Pentelow Wealth Management’s Post

I pulled the early shift today - great to chat to Lizzy Burden on Bloomberg this morning. ***Link to the video added (fwd to 38:30)*** https://lnkd.in/e3JhRaEK We chatted about #tariffs #taxes and #inflation in the context of the European #economy. The #eurozone is at risk of being buffeted by the competing winds of a weaker euro pushing up inflation and disinflationary forces from cheaper Chinese goods. Much depends on the scale and breadth of the tariffs. Add to that the current political upheaval in #France and #Germany, there is precious little policy clarity. The #ECB doesn’t have an easy task as it also has to balance a growth concerns with high wage growth. The economic tour also visited the #UK. See Lizzy’s great interview of #BoE MPC member Swati Dhingra. When asked if I agreed with her assessment that interest rates are too restrictive, my answer was that policy normalisation is probably appropriate but monetary stimulus in the coming year (ie cutting aggressively to say 3%ish) when we have a jump in public spending that will work its way through the economy risks inflation staying elevated. No one knows for sure what 2025 will have in store for the economy and markets. The only safe prediction is that there will be some surprises! St. James’s Place

📉 𝐄𝐂𝐁 𝐈𝐧𝐭𝐞𝐫𝐞𝐬𝐭 𝐑𝐚𝐭𝐞 𝐂𝐮𝐭: 𝐀 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐢𝐜 𝐌𝐨𝐯𝐞 𝐛𝐲 𝐭𝐡𝐞 𝐁𝐥𝐨𝐜 🌍 🔶 Yesterday, the European Commission announced a 25 basis points cut in interest rates, signalling a switch in focus from lowering inflation to protecting economic growth - marking the first back to back rate cut in 13 years ! 🔶 This decision was taken in light of inflation falling to below 2% for the first time in 3 years, with prices growing by 1.7% in September 2024 (see graph). 🔶 The rate cut is part of a broader strategy to tackle challenges like high energy prices and supply chain disruptions amidst concerns of a slowing economy. 🔶 Uncertainty is prevalent in the market, with upcoming US elections bearing the potential threat of fresh trade tariffs, whilst the Middle East conflict could impact price of oil. The ECB is “very attentive” to these possibilities, with ECB President Christine Lagarde adding any trade obstacles were a “downside” for Europe. 𝑴𝒊𝒕𝒊𝒈𝒂𝒕𝒊𝒏𝒈 𝒕𝒉𝒆𝒔𝒆 𝒓𝒊𝒔𝒌𝒔 𝒕𝒉𝒓𝒐𝒖𝒈𝒉 𝒎𝒂𝒊𝒏𝒕𝒂𝒊𝒏𝒊𝒏𝒈 𝒊𝒏𝒇𝒍𝒂𝒕𝒊𝒐𝒏𝒂𝒓𝒚 𝒕𝒂𝒓𝒈𝒆𝒕𝒔 𝒊𝒔 𝒄𝒓𝒊𝒕𝒊𝒄𝒂𝒍! 🔶 Whilst this 25 basis point cut is a start, a bumper cut may be required later in the year to continue investor confidence, and this is supported by market sentiment with the 𝒎𝒂𝒓𝒌𝒆𝒕𝒔 𝒂𝒍𝒎𝒐𝒔𝒕 𝒇𝒖𝒍𝒍𝒚 𝒑𝒓𝒊𝒄𝒊𝒏𝒈 𝒊𝒏 𝟑 𝒇𝒖𝒓𝒕𝒉𝒆𝒓 𝒓𝒆𝒅𝒖𝒄𝒕𝒊𝒐𝒏𝒔 through to next March. 🔶 It will be interesting to see how this impacts the eurozone's recovery and inflation rates in the coming months. What are your thoughts on the ECB decision? Will it drive economic growth and stability?? 💼💡 #HorizonRecuitment #HorizonRecruit #Economy #InterestRates #EuropeanCommission #BusinessGrowth #FinancialStrategy

Its all about the US....interesting graph from Bloomberg showing what we all know already - the US equity market is the only game in town for now despite sky high valuations (alongside most other asset classes). The increasing relative value disadvantage to bonds is clearly not important at the moment, and bonds have the added headwinds of uncertainty with regard to inflation, fiscal deficits and the financing thereof plus potential tariffs. For now the US momentum continues....

While the Trump victory drove US indices sharply higher overnight, Asian markets have been mixed as the potential economic implications of his proposed policies are assessed, including tax cuts and increased tariffs, particularly targeting China. The proposed measures are anticipated to stimulate business activity in the short term; however, analysts caution that they could also reignite inflationary pressures. Locally, the ASX closed up just 0.33% at 8,226.3 points.  Among the sectors, Energy was the standout performer while the rate-sensitive Real Estate sector took a hit.  The prospect of heightened inflation presents a challenge for US Federal Reserve chair Jerome Powell, who aims to guide the economy toward a soft landing while maintaining price stability.  The Federal Reserve is expected to announce a 25 basis point interest rate cut on Thursday (US time). However, the likelihood of further rate cuts in the... More at #Proactive #ProactiveInvestors http://ow.ly/gIsR105O7HL

The main event in November was the US election, which resulted in Donald Trump being re-elected and the Republicans winning a ‘clean sweep’. Global stock markets moved higher, driven by US indices rallying to new all-time highs amid expectations that positives from tax cuts and deregulation would more than offset any drags on US growth from tariff policies. Bond yields fell, particularly in the Eurozone, as proposed US tariffs were expected to hamper European growth and, when combined with low inflation, would allow the European Central Bank (ECB) to cut rates more aggressively. US economic data showed strength while there were signs of softer activity in the Eurozone.   Our Market Pulse discusses these themes and outlines our outlook for markets over the next 12 months. Download our pdf for the full story. https://lnkd.in/eE6-w6uR  #marketreview #ILIM #equities #bonds #economicoutlook #outlook

As expected, The FOMC meeting concluded yesterday with the decision to lower interest rates by 0.25% to a level of 4.5%-4.75%. Chairman Powell made two important remarks during the press conference: (1) he doesn’t rule out an interest hike if inflation picks up in 2025, although he thinks that’s unlikely and (2) he stressed the independence of the Fed by saying that he will not resign if newly elected president Trump would ask. The meeting was mostly about inflation, and not that much about unemployment. On the other side of the World, China’s government just announced the expected fiscal package to support the economy and the real estate sector. The central government will allocate 6 trillion yuan ($840 billion) to local governments to alleviate their hidden debt. On top of that and starting this year, the Chinese government will issue 800 billion yuan a year in local government special bonds over five years, for a total of 4 trillion yuan. Total amount of measures:$1.4Tn. Fiscal and monetary stimuli continue to work its way into the global economy and they might bring back inflation. Want to know more? join Fund@mental here https://lnkd.in/en3eA832 #iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning #policymistake #ratecut #stagflation

'The recent FOMC meeting's decision to lower interest rates by 0.25% to 4.5%-4.75% aligns with expectations, aiming to support the economy while managing inflation pressures. Chairman Powell's comments are noteworthy: while he holds a cautious stance on inflation potentially warranting a hike in 2025, he also emphasized the Fed's independence, notably stating he would not resign if President Trump requested it. This underscores the Fed's commitment to autonomy in decision-making. On the global front, China's fiscal measures to stabilize its economy and real estate sector are significant, amounting to $1.4 trillion. The 6 trillion yuan allocation ($840 billion) aims to relieve local governments' hidden debts, while an additional 800 billion yuan per year in special bonds over five years (totaling 4 trillion yuan) is planned to further bolster local economies. These moves reflect China's proactive approach to stimulating growth amid challenging economic conditions. Together, these monetary and fiscal policies in the U.S. and China could have broader implications, potentially reigniting inflationary pressures globally as stimulus efforts permeate markets. The balance between supporting growth and controlling inflation will remain crucial as these measures unfold.

Soaring real yields can impact Europe's economic recovery by increasing borrowing costs, which may slow down investment and spending. Higher real yields also make it more expensive for governments and businesses to service their debt, potentially leading to tighter financial conditions.

May's Market Wrap from William Smith covers the month's market activity; a summary of the key trends, emerging players and market movements. Will outlines key market movements that caught his attention in June: 1. #EuropeanCentralBank cuts rates before the Fed: #ECB cuts rates amidst moderating eurozone #inflation to 2.5%, but faces stubbornly high core and services inflation, delaying further rate cuts. 2. France’s snap #election drives bond yields; National Rally Party deficits: France Snap Election Impact: Macron's party loss to RN led to bond yield spikes, market losses, and euro decline. RN's fiscal promises face scrutiny. 3. China’s #copper stockpiles pulling prices down: Copper prices drop 15% on China's surplus stockpiles amid sector struggles. Imports rise, driven by discounted Russian copper, but demand outlook remains robust despite short-term volatility. Read the full Market Wrap: https://lnkd.in/gA8iSE5m #MarketInsights #Finance #marketwrap #investmentportfolio #investmentstrategy #investmentinsights #FranceElection

Whether you're a business gearing up for international trade, planning a personal trip to Europe this summer, or needing to make a personal international transfer, now is a great time to buy Euros. The GBP/EUR exchange rate has reached 18-month highs. This comes as a result of the market feeling certain of a June 6th rate cut from the ECB, whilst recent UK inflation data has suggested the BoE may hold rates throughout the year. #CurrencyExchange #InternationalTrade #TravelEurope #GreatTimeToBuy