.g. investments, borrowings, protection policies and pension policies Financial Plans are reviewed on an annual basis, taking into account any changes in a client’s personal and/or financial circumstances.
•• •• •• ••
database which contains all information on Assets and Liabilities, thus facilitating instant access to information Centralisation of costs on all Personal & Investment Properties Appraisal of Investment Opportunities Monitoring of Investments Attend meetings relating to Investments on behalf of clients
DLS Capital Management 25 Merrion Square Dublin 2
www.dlscm.ie info@dlscm.ie
DLS Capital Management is regulated by the Central Bank of Ireland
(p) 01 6119086 ( f ) 01 6619180