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The global spectacle of the Olympic games helps us all install some faith in humanity, against the unrest here and across the world.
The European Central Bank was the first of the major reserve currency Central Banks to cut interest rates, with us here in the UK making the delicately balanced decision to shave off 0.25% and the US Federal Reserve expected to follow in September. Inflation shows signs of slowing but not all are entirely convinced it seems.
Although the election triumph for Labour was long anticipated, the size of the victory, or rather the magnitude of the collapse in the Conservative vote, is seismic. The fact that the result itself was not really a surprise, meant that the city had already factored in the change of government. The Labour party has also been engaging with the business world for some time to try and ease any potential jitters.
This follows on the back of voters in South Africa and India returning their incumbent leaders and a dubious result in Uruguay, alongside shockwaves in Europe with a swing to the Far Right in the European Elections. More notably in France, prompting President Macron to call a snap election, a rearguard action to try and form a Left and Centrist bloc to stop the National Rally party triumphing. In America, Joe Biden’s decision to finally step aside for a younger candidate adds a further twist to the race to the Whitehouse.
The Global markets have so far not reacted significantly to this febrile political environment, proving that wealth creation is largely the job of the private sector, with only a modest correction in some of the global indices from the heights reached in May. There are concerns that the success of a small number of companies in the US – coined by the phrase ‘magnificent 7’ is skewing the index, whilst here the UKs FTSE100 has enjoyed a good year with a rise of nearly 7.5% so far.
Our new chancellor, Rachel Reeves, inherits some challenges, although there are some positives for the economy. A stable government, interest rates falling, inflation stabilising and growth returning. This, coupled with policy intervention, should help turn the tide. We hope the new government recognises the opportunity to promote economic growth and domestic prosperity via a thriving stock market, sooner rather than later.
So far 2024 has seen the investment environment in a different place than it has been for the last decade or so. With money no longer cheap to borrow, servicing debt for consumers and business is now harder. When this really starts to bite negatively is the balancing act for the policymakers. There is talk, but not enough action, towards a climate transition from conventional to renewable energy and these costs, whilst absorbed by companies, will be passed onto consumers.
The Aquila Investment Committee meet regularly to discuss whether any changes to the portfolios and strategy are necessary. We are not Discretionary Managers, and we need to give you, our client, a positive experience through the effectiveness of our fund selection. The funds we recommend are agile and flexible to take advantage of an ever-changing series of events and impacts, and opportunities within investment markets. We select a range of ‘best of breed’ self-contained risk managed funds with assorted styles and holdings. We believe this is the best way forward to deal with the unpredictable world we live in, as markets do price in the risks as best they can, and that an active approach to managing the changing economic and political landscape will continue to be of benefit to long term investors. Professionals sell expensive assets and buy cheap to generate long-term returns. Our approach aims to deliver returns above their peers as we pool the best ideas into your portfolio. We continue to monitor the situation closely.
