Emma Sheldon

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.

Written by Chris Ayton.

Last week brought some welcome relief to equity and fixed income markets. The MSCI All Country World Index rose +2.0% and the FTSE All Share Index recovered +1.4%.  The Bloomberg Global Aggregate Index was -0.3% in GBP Hedged terms.

UK news last week was dominated by the UK government’s decision to reverse its planned axing of the 45p income tax rate just days after having announced it.  “We get it and we have listened” Chancellor Kwasi Kwarteng sheepishly announced on Twitter.  In a further attempt to calm currency and fixed income markets, Kwarteng was also forced to announce he would be bringing forward the disclosure of his debt reduction plan from 23^rd November to the end of this month.  Sterling and UK Treasuries recovered some lost ground, aided by the Bank of England’s promise of intervention through buying up long dated gilts.

In the US, bad news was initially good news as weak manufacturing data increased hope of slower additional interest rate increases from the Federal Reserve.  However, the week ended with news that the US unemployment rate had dropped back to its pre-pandemic low of 3.5% which pointed to a tighter labour market and dampened any enthusiasm that the Fed may choose to take things slower.  Nevertheless, the 1.8% rally in the S&P 500 Index comes after three consecutive quarters of declines for the S&P 500 Index, the first time this has been observed since 2008.

Eyes now turn to the Chinese Communist party’s 20^th national congress, which opens on 16^th October. President Xi Jinping is widely expected to win an unprecedented third term, but the focus will also be on how China plans to deal with the harsh economic challenges caused by its zero Covid policy as well as a rapidly slowing property market.

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 10^th October 2022.

© 2022 YOU Asset Management. All rights reserved.

Written by Shane Balkham.

For many investors, it may seem like we have had too many ‘once-in-a-generation’ events over the past few years. Brexit, COVID-19, war on Ukraine and the cost-of-living crisis to name the obvious ones. However, last week truly gave us market ructions on a scale that forced policymakers into emergency measures once again.

The week began with the Bank of England (BoE) and UK Treasury battling to calm markets after the pound hit a record low against the US dollar of $1.035, as the consequences of the Government’s mini-budget played out. There was a lot of rhetoric designed to placate markets, with the BoE announcing that it would not hesitate to change interest rates as necessary, but only after a full assessment at its next scheduled meeting.  This caused new concerns and gilt yields soared on the back of strengthened expectations of a significant rate hike at the next meeting.

The BoE’s Monetary Policy Committee was not due to meet until 3^rd November, when they would publish the next Monetary Policy Report, giving guidance on inflation expectations.  However, on Wednesday the BoE intervened in the gilts market, unleashing £65 billion of quantitative easing in order to stem the meltdown in UK government debt.  The BoE’s plan is to buy long-dated bonds at a rate of £5 billion a day for the next 13 weekdays.  It also suspended the current programme of selling gilts, which was part of the effort, along with interest rate hikes, to bring inflation under control. Although UK government bond markets recovered sharply after the announcement, economists warned that the printing of new money would add to the inflationary pressures.

The International Monetary Fund added to the UK’s woes by publishing a scathing attack on the UK’s plans, urging the Government to re-evaluate proposals amid the threat of spiralling inflation. It claimed that the Government’s plan to cut taxes and invigorate economic growth is at cross-purposes with the BoE’s task of combating inflation. It now puts the central bank in a position of potentially having to move interest rates even higher than may have been planned.

The unintended consequences of the Conservatives’ strategy to boost supply-side economics by reducing the tax burden facing businesses and families, alongside a major programme of investment to stimulate and drive growth, has shaken the faith in the UK’s finances. The timing of the mini-budget could not have been worse. Politically, it provided opposition parties with ammunition to attack the new prime minister and her cabinet. Economically, it has increased the uncertainty over inflation and growth. There are also arguments that proposed policies will push out the point at which inflation will peak and result in higher interest rates.  The BoE’s remit has become increasingly more difficult.

Liz Truss now faces the devastation of her own making at the Conservative conference in Birmingham. While there has been an admission of mistakes, and a subsequent reversal of the elimination of the 45p top income tax rate, there is unlikely to be a retreat from the Prime Minister on the general direction of unfunded tax cuts.  Time will tell how successful this strategy will be.

Long-term investing is the best antidote to market fluctuations. Our studies have shown that the longer you invest for, the higher the probability of making better returns. However, it can be difficult to remain dispassionate during market turmoil and that is why we continue to provide reassurance during your investment journey. Please take time to visit our website: www.YOU-asset.co.uk/stay-invested for an educational presentation on the importance of staying invested.

An appropriately diversified portfolio will provide cushioning during the worst of times and take opportunities during the better times. While Sterling plummeted, it does mean that certain parts of your portfolio will have benefitted.  The consolation of being geographically diversified is that overseas assets are worth more when Sterling weakens.  This is the same effect we benefitted from when Brexit broke in 2016.

Last week was one of the most challenging weeks in what has been an incredibly difficult year. In volatile times, the critical message is to remain vigilant but remain true to your long-term investment plan. In turn, we will remain robust in our long-term investment processes and philosophy, adding to our track record of delivering impressive long-term returns to our clients.

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 3^rd October 2022.

© 2022 YOU Asset Management. All rights reserved.