The Livery Newsletter and Gazette Issue 30 Spring 2019 - Page 7

The Tobacco Pipe Makers and Tobacco Trade Benevolent Fund The lunch the was deliciously catered by Mark banking Grove In 2008, catalyst was the international and team investors at Cook sold & Butler and we sat cracked crisis his when shares and on cash. along at a goodly pace. Our guests were admirably The fragility of the financial system required central introduced by Liveryman Fran Morrison and our banks to increase cash in the system (liquidity) Principal Guest, Tim Wonnacott generous and through the reduction of interest gave rates a and eventually very humorous reply to which I responded initially resorting to the process of quantitative easing - the by drenching poor Tim in the a glass of water - he was injection of cash through purchase of bonds. very kind about it (sorry I was very pleased Effectively, central banks Tim!). were propping up asset to show off the newly found Livery Grant of Arms prices by purchasing bonds in the market; a state and Letters Patent been missing As for the many of affairs that could which not go have on indefinitely. years - our Clerk tenaciously sought them out, and economic indicators improved in the US and growth the Past Master, Chris Allen, and his had new been Immediate recorded for several quarters, the Federal IPM, Mark Gower-Smith have funded a beautiful re- Reserve wound down quantitative easing and began presentation and they are now resplendent in frames a series of modest interest rate rises which continued carved with of tobacco leaves interest (or close to); rise, Sandra also to the end 2018. When rates equities located a huge banner not seen since 1985 and Angus (shares) tend to be less attractive, particularly when Menzies, Clerk to above the Master Mariners and never interest rates rise the rate of inflation. Risk shy of a challenge saw to it be that drawn it was to displayed on the of averse investors would the attraction Quarterdeck. low risk cash deposits or bonds that could provide an The audited Annual Report and Financial Statements for the year to 31 March 2018 may accessed through this LINK Incoming resources were significantly higher than the previous year at £461,264 due mainly to the timing of donations to the Welfare Fund from one of the tobacco companies and higher levels of investment income. Expenditure on charitable activities was 6% higher at £336,253. At the end of the financial year, total funds were 2% lower at £7,710,016. The slight decrease in the value of the funds is due to market volatility and the valuation taken on the final day of the accounting year. FTSE 100 January to December 2018 above return. commentators often Whilst inflation all this was going Market on, apparently biblical- refer to the impact on share a “rerating” style downpours were being prices had all as over London or “market correction”. Global markets are having - oblivious to all that drama we ended our now lunch to how back to work on quarterdeck their own fundamentals and learn trooped to the where Coffee, without the excess liquidity Cigars, and Cognac awaited that us (I has did propped mention up that valuations for a decade. This transition produced our Livery enjoyed dining on the High C’s..) and higher levels of to volatility during 2018. which seemed hit the mark – Liveryman Jemma Freeman had there kindly the factors torpedo at cigars In addition, are provided geopolitical play: and had had them placed in souvenir tubes with our President Trump’s tariff threats could trigger a global Crest emblazoned on it. Several of us also sported trade war; China’s economy has slowed; the US$ has a continued limited edition Livery Smoking hat - originally to strengthen, commodities prices have conceived as a sort of shooting hat, it serves its been volatile, economic recovery in some European purpose well as a “team” hat, political that of orders the twenty countries so has faltered, the old have ordered, but one remained by the close of the day! been threatened by the rise of populist parties … Thank you there to the Master Mariners for allowing us the and then is Brexit. While Brexit dominates use of the in venue, to Tim for context being a of perfect Principal the news the UK, in the the global Guest, and for everyone attending and giving my economy, it is less of an issue. year such a special start. The Trustees hold regular meetings with Quilter Cheviot and these uncertainties have been monitored closely. The Welfare Fund was established The 150 Master years ago and the General Fund over 60 years ago. Source: London Stock Exchange Investment performance and market volatility The Trustees receive quarterly investment reports and monthly valuations from the Benevolent Fund’s investment managers, Quilter Cheviot. During 2018, the value of the funds peaked at £8,321,000 at the end of August. Since the recession of 2008, there had been a decade long “bull market” and, during the 18 months to mid-2018, many stock markets rose with historically low levels of volatility. All economies and stock markets are subject to cycles where economic growth fuels investors’ confidence and the markets rise until an event or other factors undermine the confidence and stocks are sold and valuations fall. 3 7