Last week, Bloomberg Economics conducted an analysis revealing that the latest forecasts are indicative of turbulent times ahead for the UK economy, with key indicators suggesting that the country may already be in the midst of a recession. After a period of aggressive monetary tightening and rising unemployment, households are becoming more cautious about spending, posing a significant challenge for Prime Minister Rishi Sunak, who faces an upcoming election. The Autumn Budget statement on 22 November is under scrutiny, with scepticism from think tanks about the fiscal headroom for tax cuts. While Bank of England (“BoE”) Governor Andrew Bailey insists it is premature to discuss interest rate cuts, Chief Economist Huw Pill acknowledges investors are not being unreasonable in their prediction for rate cuts next summer. Traders are now anticipating interest rate decreases in the region of 0.75% next year, reflecting a notable shift from just 0.3% last month. The contrasting views within the BoE highlight the complexity of navigating economic uncertainties, especially with the threat of inflation and geopolitical tensions....

Stocks featured:

Marks & Spencer, Associated British Foods and Auto Trader

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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Last week saw the Bank of England (“BoE”) decide to keep interest rates steady at 5.25% for the second consecutive meeting, in line with expectations. The BoE's assessment notes that while there have been no significant changes in inflation since September, underlying inflation remains elevated, and the potential for secondary inflation effects to unwind is prolonged. The BoE also highlighted the risk of rising inflation due to Middle East events, despite the current mean projection for inflation to be at 2.2% in two years’ time and 1.9% in three years’ time. The gross domestic product growth forecast for the third quarter of 2023 is now expected to be flat, falling below previous estimates from August of 0.1% growth. The central bank also signalled a 50% chance of a recession by mid-2024. The BoE's forecasts are based on expectations of maintaining the 5.25% base rate until the third quarter 2024. Despite the BoE's recent hawkish stance, market sentiment remains slightly more dovish, with a 25% probability of one more interest rate rise by February 2024 and focus shifting to the timing of the first rate cut. The central bank may have to consider reducing the bank rate faster next year as the economy slows...

Stocks featured:

Ocado Group, BP and Next

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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The UK's economic landscape experienced several developments last week. Borrowing costs surged to their highest point in 25 years as the 30-year UK gilt yield reached 5.209%. This increase mirrored global trends as investors worldwide anticipate interest rates will remain at elevated levels for a longer period than first expected. Despite this, a Reuters survey of economists indicated that the Bank of England's rate cycle might have peaked, with expectations of rates remaining on hold until the second quarter of 2024. Inflation risks were acknowledged, though the labour market seemed to stabilise. The majority foresaw the first rate cut, if needed, occurring no earlier than July, with a 0.25% reduction. In parallel, the UK labour market displayed challenges, with the benefit claimant count showing a substantial rise by 20,400, exceeding consensus estimates of a 2,300 increase. Notably, uncertainty around the Labour Force Survey prompted the introduction of a new data series for the unemployment rate by the Office for National Statistics, revealing a 4.2% unemployment rate, up by 0.2% from the previous quarter. Payrolled employment saw a decline and average weekly earnings eased....

Stocks featured:

Natwest Group, Barclays Initial and International Consolidated Airlines Group

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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September brought an unexpected twist to the UK inflation narrative, with a surprising increase to 6.7% year-on-year, slightly surpassing consensus expectations of 6.6%. The service sector, which saw increasing prices, was noted as the primary driver. While this may encourage a more hawkish stance within the Bank of England (“BoE”), wage growth indicated signs of slowing, suggesting a potential easing in price pressures by the end of the year. The UK labour market also displayed signs of easing, with a decrease in payrolled employees and vacancies. The Times cited BoE Deputy Governor, Jon Cunliffe, who anticipates that interest rates will persist at higher levels for the foreseeable future. He noted mixed economic signals, with some indicators slowing, while others suggest that the labour market is beginning to cool. He acknowledged that the economy displayed more resilience in 2022 than previously thought...

Stocks featured:

Bellway, Rentokil Initial and Segro

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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The International Monetary Fund (“IMF”) released its World Economic Outlook last week, which provided a comprehensive perspective on the global economy. While the outlook has shown some balancing since earlier this year, downside risks persist. The report highlighted the limited room for policy errors and delved into the consequences of tightening policies on both inflation and economic activity. The IMF's updated gross domestic product growth forecasts for 2023 and 2024 include a weaker growth outlook for the UK compared to its G7 peers in 2024. It is also noteworthy that core inflation is expected to decline gradually, with many economies not returning to target inflation until 2025. This suggests that monetary policy must remain consistent to effectively tackle inflation, while fiscal consolidation is essential to address rising debt.

Stocks featured:

EasyJet, YouGov and Ashmore Group

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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Rishi Sunak's Conservative Party conference speech last week marked the beginning of his election campaign. He outlined a bold agenda, including tax cuts, education reform and a substantial £36 billion investment in northern and midlands transport infrastructure. This investment came as a result of the decision to cancel the northern leg of the HS2 railway project, which stirred mixed reactions and represented a significant shift in political consensus. Sunak also emphasised the Conservative Party's commitment to bold change, introducing a new qualification, the "Advanced British Standard," and promising tax cuts while highlighting the need to control inflation. Additionally, he proposed a phased increase in the legal smoking age....

Stocks featured:

Aviva, Pennon Group and Tesco

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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Last week saw mixed signals for the UK economy as the job market displayed signs of cooling. According to an update from the Recruitment and Employment Confederation (“REC”), job postings rose by 13.5% in the week ending 17th September but remained below earlier-year averages, with 175,000 new job adverts posted, down from over 200,000 on average earlier in the year. The REC Chief Executive, Neil Carberry, noted that recruiters

across the country have reported a market normalisation as job postings fell from pandemic highs. This cooling labour market was highlighted by the Bank of England (“BoE”) as one of the factors influencing its decision to keep interest rates on hold. Despite these concerns, the UK's economic performance since the onset of the Covid-19 pandemic has been stronger than previously thought. Data from the Office for National Statistics revealed that the UK's recovery has outpaced that of Germany and France, signalling a faster post-pandemic rebound. This unexpected resilience in the economy has raised questions about the accuracy of official economic forecasts. The Institute for Fiscal Studies cautioned that excessive government borrowing, driven by costly policies introduced by recent chancellors, has undermined faith in these forecasts....

Stocks featured:

Future, Card Factory and Learning Technologies Group

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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Last week saw inflation and interest rates take centre stage as the latest figures were released. Forecasts at the beginning of the week showed that August inflation was expected to accelerate to 7% from a prior reading of 6.8% in July, with economists attributing the acceleration to rising fuel prices. However, August inflation came in weaker than expected at 6.7% alongside a much softer core inflation figure of 6.2%, compared to a consensus

forecast of 6.8%. The Office for National Statistics (“ONS”) said that the largest downward contribution came from food prices and accommodation services, which offset fuel price increases. This inflation reading led to a shift in momentum from consensus expectations for an interest rate hike, as markets priced in less than a 50% probability of a 0.25% rate rise compared to previous forecasts which anticipated there would be a quarter percent increase....

Stocks featured:

JD Sports Fashion, Dunelm Group and Halma

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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Last week saw UK equity markets in positive territory as the FTSE 100 closed the week 2.1% higher as markets continue to anticipate that the Bank of England (“BoE”) is approaching the end of its rate tightening cycle. An article published by Bloomberg discussed recent rhetoric from BoE policymakers and noticed that there is a change in tone alongside more clarity on the debate facing the Monetary Policy Committee as it nears the end of the cycle. It was noted that the change in tone may be a sign of the BoE laying the foundations for a pause in interest rate hikes. However, the BoE may find it difficult to justify a pause at this week’s upcoming meeting, due to accelerating wage growth as a result of one-off bonuses and basic pay increases stuck at high levels. This demonstrates the continued resilience within the UK labour market, although unemployment figures are showing gradual signs of increasing as a result of the slowing economy. The latest figures published last week show the UK unemployment rate was 4.3% during the period May to July 2023, compared to 4.2% in the previous quarter...

Stocks featured:

Renishaw, Kier Group and Associated British Foods

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

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The British Chamber of Commerce (“BCC”) published updated economic outlook figures last week which highlighted an expectation that the UK economy will avoid a technical recession. However, growth is set to remain weak. Figures state that the UK is expected to have a growth rate of 0.4% for the whole of 2023, dropping to 0.3% in 2024 and rising to 0.7% in 2025. The BCC also revised inflation figures upwards for 2024 to 3% against a previous forecast of 1.5%. This shows that the BCC expects inflation to remain higher for longer, largely as a result of a resilient labour market. The report suggests that although the UK economy will avoid a recession, it will likely feel like one for a lot of households and businesses due to the low growth levels within the economy....

Stocks featured:

Hilton Food Group, Gamma Communications and Ashtead Group

To find out more about the investment management services offered by Walker Crips, please visit our website:

https://www.walkercrips.co.uk/

This podcast is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this podcast constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips. Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.

Hosted on Acast. See acast.com/privacy for more information.