April 2023
- Most markets remain down over the last year. The Nasdaq is down 18% however, European indices are faring well, this confirms investments markets remain tilted towards value rather than growth.
- Banks are in trouble but fears of a systemic crisis have passed however, the recent problems at Silicon Valley Bank (SVB), Credit Suisse and First Republic will give rise to tighter credit conditions as central bankers tighten regulations, this extra compliance will contribute to slowing the global economy in the way higher interest rates do.
- Interest rates will continue to rise it seems and stay higher for longer. This may cause problems globally and is not priced into the market according to many experts.
- The budget brought with it some bright lights and unexpected, good news in the form of pension rules being relaxed. The pension rules remain arcane but for those willing to understand them there are opportunities. The Chancellor did little to stimulate our economy, we will all be paying a lot more tax.
- Foundation Financial Planning remain alert to corporate earnings and fundamentals. Most tech (growth) companies have had poor earnings and value companies (especially oil companies) are exceeding earnings expectations.
- Overall, there is a sense financial repression is upon us – where we have inflation far exceeding the rate of interest we can obtain from our savings, governments benefit from this situation as the interest on their debt remains low individuals do not, as the interest rate on their borrowings remain low too. However, if we can adjust to higher debt servicing that relatively higher interest rates give rise to and avoid further problems with the banks, we will get through this transition period.
- At annual review FFP continue to make adjustments to client portfolios that take into account the changes to the global economy as referred to above.
Please note that:
- This information in isolation is not financial advice.
- Past Performance of investments is not to be relied on and the value and the income from investments can go up as well as down.
- It is advisable to regularly review your investments.
Gianni Campopiano
Managing Director & Chartered Financial Planner
