Mid market update: Inflation and the global market

By Acumen Financial Partnership Ltd

22 Feb 2023

Markus Spiske Xrify4ck1w Unsplash Scaled

By Daniel Frampton FPFS.

As the worries about prolonged inflation start to subside – there appears to be light at the end of the tunnel for developed economies. There have been three months in a row of CPI prints that have come in at or below expectations.

The general consensus is that inflation has peaked and over the next 12 to 18 months it should taper down to the Bank of England’s target rate. This is also the view for the United States which is positive as their markets make up the majority of global stock market capitalisation. 

Over the last 15 months, global markets have had to become steadily immunised to the rapid rising of central bank interest rates. The Chairman of the Federal Reserve in the US has repeated his “higher for longer” view in every speech he has made since the middle of 2022.

Unlike the Bank of England – who’s only target is keeping inflation under control – the Federal Reserve also have the target of keeping employment levels stable. Central banks do not have mandated targets regarding the value of assets – it matters not, to them, whether the stock/housing/bond markets rise, fall or stay flat. 

At this point in time, employment levels in the USA are at near record levels and inversely, unemployment leaves are at near record lows. This is in part helped by the cost-of-living increases and many citizens being forced to take a second job to make ends meet.  

WHAT IS THE BANK OF ENGLAND BASE RATE?
CPI is still far higher than central bank targets and with employment being strong, there is currently no reason for the Federal Reserve, the Bank of England and the European Central Banks to consider decreasing base rates at this time. 

The most likely outcome for the short term is that Central Banks reach their terminal interest rate and hold them there until either unemployment rises above targets or inflation falls below targets. At this point in time, the Federal Reserve have set an interest rate of 4.75% and their defined terminal rate is 5% – so, we are almost there. 

The next point of interest for markets is the corporate earnings landscape. As Consumers tightening their belts and the cost of production and energy is substantially higher than a couple of years ago. 

The question analysts are wrestling with at the moment is the extent to which profits will be hit across economies. We are in the midst of an earnings season and so far, earnings have been robust – with many companies meeting expectations and some exceeding them. 

There are a number of recession warning signs flashing but GDP growth remains relatively robust. We will continue to monitor the ongoing economic climate and ensure that any important news is fed back to you via our various means of communication. 

Even if a recession does become the base case – the stock market is forward looking and therefore, valuations will have likely accounted for this well in advance. In past recessions, the stock market usually starts recovering well before the economy reaches its worst point.  

As ever, the most proven strategy during periods of volatility is to remain invested through the peaks and troughs. If you would like to speak to one of our advisers regarding this, or anything else – please feel free to contact them at your earliest convenience to start your financial planning

Latest news

1

fulfilmentcrowd ships 200,000 items on Black Friday Fulfilmentcrowd Black Friday

fulfilmentcrowd ships 200,000 items on Black Friday

01 Dec 2023

2

Blackpool's civil service hub hits construction milestone Civil Service Hub Construction

Blackpool's civil service hub hits construction milestone

30 Nov 2023

3

Don't judge, not everybody's got a great brand, ok? Laura Weldon Studio LWD

Don't judge, not everybody's got a great brand, ok?

27 Nov 2023

4

Glitz, glamour and generosity see Rainbow Hub ball raise £70,000 Rainbow Hub Ball 2023.jpg.jpg

Glitz, glamour and generosity see Rainbow Hub ball raise £70,000

01 Dec 2023

5

Lancashire/Morecambe Hotspots: Give and tech Leighton Hall

Lancashire/Morecambe Hotspots: Give and tech

01 Dec 2023

2664LBD980x120gif
Background image for hub sign up block

LBV Hub

Reach 50,000 members of the Lancashire business community

Post your news
Post your events
Post your offers
Company profile
Social reach
Magazine coverage
Sign-up
Events
Help to Grow Management Course
Collaboration v3.png.png
LBV Hub Seminars
31 Oct 2023 - 14 Feb 2024

Help to Grow Management Course

University of Central Lancashire, School, Online and face-to-face , UCLan, PR1 2HE

09:30 - 11:30

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
01 Dec 2023

Business Networking in Preston - BNI Brunch

Samlesbury Hotel, Preston, PR5 0UL

09:30 - 11:00

Business Networking in Blackburn - BNI Vista
EVENT LISTING Networking In Halifax (1).png.png
LBV Hub Networking
05 Dec 2023

Business Networking in Blackburn - BNI Vista

Hampton by Hilton, Blackburn, BB1 3AL

06:45 - 08:30

Using your existing Pension to invest in Commercial property
Chris Montgomery SmgTvepind4 Unsplash
LBV Hub Webinar
05 Dec 2023

Using your existing Pension to invest in Commercial property

Zoom, Burnley, BB11 1JG

09:00 - 09:45

Business Networking in Lancaster - Eden Business Network
Eden Business Network.png.png
LBV Hub Networking
06 Dec 2023

Business Networking in Lancaster - Eden Business Network

The Borough, 3 Dalton Square, Lancaster, LA1 1PP

18:30 - 20:30

Twas the night before ransomware
Event Graphic 3.jpg.jpg
LBV Hub Seminars
07 Dec 2023 - 07 Dec 2023

Twas the night before ransomware

The Lowry Theatre, Salford Quays, M50 3AZ

14:00 - 17:00

Discover the power of BNI - Business Networking in Preston
Preston.png.png
LBV Hub Networking
07 Dec 2023

Discover the power of BNI - Business Networking in Preston

Samlesbury Preston Hotel, Preston New Road, Samlesbury, PR5 0UL

09:30 - 11:00

The Business Network Central & East Lancashire
LBV Hub Networking
07 Dec 2023

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:30

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
08 Dec 2023

Business Networking in Preston - BNI Brunch

Samlesbury Hotel, Preston, PR5 0UL

09:30 - 11:00

Business Networking in Lancaster - Eden Business Network
Eden Business Network.png.png
LBV Hub Networking
13 Dec 2023

Business Networking in Lancaster - Eden Business Network

The Borough, 3 Dalton Square, Lancaster, LA1 1PP

18:30 - 20:30

Discover the power of BNI ONLINE - Business Networking in Lancashire
Preston.png.png
LBV Hub Networking
14 Dec 2023

Discover the power of BNI ONLINE - Business Networking in Lancashire

Online Meeting, -, -

09:30 - 11:00

Business Networking in Preston - BNI Brunch
EVENT LISTING SIZING Brunch .png.png
LBV Hub Networking
15 Dec 2023

Business Networking in Preston - BNI Brunch

Samlesbury Hotel, Preston, PR5 0UL

09:30 - 11:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV Advertising Visual NovDec
Subscribe now

Weekly news bulletin