What goes down, must go up

I hope that this update finds you keeping safe and well.

Looking back over my last few updates these have been very centred around the risk of rising inflation and the lack of cash based returns.

Both areas are still grabbing headlines with the Bank of England keeping rates on hold for now with the expectation that inflation will plateau off soon. This also has seen them change their stance on increasing rates but when and what level that is still under wraps.

In recent days we have seen the expected cost of energy bills to increase and that goes hand in hand with most other prices increasing as well.

To try and put some context here on costs, I’ve looked toward the changing cost of petrol and set this out below.

May 2020            100.4 p

July 2021              130.0 p

The source of this is the AA and this is the average UK supermarket costs.

As you can see from the above this is quite a jump here. The very basic economics that sit around this is back to supply and demand.

The demand is back and therefore the price increases. The scary part of this is that this is just the supermarket average. It does mean stand alone and motorway services are more.

Looking toward the UK market we have seen a bounce in dividend payments with some large names increasing theirs. The pressure is now on the builders with the rising costs of materials and labour. Can they continue to weather the storm and keep building while making a profit?

There has been a sharp selloff in Chinese tech stocks with the Chinese government looking to clamp down on that sector.  

China will want the tech sector to flourish but at the same time not lose control. If history tells us anything of this style of clamp down this could see rapid growth afterwards as per the finance and data sectors who have been hit in the past.

Furlough here in the UK is slowly still being unwound so only once this is fully closed, we will know the full extent of the job losses.

However, the UK job market does seem stretched especially in the hospitality and leisure sectors.

The great ping’demic has a lot to answer for right now with multiple venues being closed on mass.

The post reopening surge has not kept pace with us not returning to a fully normal consumer patten and this is still now being felt on the high street. The city centre offices are still only just reopening with most heading for a September onwards timeline.

One interesting news article was Tesco offering a £1,000 golden hello for HGV drivers to join them shows the lack of movement in the job market and having to improve terms to attract the right people.

A quick look back at the first 7 months of this year with some interesting results below.

 Index                             Return

Russia                                16.91%

S&P 500                              15.72%

European Equities            12.69%

FTSE All Share                    11.68%

India                                     11.44%

FTSE 100                              10.98%

Brazil                                     0.79%

Japan                                   -0.28%

Emerging Markets            -1.47%

Corporate Bonds              -1.57%

China                                   -4.72%

UK Gilts                                -4.74%

Gold                                    -6.38%

*Figures from 31.12.20 to 01.08.21. Source: FE Trustnet

I’ve picked out some interesting indexes here and of course good old gold. There is quite some difference here and notably the negative return of UK Gilts once more.

As always, please free to contact us if you have any questions at all regarding any of this or if you wish to discuss your planning in any way.

Enjoy the rest of the summer and if you are travelling for a UK staycation remember to fill up at the supermarket before you leave!