Emma Sheldon

Written by Shane Balkham.

American families congregated together to celebrate the harvest and give blessings for the year that is passing.  Thanksgiving and its subsequent commercialisation being Black Friday, will be an interesting reflection point for 2022.  What, if anything, will the American consumer be grateful for?  With the cost-of-living crisis continuing to squeeze Middle America and as central banks blindly continue to hike rates, was there any salvation for retailers over the weekend?

Mastercard has forecast that Black Friday will see the American consumer spend 15% more on the equivalent day in 2021.  This projection itself seems inflated, however, the forecast represents the strategy that retailers are offering short-term promotions in order to clear inventories that have built up in a slowing economy.  Interestingly, it is expected that Black Friday online sales will surpass $9 billion for the first time, according to Adobe Digital Insights.  After two years of pandemic-related anxieties, shoppers are expected to return to physical stores this year.

The minutes from the Federal Open Market Committee (FOMC) were published last week and described a desire to slowdown the pace of rate hikes but fell short of signalling an actual pause.  These minutes were taken over three weeks ago, and since then we have had several members of the FOMC give speeches that reinforce the growing expectation that the Federal Reserve realise that policy may have gone beyond what is needed.

With the next FOMC meeting a little over two weeks away, there is insufficient time for the data on which the decisions are heavily reliant to show what the market already suspects; that inflation is slowly being tamed and central banks have seemingly delivered adequate rate hikes.  This leaves the FOMC with a difficult decision on 14^th December, as there is an inherent lag between monetary policy actions and the behaviour in economic activity and inflation.  Based on Chairman Jerome Powell’s previous comments on maintaining a firm stance on combating inflation at all costs, it is likely that we will see a fifth successive 0.75% rate hike.  Whereas the decision in the September meeting was unanimous amongst the members of the FOMC, it is likely that this next vote will be split.

Across to the opposite side of the world, China reported the first COVID-19 fatalities for over six months.  There is widespread expectation that China will ease restrictions, however this is only likely once China has approved  its own mRNA vaccine (similar to the Pfizer-BioNTech and Moderna vaccines) and roll out programme.  Until then, a continuation of lockdowns and restrictions will remain in place.   However, a zero-tolerance towards COVID-19 policy can only work if the population believes that the frequent lockdowns will actually work.  It would appear that many do not have that faith with protests held in Shanghai and Beijing over the weekend.

It is unusual to see the Chinese people challenging the authorities, with banners protesting against President Xi Jinping and his policies, reminiscent of the Tiananmen Square protests  in 1989.  Although the protestors represented a relatively small portion of the population, it does show the need for China to tackle the virus quickly, especially against a slowing and faltering economy.

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 November 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Cormac Nevin.

Global equity markets were broadly flat in local currency terms last week, however there was a significant weakening in the US Dollar vs Sterling and other currencies which left the GBP return for the MSCI All Country World Index down -1.6%.

The weakening dollar was driven by hopes that slowing economic data might prompt the Federal Reserve in the US to slow, pause, or even reverse its path of monetary tightening to combat inflation. This caused a rally in Emerging Market equities and Fixed Income which have come under significant pressure from the incredible strength of the US Dollar over recent years.

This rally was particularly pronounced in China, as the MSCI China Equity Index is up +20.0% for the month of November to date in GBP terms. This rally has been spurred by the unveiling of support for over-indebted property developers by the authorities in Beijing, as well as tentative rumours of a potential relaxing of the economically disruptive COVID-Zero policy. Whether these measures prove substantial and lasting remains to be seen, but they provided enough hope for markets to rally significantly, having taken a significant beating and reaching more attractive valuations.

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 21^st November 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Millan Chauhan.

Last week, we saw inflation in the US slow for a fourth month in a row with year-on-year inflation printing at 7.7%, which was 0.3% lower than estimates.  This was also 0.5% lower than the September reading. The month-on-month inflation rate was 0.4% and it does look like inflation has slowed, thanks to recovering supply chains and reduced consumption levels, as the Federal Reserve’s run of rate rises start to bite. Core CPI (which strips out energy and food prices) rose by 0.3% over the month and 6.3% on a year-on-year basis. A decline in the inflation rate simply means that prices are not rising as quickly.

Following the lower-than-expected reading of CPI, in the US we saw a rally in growth-exposed or longer-duration assets (assets that are more sensitive to interest rate changes), with the S&P 500 closing +5.5% in local currency terms last Thursday alone. For the week, the S&P 500 closed +5.9% and the technology heavy NASDAQ 100 closed up +8.9%, both in local currency terms. Markets responded well to the inflation news. It was announced that the Democratic Party also retained control of the US Senate, but the Republican Party is inching closer to securing a House of Representatives majority.

Elsewhere, Jeremy Hunt signalled that ahead of his announcement of the Autumn budget this Thursday, the Government is planning to implement a large package of spending cuts and tax increases to finance an additional £70 billion of additional borrowing.

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 14^th November 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Chris Ayton.

Although down in local currency terms, the MSCI All Country World Index rose +1.3% in GBP over the week and the FTSE All Share Index was up +3.8%. The Bloomberg Global Aggregate Index was down -0.8% in GBP Hedged terms.

In the UK, in a further attempt to dampen inflation, the Bank of England (BoE) increased interest rates by 0.75% to 3%, the largest monthly rise since 1989.  BoE indicated that rates may rise less than the market expected going forward as the UK has already entered a recession.  In other positive news, UK construction activity grew more than anticipated and UK new car registrations surged 26% from a year earlier, with hybrid and electric vehicles driving the rise.

In the US, the S&P 500 Index finished the week down -3.3% in local currency terms but further Dollar strength reduced the loss to -0.7% for GBP investors.  The Federal Reserve also increased interest rates by 0.75%, its fourth monthly increase in a row.  However, unlike in the UK, the Fed Chair Jerome Powell indicated that US interest rates are likely to peak at a higher level than expected as inflationary pressures were proving sticky, although he did note the pace of those rises to reach that peak may slow.  This week’s inflation print will be closely watched.

Continental European equities enjoyed a strong week, with MSCI Europe ex-UK up +3.7% in Sterling terms.  Producer Price Inflation in the Euro Area eased a little, but the reading did nothing to ease concerns around inflationary pressures across Europe, at a time of a weakening economic outlook and continued conflict in Ukraine.  European Central Bank President Christine Lagarde said she still does not expect a recession in the Eurozone economy but that, even if there was, it would not be enough to stop them raising rates further to quash inflation.

In Asia, Chinese shares rebounded sharply as there were rumours of an imminent relaxation of China’s strict COVID-19 restrictions.  A Chinese foreign ministry spokesman said that he was not aware of any such news, but this did not stop these unfounded rumours pushing the MSCI China Index up +14.1% over the week in Sterling terms.

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 7^th November 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Chris Ayton.

In a volatile week of trading, The MSCI All Country World Index fell -0.4% but the FTSE All Share Index recovered +1.6%. The Bloomberg Global Aggregate Index also made some positive ground and was +1.7% in GBP Hedged terms.

UK media last week was dominated by the news of the election of Rishi Sunak as Prime Minister just seven weeks after the ill-fated ascension of Liz Truss.  Markets reacted with relief to Sunak’s appointment and the retention of Jeremy Hunt as Chancellor, with long-term gilts now having fully recovered the extensive losses triggered by the package of unfunded tax cuts announced by Truss’s regime. The pound also climbed back to $1.16, although this was partially due to broader weakness in the US Dollar. The more UK domestic focused FTSE 250 mid-cap Index also reacted well to what markets consider an economically safer pair of hands, rising +4.2% over the week. Nevertheless, Sunak and his new team have their work cut out to address what they themselves refer to as a “profound economic crisis”.

In the US, Google’s parent, Alphabet Inc., reported an unexpected downturn in its core advertising business.  Microsoft followed with a warning of a slowdown in its cloud computing business, a division previously thought to be economically insensitive. Then Meta, the parent of Facebook, reported another quarter of declining revenues and Amazon followed suit, also warning that an economic slowdown was starting to bite. Despite these individual setbacks, a strong finish to the week still saw the NASDAQ 100 Index up +2.1% in local currency terms although, due to the recovery in the pound, this translated to -1.6% in Sterling terms.

In China, President Xi Jinping tightened his grip on power at the Chinese Communist party’s 20^th national congress, securing a third term and likely beyond.  He also successfully surrounded himself with loyal allies prompting fears of less checks and balances, a continued shift from market-friendly policies to ones promoting common prosperity and security, no change to Xi’s economically damaging zero Covid policy and potentially more unfriendly geopolitical rhetoric.  Investors were also unimpressed with the subsequent delayed announcement of 3.9% GDP growth which fell well short of China’s full year target of 5.5%. MSCI China fell an astonishing -12.3% over the week in GBP terms.

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 31^st October 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Cormac Nevin.

Last week provided some welcome relief for UK investors, as the MSCI All Country World Index rose +4.1% in GBP terms (up +3.3% in local currency terms). This was driven primarily by US tech stocks, with the NASDAQ 100 Index up +6.6% (in GBP terms).

The shifting sands of the UK political landscape have been difficult to keep up with, and this past weekend and this morning have been no exception. Following the resignation last week of the UK’s shortest serving Prime Minister, it was announced on Sunday that Boris Johnson had withdrawn from the race to be Liz Truss’s successor. This leaves the field wide open for Rishi Sunak, who appears to be the market’s favourite candidate as the news caused gilt yields to drop sharply and Sterling to rally.

Other political developments driving markets last week and this morning included the continuation of the National Congress of the Chinese Communist Party. Increasingly hostile verbiage from Xi Jinping towards the country’s wealthy and the tech sector, more generally, caused Asian markets to sell off heavily. The delayed release of the country’s slowing gross domestic product figures also caused the Hang Seng Index of Hong Kong listed equities to fall over 5% on Monday.

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 24^th October 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Millan Chauhan.

Last week was an eventful week in UK Politics, as Kwasi Kwarteng was sacked as Chancellor of the Exchequer, a role which he held for only 38 days. This also came three weeks after he announced his mini-budget which caused Sterling to sell-off significantly, sent the cost of government borrowing and mortgage rates up, that led to an unprecedented intervention by the Bank of England.

Jeremy Hunt has been selected as his replacement and will now make a medium-term fiscal announcement on the 31^st October, if not sooner. The chaos that has unfolded over the last few weeks has put immense pressure on Liz Truss’s battle for political survival.

There were some important economic data releases last week in the UK, with GDP unexpectedly falling by -0.3% in August which was caused by a fall in the production sector. This latest data release also meant that the economy shrank by -0.3% in the three months to August. On Wednesday, we will find out the state of the UK’s inflation situation with September’s CPI data set to be released with expectations leaning towards a monthly increase of 0.4% (estimated 10.0% Year-on-Year).

US markets saw a huge intraday movement last Thursday, following the US inflation data release which saw US CPI come in at 8.2% on a year-over-year basis. This was slightly above estimates of 8.1% which sparked a very negative reaction from US markets at the open. Expectations were that we would begin to see inflation flatten as supply chains have improved and the labour market situation has recovered. US indices subsequently rebounded that day to close in the green as the underlying constituent data showed some signs of a slowdown.  Time will tell whether we are at a juncture of a change in sentiment.

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 17^th October 2022.