Monthly Newsletter – February 2026

Markets in 2025 have been shaped by heightened political uncertainty, both in Europe and the US. Budget pressures in France and the UK, alongside shifts in US trade policy and tariffs, have contributed to volatility.
Bond markets have also been unsettled, reflecting concerns over expanding fiscal deficits in the US, UK and Japan. Challenges to the independence of the US Federal Reserve have further dented confidence in US assets, particularly the dollar, while geopolitical tensions have remained a persistent backdrop.

These factors have driven alternating periods of ‘risk-on’ and ‘risk-off’ sentiment. Nevertheless, overall investment returns in 2025 have been strong, underpinned by solid earnings growth, easing interest rates and resilient consumer demand supported by robust labour markets. As a result, the OECD forecasts global growth of 2.9% in 2026.

Caution remains warranted. Consumer confidence is subdued, corporate guidance is tentative, and capital expenditure outside AI remains constrained, reflecting political uncertainty and early signs of softer economic data. While equity markets may continue to progress, elevated valuations leave them vulnerable to negative growth surprises.

Looking ahead to 2026, Europe and emerging markets are areas of particular interest. Germany’s defence and infrastructure investment represents a structural boost for the European economy, supporting consumers and strengthening the euro. European equities have delivered strong sterling returns, outperforming the US market this year.

In China, demand-focused policies, improved trade relations with the US and stronger market governance have supported performance and may prompt investors to reassess low allocations. Emerging markets more broadly continue to benefit from favorable economic conditions and strong public finances, supporting currencies and returns.

In fixed income, credit fundamentals remain sound and interest rates are expected to ease further. However, limited compensation for credit risk leaves markets vulnerable to future stress. Sovereign bonds also carry risks amid persistent fiscal deficits and sticky inflation.

In summary, while we remain constructive on the outlook for returns, expectations are more measured. Volatility is likely to persist, making diversification and active management increasingly important.

Anna Griffiths – Clear Technical Manager

Big round numbers fit in our brains and we remember them.
If you ask someone to guess the price of a car, the width of the English Channel, or the weight of an elephant their first thought will be a round number which they’ll then work backwards from “£20,000” or “20 miles” or “5,000 kilos”. Like all good psychological phenomena, you can see round-number bias rear its head in investing. Those numbers just get our attention.

Now, there’s a decent chance that by the end of this week, the FTSE will have squared itself.
By which we mean the FTSE 100 index will have reached a level of 10,000!

Source: FactSet. Past performance is not a guide to the future.

But the “number” of the index – round or otherwise – is entirely arbitrary! Its importance lives in our brains!
In 1984 the FTSE 100 started with a value of 1,000. The midcap FTSE 250 began in 1992 at a level of 2,403. The US index – the S&P 500 –(Standard & Poors) started in 1957 with a value of 44.06. Comparisons don’t mean anything when the starting point is that random.

Also, if you look at the chart above, you’ll notice that the numbers don’t stop. The larger the index gets, the smaller a percentage gain needed to hit a new “important” level. Once we pass 10,000, we’ll be just 10% away from 11,000. And after that, just 9% away from 12,000.

But if you want to sound smart, don’t use round numbers.

When Mount Everest was measured for the first time, it came in at 29,000 ft exactly. So the surveyors said it was 29,002 feet, to convince the public they had bothered to do the job!
So, if you want everyone to believe you’re an intelligent and precise large mammal appraiser, make sure your elephant estimate is something like 3,567.52 kilos … It works, even if you’re wrong!

Source:7IM

There are already more than 5 million industrial robots hard at work around the world (not including Siri, smart washing machines or driverless cars).
But countries are adopting robots at different paces. China, Japan and South Korea account for two thirds of all robots built every year:

 Source: AI Index Report (2025)

Economists will tell you that the reason is because there is huge demographic problem in those countries, which are aging faster than most other nations.

Source: Our World in Data

Robots are a helpful solution when the number of retirees starts to overwhelm the number of people still working. But another angle is Social psychology.
Europe and the US, are just not that comfortable with robots. In a recent survey about attitudes to robots, people were asked how happy they’d be with robots being involved in everyday social tasks like cooking, elderly caregiving and medical care. Just 26% of Americans (and 29% of Brits) said they would be ok with robots doing those tasks, compared to nearly 60% of Chinese respondents.

Why could that be?

This is just a thought but could the fact that Arnie and the rest of the android assassins didn’t make it to China until the mid-2000’s (along with Blade Runner and a host of other robot bad guys …) have something to do with our negative view of robots!

Source: The Terminator, 1984/7IM

In the Hitchhikers Guide to the Galaxy the best place in the universe to eat is at Milliways.

Source: Pan Books

Milliways exists one hundred and seventy quintillion years in the future, just at the instant when the universe implodes and everything ends.  One of the most appealing things about eating there (assuming you can time-travel) is that you don’t have to worry about the bill.

Invest a penny into a savings account today, and then let it accumulate for one hundred and seventy thousand million billion years … and through the magic of compound interest and a very long time horizon, you’re more than covered!

Billions of years seems a bit much even for the most long-term planning, in the non-fiction world, there are plenty of examples of how small amounts of money, invested over time, turn into something very significant.

This is a great London example:

Source: London Bridge Museum & Educational Trust

For hundreds of years, London Bridge was the only crossing of the River Thames*. It had a total monopoly.

• If you wanted to cross the bridge to get to the City, you paid a fee.
• If you wanted to sail under the bridge, you paid a fee.
• If you wanted to fish off the bridge (not a good idea in the Thames most of the time!) you paid a fee.
• And if you owned one of the 140 shops/houses on the bridge you paid a fee.

And since 1209, those payments have been accumulating in the coffers of the City Bridge Foundation.
To give you an idea of what compounding can do, if you had invested £1 and made a 2% return every year for the last 816, you’d have £10 million today.
So, it comes as no surprise that despite having to rebuild the bridge a few times in the past 800 years, the foundation is now worth around £1.6 billion showing the power of solid financial planning, and believing in the long term.

Of course, it’s not all just pocket money; the foundation is now responsible for four other bridges in London-Tower, Southwark, Millennium and Blackfriars. In particular, it needs to have enough money on hand to rebuild any of them from scratch. This was very nearly put to the test in the year 2000 – Wobbly Millenium Bridge!

Source:7IM

 

Source: BBC, Millennium Bridge wobbling, June 2000

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