Barclays reported a pre-tax profit of £3.7 billion in the first six months of 2022, down from £4.9 billion a year ago. Analysts had predicted the bank to report a Q2 pre-tax profit of £3.9 billion.
Barclays’ most recent results were tainted by a £1.3 billion charge in the half to meet the costs of buying back the $17.6 billion worth of securities that it sold in breach of US regulations.
The bank previously admitted to selling more products to US investors than it was permitted to, which triggered an approximate loss of £450 million.
Since Russia’s invasion of Ukraine, some of the structured goods have increased in popularity, attracting further regulatory scrutiny for Barclays over the error.
[ymal]
According to a new report from McKinsey and Co, approximately 40% of employees in the US are considering quitting their current roles over the next 3-to-6 months. McKinsey and Co surveyed over 6,000 US employees between February and April.
“This isn’t just a passing trend or a pandemic-related change to the labour market,” commented Bonnie Dowling, one of the report’s authors.
“There’s been a fundamental shift in workers’ mentality, and their willingness to prioritise other things in their life beyond whatever job they hold […] We’re never going back to how things were in 2019.”
As well as speaking to employees in the US, McKinsey and Co also spoke to people in Australia, Canada, Singapore, India, and the UK.
“Respondents across the six countries showed a consistently high desire for work that is better paying, more satisfying, or both, as well as a conviction that they can find better jobs elsewhere,” the report said.
“To navigate this new playing field successfully, hiring managers can look beyond the current imbalance in labour supply and demand and consider what different segments of workers want and how best to engage them.”
[ymal]
Johnson, ministers, and executives from the London Stock Exchange have been involved in an 11th-hour bid to persuade SoftBank to consider at least a partial listing of Arm in the country. However, higher valuations have recently made New York a more attractive choice for most of the world’s largest tech flotations.
“We want to make the UK the most attractive place for innovative businesses to grow and raise capital,” a government spokesperson commented in May.
Back in February, SoftBank CEO Masayoshi Son disregarded the UK when outlining backup plans for the flotation of Arm following the collapse of a $40 billion takeover deal by its California-based rival Nvidia.
“We think that the Nasdaq stock exchange in the US, which is at the centre of global hi-tech, would be most suitable,” Son commented at the time.
However, more recently, Son said London was still an option for the company’s upcoming stock market listing, though added that his top preference was the US’s tech-focused Nasdaq stock exchange.
[ymal]
Compared to one year ago, the CPI hit 9.1% in June, jumping from the 8.6% year-on-year rise seen the month before. The increase maintains the highest inflation seen in four decades for the US economy.
Wall Street analysts had predicted a month-on-month increase of 1.1% and an annual increase of 8.8%.
June’s rise was heavily influenced by higher fuel and food costs. The price of petrol increased 11.2% from May while energy prices rose 60% over the past year. Food prices were up 1% from May and 10.4% over the previous 12 months.
Last month, Federal Reserve Chair Jerome Powell vowed that policymakers would not allow inflation to overcome the US economy in the long term:“The risk is that because of the multiplicity of shocks you start to transition to a higher inflation regime. Our job is literally to prevent that from happening, and we will prevent that from happening,” Powell said.
“We will not allow a transition from a low-inflation environment into a high-inflation environment.”
[ymal]
Cohen is a protege of former Google CEO Eric Schmidt. In 2010, Cohen went on to establish technology incubator Jigsaw. His recruitment is the most recent step taken by Goldman Sachs to inject a technology focus into the bank.
Cohen is set to lead the group, known as the Office of Applied Innovation, alongside co-chief information officer George Lee.
“Working closely with leaders across Goldman Sachs, George and Jared will specifically identify and advance commercial opportunities for the firm that are at the intersection of a changing global marketplace, shifts in the geopolitical landscape and rapidly evolving technology,” Solomon said.
Cohen will be joining New York-based Goldman Sachs at its senior-most rank, serving as a partner, management committee member and also as president of global affairs.
[ymal]
In June, Federal Reserve officials highlighted the need to tackle inflation, even if it came at the cost of slowing the economy amid the looming threat of recession. They said that the US central bank’s July meeting would likely see another 50 or 75 basis point move on top of a 75 basis point increase that was approved in June.
“In discussing potential policy actions at upcoming meetings, participants continued to anticipate that ongoing increases in the target range for the federal funds rate would be appropriate to achieve the Committee's objectives,” the minutes read.
“In particular, participants judged that an increase of 50 or 75 basis points would likely be appropriate at the next meeting. Participants concurred that the economic outlook warranted moving to a restrictive stance of policy, and they recognised the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.”
[ymal]
In June, the US central bank upped its benchmark interest rate by three-quarters of a percentage point, the largest hike since 1994. This increase followed a quarter-point increase in March and a half-point increase in May.
In the coming months, further rate hikes are expected. On average, Fed policymakers said they expect interest rates to rise to approximately 3.4% by the end of this year, up from the 1.9% increase projected back in March.
Speaking to CNBC, Scharf said that while the consumer and small businesses have remained strong, the impact of rising rates has not been properly taken into consideration with regard to the broader economy.
“We know rates are going up, it couldn’t be clearer,” Scharf told CNBC on Wednesday. “We know that consumers and businesses, while strong today, are going to see deterioration, and we’re going to act surprised when it happens.”
“That doesn’t mean the world is coming to an end,” Scharf continued, though added that “we should do our best to recognise that and focus on what the solutions are.”
[ymal]
WBA’s move marks the conclusion of a review that commenced in January and saw the British retailer valued at £5 billion.
WBA said that the sale of Boots attracted significant interest, though global markets have suffered substantially since it launched the sale. Bidders including billionaire businessmen Mohsin Issa and Zuber Issa are understood to have missed out on acquiring Boots, which is the largest pharmacy in the UK.
“As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company,” WBA said.
Rosalind Brewer, CEO of WBA, said: “We have now completed a thorough review of Boots and No7 Beauty Company, with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control. It is an exciting time for these businesses, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty markets.
“The board and I remain confident that Boots and No7 Beauty Company hold strong fundamental value, and longer-term, we will stay open to all opportunities to maximise shareholder value for these businesses and across our company.”
[ymal]
When the Federal Reserve made the unprecedented move in March 2020 to pump trillions into the economy, it was a global milestone. Because USD is the world’s reserve currency, the Fed is effectively the world’s central bank, overshadowing all others.
With such a drastic increase in circulating supply, the USD lost value, coupled with low-interest rates which resulted in cheap access to borrowing, we saw a worldwide inflation spiral. The UK closely follows the US inflation rate, as both have reached 40-year highs.
The UK Economic Woes A Mirror Of The US
While the US inflation reached 8.6% in May, UK inflation outpaced it even further, at 9% in April, the highest of the G7 nations. The cost of fueling up a family car in the UK is now £100.27, according to Experian Catalist’s database.
Compared to the US, this means that a gallon of gas in the UK is equivalent to ~$8.8, which is 76% higher than the US gas price national average of $5. This has had such a huge impact on the cost of living that one in four people have resorted to skipping meals, according to a Sky News survey.
Consequently, both the Federal Reserve and the Bank of England have started raising interest rates to lower consumer spending and borrowing, which levels down inflation. The latest FOMC meeting placed the target interest rate at 3.4% by the end of 2022. At the same time, the Bank of England is hiking its interest rate for the fifth consecutive time, to 1.25%, which is the highest it has been in 13 years.
Unfortunately, the hikes themselves, as a remedy to inflation, are decimating stocks and cryptos alike. Blue-chip representatives for Europe and the US are both down by over -20% year to date. On the upside, London’s “Footsie” index (FTSE 100) has been outperforming them.
Unquestionably, these are withdrawal symptoms of a market habituated to cheap, near-zero interest rate capital. Furthermore, the housing market is getting hit, as higher interest rates on mortgages are anticipated to price millions of individuals out of home ownership.
In other words, a remedy for inflation can trigger a recession—a period of declining output and hiring freezes as companies consolidate their capital under new conditions.
Funds To Escape The Inflation Vice
While this economic cycle seems particularly harsh, they come and go as they always do. For this reason, one must adopt a long-term outlook. An outlook, so to speak, that aims for a 5-year investment gain. More importantly, it is crucial to consider assets that are in demand regardless of either inflation or a recession.
In the UK, open-ended investment company (OEIC) funds are equivalent to open-ended mutual funds in the US. They are priced once per day, diversifying investor money across a wide range of assets. For this reason, they are considered a long-term investment, of up to 10 years, spreading the risk widely so the growth outweighs the potential of losing the principal.
Because OEIC funds are professionally managed and diversified, their maintenance is relatively higher. The funds are generally available through many of the leading apps for trading stocks in the UK. They typically charge an annual management charge (AMC) between 1% to 1.5% of the allocated shares’ value. Here are three OEIC fund candidates for your consideration.
1. VT Gravis Clean Energy Income
By 2030, the UK will no longer allow for new gas-operated vehicles to be sold on the market. This speaks volumes about the relentless regulatory green push. Moreover, energy investments have been a historical safe haven against inflation.
In the near future, the UK government announced that it will phase out Russian oil imports as a result of the Ukraine-Russia conflict. This will be as early as the end of 2022. Both the intermediate geopolitics and long-term legislation translate to a mass adoption of renewable energy.
At $459.26 million and targeting 4.5% annual income, VT Gravis counts on that future by diversifying investor money on smart grids, energy efficiency, storage and other zero-emission alternatives. The fund charges 0.81% AMC.
2. LF Ruffer Diversified Return
Although launched in September 2021, it is based on the time-tested Ruffer Investment Strategy. Having received a “cautious balanced” rating, LF Ruffer is on the lower end of the risk spectrum. Its portfolio diversification is focused on times of market distress.
Specifically, high inflation is currently plaguing the world. LF Ruffer ties precious metals, energy stocks and index-linked bonds in a capital-protection bubble that are least likely to lose money on an annual basis. At a size of $751.29 which targets above 4% annual income, RL Ruffer charges 0.93% AMC.
3. M&G Global Listed Infrastructure
Infrastructure goes hand-in-hand with energy stocks, precious metals and renewables as guardians against inflation. Although high inflation impedes new infrastructure projects, all governments are aware that the cost of not building and maintaining roads and civic and utility buildings is higher in the long run if left behind.
That is why M&G Global covers infrastructural assets that are critical for any nation - social and economic. Furthermore, the fund counts on the growth of emerging markets - smart gridding the cities, data centres and communication towers. However, its portfolio does include a tighter range of investments, so a drop in one could significantly impact the fund’s value.At $634.96 million size and targeting 3% - 4% annual income, M&G Global charges 0.70% AMC.
Taking Advantage Of The Davos Agenda
In prior decades, it was more difficult to pick the right fund. One had to choose between an actively managed or a passively managed (index) fund. The latter typically have lower annual fees but are less likely to take advantage of changing market conditions. A strong case could be made that actively managed funds are also superior to life insurance policies, in terms of financial protection.
There is also the credit rating and default risk to consider. While all of these metrics still stand, the concentration of economic power has grown to the point where one metric is more important than others. Does the fund cater to the Davos Agenda?
Whether it is the World Economic Forum, UN’s 2030 Agenda or the World Government Summit, they all tie every economic act worth of note in a unified front. Furthermore, they deploy ESG framework - environmental, social, governance - to rate them above the immediate profit-return considerations.
This creates a streamlined investment outlook in which emerging infrastructure, renewables, digitisation and smart grids take priority regardless of market upheavals. From this perspective, the three listed funds pose the least risk in these uncertain times.
This article does not constitute financial advice. The author and Universal Media Ltd. are not qualified financial advisers. All investments are made at the reader’s own risk.
[ymal]
The US central bank increased its policy rate by 75 basis points on Wednesday to a range of 1.5% to 1.75% as officials increased their fight against stubborn inflation.
Wells Fargo & Co now expects a “mild recession” for the end of 2022 and into early 2023.
“The Federal Reserve is going to hike interest rates until policymakers break inflation, but the risk is that they also break the economy,” Ryan Sweet, Moody’s Analytics head of monetary policy research, said. “Growth is slowing and the effect of the tightening in financial market conditions and removal of monetary policy have yet to hit the economy.”
A recession is generally defined as a downturn in overall economic activity that is broad and lasts for more than a few months. The United States has only just emerged from the economic slump that was triggered by the Covid-19 pandemic.
[ymal]
The 2-year rate increased by more than 10 basis points to 3.1535%, hitting its highest level since 2007. The benchmark 10-year Treasury yield was also up, trading at around 3.1762%.
This week, a highly anticipated Federal Reserve meeting will be held, with the US central bank likely to announce at least a half-point rate hike on Wednesday. The Federal Reserve has already upped rates on two occasions this year, including a 0.5 percentage point increase in May in a bid to stave off surging inflation.
Last week, it was reported that the US consumer price index was up 8.6% in May on a year-over-year basis. This is its fastest jump since 1981, according to the Bureau of Labor Statistics.
[ymal]
On a monthly basis, headline consumer price index (CPI) was up 1% while core increased by 0.6%. Estimates had been 0.7% and 0.5% respectively.
Surging fuel prices, food prices, and housing costs all contributed to the record-high jump.
Energy prices broadly increased 3.9% from a month ago, bringing the annual gain up to 34.6%. Housing costs rose 0.6%, the fastest one-month gain since March 2004. Food costs, meanwhile, jumped another 1.2% in May, taking the year-over-year gain up to 10.1%.
“What we need to see is clear and convincing evidence that inflation pressures are abating and inflation is coming down — and if we don’t see that, then we’ll have to consider moving more aggressively,” Chair of the Federal Reserve Jerome Powell told the Wall Street Journal last month.
“If we do see that, then we can consider moving to a slower pace.”
[ymal]
