become the economic and investment powerhouse of the world , so that ’ s what we must look forward to ! We ’ ll only have to wait 248 years to find out ...
For a few dollars more
With this new Government , we found out there ’ s a huge 10 – 30-billion-pound black hole that needs to be filled . I guess we ’ ll have to put that wide gap down to rounding errors , right ? Unfortunately , and crudely , there are only two ways to fill that kind of gap – austerity or taxes . We all knew what was on the cards .
The newly appointed Chancellor of the Exchequer , Rachel Reeves , introduced the new Budget to the world and it caused some upset , however , not as much as Truss and Kwarteng . The adage “ be careful what you wish for ” does spring to mind . So , in the wake of our recent Budget , in 2024 we now have farmers fighting or striking , companies talking about not giving pay rises to retain profitability while increasing NI contributions , economic growth projections for the UK downgraded , and the NHS not likely to see the upside of the proposed changes until 2026 .
The wild bunch
Across the pond in the US , we watched a man with mugshot re-win the White House . After his win , he proceeded to give a wandering walk of a speech , including a detour into talking about Elon Musk ’ s rocket , inviting the president of The U . F . C . up on stage to speak mid-speech , and calling on a P . G . A . player to come speak too . In a strange turn of events , a few days later the TV star turned President went on to employ the world ’ s richest man to start looking at where they can cut back on government spending , before hopping onto a private jet and posing for a photo with a few burgers from McDonalds . The reality of this is stranger than fiction .
This is scratching the surface and making light of where we find ourselves currently in this political zoo – but the truth is that 2024 will be remembered by many of us as being a crazy year in politics .
The magnificent seven ( more or less !)
After a few years of pain , inflation has eased back and growth has started getting back on track . At the start of the year , we were all hopeful for big rate cuts from central banks to spur on the economies . In Q2 , the ECB started to cut rates . Since the start of the year , we have had three rate cuts by the ECB , with a fourth cut predicted for December . In the UK we saw our first cut in August , followed by a second in November . These two rate cuts are the first we have seen since 2020 , after experiencing the frantic rate hiking cycle we have seen in an attempt to combat inflation .
The FED held off for longer than Europe and the UK , introducing the first cut in September , and again in November with expectations high for another cut before the end of the year . So , despite a volatile backdrop , these are great positive we can take away from this year .
What about markets ?
Well , spurred lightly by rate cuts , and despite a crazy political backdrop , markets have been a silver lining to an odd year out there .
Despite the volatile political backdrop , the USA . has again outperformed the rest of the world . The S & P500 is up 25 %, and NASDAQ is up 28 % YTD , with Nvidia up 205 % - great time to be invested in tech and the US .
Here in the UK . we ’ ve seen our FTSE100 up a mild 5 % YTD and the FTSE250 up about the same . The FTSE250 giving back some performance since the aforementioned Budget . So , confidence and performance both seem low .
The Japanese Nikkei is up 15 % after a very volatile year too , showing that common sense and going from “ bad ” to “ passable ” can have major upsides to the outlook for a country and the companies within .
The Chinese stock market is up 17 % YTD , after six years of difficult returns . This year marking changes and a willingness from the Chinese government to spark growth . Interesting times ahead here .
True grit
What a busy and chaotic year 2024 turned out to be . However , if we zoom out a little and look at the bigger picture , things aren ’ t as bad as they seem . Sometimes there is benefit in taking a step back .
If at the end of 2023 , we were told that 2024 would see ; a change in government voted for by the people , markets globally up and building wealth for clients , central banks dovish , and cutting rates spurring on the economy , no housing crisis , no recession ( so far ) – I think we all would have taken this as a good year !
Sometimes with a little perspective , we can move away from what appears to be a busy and chaotic world below . I ’ ll be trying my best to take this new perspective into next year … where things will be far calmer , right ?
December 2024 | 5