Ellen Ward

The World In A Week - One door closes and another one opens

Written by Shane Balkham

The US tariffs story took an interesting turn last week. The US Court of International Trade ruled that tariffs imposed using the International Emergency Economic Powers Act are illegal, as applying tariffs relating to fentanyl, illegal immigration, as well as reciprocal tariffs, were inappropriate. However, the Court also offered a lifeline to the Trump administration by stating that other statutes do allow presidential tariff authority.

What this means is President Trump is allowed to impose tariffs, just not in the way he is currently justifying them. This has been appealed by the Trump administration, allowing the current level of tariffs to be collected while the US Court of Appeals considers the case.

The positive aspect of the ruling is that to date, President Trump had been using the emergency powers on an ad hoc, unpredictable basis. Most other trade authorities require a process that is more predictable and structured, which could bring more certainty to countries, companies, and markets.

The negative aspect of this ruling is that it extends the timeline of uncertainty around the future trajectory of US trade policy. It effectively means that negotiations that were underway to try to beat the 9^th July deadline, for the 90-day pause on reciprocal tariffs, are likely to be paused. Countries have little reason to negotiate when the Trump administration is awaiting the decision of its tariff powers, meaning a quick end to negotiations is some way off, as Trump can use multiple other legal justifications to impose tariffs.

Treasury Secretary Scott Bessent has insisted the US would never default on its debt as he sought to lessen Wall Street concerns over the state of the country’s public finances. The market has had concerns over the size of the US federal debt as President Trump has urged Congress to push through his “One Big Beautiful Bill Act” which is expected to increase the deficit. The Committee for a Responsible Federal Budget has warned that Trump’s bill would add about $3tn in debt over the next decade. The bill passed the House of Representatives and is now set to be debated by the Senate. The Trump administration has insisted the bill will not increase the deficit and that projections fail to consider increases in economic growth.

But with the US net federal debt-to-GDP already over 100%, and with economic growth slowing materially this year, there is a concern that the US is pushing the limits of bond market tolerance for perpetually high fiscal deficits that continue to increase the debt-to-GDP ratio.

We continue to believe that an appropriate globally diversified portfolio, of different asset classes and investment styles, is the most effective way to navigate the volatile and evolving global landscape. When uncertainty is prevalent, staying invested is the best course of action.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 2nd June 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Deficits, Downgrades and Duties

by Ellen Ward

The World In A Week - Unlocking Shareholder Value in Japan

Written by Ilaria Massei

Japanese equities rose last week, with the MSCI Japan Index up +1.0% in GBP terms, supported by a corporate development that highlights how governance reforms are continuing to reshape the investment landscape.

Corporate governance refers to how companies are managed, how decisions are made, how management behaves, and how shareholders are treated. Strong governance means that companies are more transparent, accountable, and disciplined in how they use capital - crucial elements for delivering long-term value to investors.

The key news came from Nippon Telegraph and Telephone (NTT), which announced plans to take full control of its listed subsidiary, NTT Data. NTT plans to purchase the remaining shares it doesn’t already own, offering a 35% premium over the stock’s closing price of the day before the announcement. This signals a shift in how shareholders are considered in Japan. In the past, similar deals were usually structured to favour the parent company, with little consideration for minority shareholders. Offers often came with minimal premiums - or even at a discount - and shareholder rights were frequently overlooked.

The NTT transaction is a strong example of how improved governance can unlock value for investors. It reflects the broader progress Japan has made over the past decade, following the introduction of economic reforms under former Prime Minister Shinzō Abe, who led Japan from 2012 to 2020. A key pillar of his "Abenomics" agenda was corporate governance reform, aimed at making Japanese companies more efficient, transparent, and shareholder-focused.

Developments like these in Japan highlight the importance of maintaining a globally diversified portfolio, as investment opportunities tend to emerge at different times across different regions.

Elsewhere, the UK also made headlines after finalising a long-anticipated trade deal with the US. While the baseline 10% tariff on UK goods remains, the agreement will remove tariffs on steel and aluminium (previously 25%) and provide reciprocal access for products like beef and ethanol. The UK car industry also welcomed a key outcome as tariffs on vehicle exports to the US will drop from 27.5% to 10%.

In a separate development, the Bank of England cut interest rates by 25 basis points to 4.25% as inflationary pressures continue to ease and concerns about slowing domestic growth come to the forefront. The rate cut didn’t lift the broader UK equity market, with the FTSE All Share Index ending the week slightly down (-0.1%). However, the FTSE 250 Index - made up of mid-sized companies that are more sensitive to the UK economy and interest rates - rose by +1.3%.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon.

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 12th May 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Warren Buffett’s lesson in the power of compounding

Written by Chris Ayton

The rebound from April’s “Liberation Day” equity market sell-off continued last week with the MSCI All Country World Index up +2.9% in GBP terms. The S&P 500 Index in the US closed the week up +2.8%, with Friday’s close the first time the index had enjoyed nine consecutive positive trading days since 2004. The US market was boosted by some resilient employment data; in reality, much of the data only confirmed things were broadly fine before the escalation of tariff-related uncertainty. Similarly, earnings results, which are also backwards-looking, have generally held up well. However, Apple’s shares declined after the CEO, Tim Cook, announced that tariffs would likely add around $900m to Apple’s costs over the June quarter alone.

One major announcement last week was news that the legendary investor Warren Buffett will be stepping down as CEO of Berkshire Hathaway. Buffett has been at the helm since 1965, when it was a pretty modest and underperforming textile company. He leaves after 60 years with the company, now a $1.2 trillion conglomerate and, as of Friday, with the shares at a record high. Incredibly, the shares have risen approximately 20% per annum over those 60 years, double the return of the S&P 500 Index. For anyone seeking to teach their kids about the power of compounding and staying invested, Berkshire Hathaway’s 2024 year-end annual report highlights that this represents a cumulative return of 5,502,284% versus 39,054% for the S&P 500 Index over that period. This is despite including share price declines of over 30% in 2008 and approximately 50% in 1974.

Most other equity markets also performed positively last week. The MSCI Europe ex-UK Index was up +3.4%, the MSCI Japan Index was up +2.5%, and the MSCI Emerging Markets Index was up +3.3%, all in GBP terms. The FTSE All-Share Index was up +2.3%, with mid and smaller companies generally the better performers.  Markets are predicting that the Bank of England will almost certainly cut interest rates this week. Inflationary risks in the UK seem to be receding with wage growth expected to slow, energy prices falling and concerns over declining global activity caused by ongoing tariff uncertainty providing the Central Bank with greater ability to cut.

Away from equities, global bonds were broadly flat over the week, although global high yield bonds delivered small gains. Broad commodity indices dropped back over the week as oil prices continued to decline over a combination of global growth concerns and fears of a global supply glut following a decision by OPEC+ oil producing nations to increase supply.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 6th May 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - The bounce back

Written by Cormac Nevin

Last week was a strong one for global equity and fixed income markets as investors continued to allocate to US tech stocks in the face of ongoing uncertainty regarding tariff policy and the second order implications of said policy. The MSCI All Country World Index of global equities was up +3.4% in GBP while the NASDAQ 100 Index of US tech stocks was up +6.4% in USD terms. However, the ongoing weakness in the US Dollar translated the weekly gains in the NASDAQ to a +5.8% return for GBP based investors. This continued the story of the year to date, which has seen a sustained selling in the US Dollar, particularly since the announcement of Trump’s tariff policies on the 2^nd April despite last week’s recovery in equity markets. In fixed income markets, we saw the riskiest areas of the market as measured by the Bloomberg Global High Yield Corporate Index rebound strongly, returning +1.2% in GBP hedged terms for the week.

A range of views have been circulating regarding the recovery in observed market sentiment. Some point to an easing in trade tension rhetoric (despite scant evidence of actual progress on substantial trade deals), strength in corporate earnings with decent (backward-looking) earnings posted by Alphabet/ Google and also continued buying from retail investors. We remain mindful that much of the data observed currently is rather stale and that the likely second-order implications of the trade disruption are only going to appear with a lag. Much of the global financial system is hard-wired to buy outsized volumes of US equities via unthinking “passive” investment strategies – and it may take some time for foreign authorities to unwind these flows with the aim of keeping capital at home instead.

Whatever the outcome for the US economy from the uncertain trade policy, we continue to focus on attractive investment opportunities across the globe which are not concentrated on any one geography. This approach has strongly shown its benefits throughout this year, and we feel it is reasonable to expect that to continue.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 28^th April 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward

The World In A Week - Diversification to the rescue

Written by Chris Ayton

Last week was a mixed one for equity markets with the MSCI All Country World Index down -1.0% in GBP terms. However, with the US being the dominant component of global equity indices, this result was heavily influenced by the -2.8% return of the S&P 500 index. The US equity market lagged once more as investors continued to flee the stock market and the US Dollar as nervousness around President Trump’s unpredictable economic policies led them to look elsewhere. Trump’s continued criticism of Federal Reserve Chairman, Jay Powell, suggesting he should be removed from his post for not cutting interest rates quickly enough, has also created concerns over the ongoing independence of the US central bank.

Conversely, the UK equity market was one of the strongest, returning +4.0% over the week as domestic corporate profit results were generally robust and the market’s lower allocation to the out-of-favour tech sector and greater prevalence of cheaper stocks held the market in good stead. Continental European indices were also robust with the MSCI Europe ex-UK Index up +2.4% over the week in GBP terms. As expected, the European Central Bank lowered interest rates by 0.25% for the third time this year, citing subdued inflation but warning of continued risks to European growth emanating from tariff-related tensions.

Japanese equities were also in the green, with the MSCI Japan index up +3.4% over the week in GBP terms. In recent weeks the market has been worried about the tariff related risks for large Japanese exporters, but some comfort was taken when, after a face-to-face meeting with President Trump and Treasury Secretary Scott Bessent, the Japanese Minister of Economy, Trade & Industry suggested to reporters that the US President had said getting a deal with Japan was a “top priority”.

Away from equities, other diversifying assets generally held up well and supported appropriately constructed, multi-asset portfolios. Bond markets enjoyed a positive week with the Bloomberg Global Aggregate Index up +0.7% in GBP hedged terms. High Yield bonds performed particularly well. Commodities were also collectively positive with gold’s perceived safe-haven status helping the gold price to hit repeated all-time highs.

Any opinions stated are honestly held but are not guaranteed and should not be relied upon. 

The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products. 

The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments. 

All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 22^nd April 2025.

© 2025 YOU Asset Management. All rights reserved.

by Ellen Ward