A Devitt provided a market commentary on recent events.

Highlights since the last update included:

·         Inflation remains at the front and centre of government and household concerns, and in September rose to a 40 year high, rising 10.1% (CPI). As levels stay around high single digits or even double digits in Europe and the US, there are nevertheless some signs of it faltering.

These are signs that the unemployment rate in the US rose slightly (although is still historically low) while supply shocks seem to have played out and there is evidence that the supply of goods is not still seeing price hikes.

·         Interest rates continued to rise, with the US Fed raising rates for the sixth time this year (75 bps) in November while the Bank of England raised its rates to 3%, its eighth consecutive rate rise and the largest (75 bps) since 1989. As noted earlier, some central banks are “blinking” in the lights of economic strains and not raising by as much as expected.

·         UK employment figures remain robust, with unemployment numbers at multi-decade lows and at numbers not seen since 1974. This was partially driven by a lower participation rate, particularly as older workers stayed out of the work force and students choosing not to work.

·         GDP growth in the UK has been flatlining – falling by 0.6% in September and 1% in August but after growth of only 0.1% in July.

·         The political environment remains fraught, although the new Conservative government seems less wracked with drama than the previous one and there is clearly a strong desire for stability, from fellow politicians, the general public and market participants.

The following would be watched in the coming months.

·         A Measure of Winter Cheer. As we noted last quarter, it is critical to see what the winter brings in terms of energy pricing and consumer sentiment. With mortgage rates in the UK set to rise sharply, this will place extreme stress on certain consumer segments, and the pending more austere fiscal climate will also present challenges. How this translates into retail sales, real estate demand and corporate health will be critical.

Tech as a Canary in the Coal Mine? During the recent layoffs, may tech executives noted with chagrin their recent overly exuberant hiring and growth expectations. It is true that they did contribute to a particularly frothy employment climate.

It will be key to see if they have over-steered now, or only scratched the surface, and whether other industries follow suit. With the apparent shortage of labour in some areas and a challenge in hiring, how this all settles with respect to employment will be very interesting to watch.

·         The end of zero-Covid? As we discussed in the spotlight on China section, there is so much still pending on the direction that Xi Jinping’s united front of a government takes with respect to opening up China’s economy and relaxing some of the zero-Covid restrictions that are incompatible with that. Visibility as to this, their position on trade and their aspirations with respect to Taiwan will be key to seeing how one of the world’s largest economies plays its part in the years ahead.

The Chair thanked A Devitt for an interesting and informative report.