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Please see below, an article from EPIC Investment Partners which discusses the potential impact of AI as a driver of disinflation. Received today – 15/05/2026

Kevin Warsh arrives at the Federal Reserve with a deceptively simple question: if companies can do more tomorrow with the same inputs they used yesterday, why should prices keep rising at all?

This is the deeper point behind his view of artificial intelligence. Warsh is not merely arguing that AI will make companies more efficient or shareholders richer. He is suggesting that it could alter the inflationary structure of the economy. If AI allows firms to automate routine services and lower the cost of starting new businesses, the Fed may need to rethink its interpretation of growth, employment, and productivity.

In theory, productivity is disinflationary. If a company produces more with the same labour and capital, unit costs fall. In a competitive market, those savings are passed to customers, slowing price growth and raising real incomes. Yet inflation persists because these gains are not automatically competed into prices. Firms with market power often retain them, while sticky costs — rents, insurance, and professional fees — remain constrained by politics, scarcity, or regulation that software cannot easily fix.

This is where AI may be different. Earlier technology cycles improved what firms could do. AI may change who can compete. For decades, organisational scale was itself a barrier to entry. Challenging an incumbent required teams of coders, lawyers, accountants, marketers, and support staff. Competition was expensive.

AI compresses that structure. A small team can now write code, generate research, answer customers, and review contracts with far fewer people. It does not eliminate expertise, but it reduces the minimum efficient scale of the firm.

That creates a potentially powerful disinflationary force. If incumbents use AI to lift margins without cutting prices, they may face leaner competitors able to undercut them. The threat is not just that existing companies become more efficient. It is that competition itself becomes cheaper.

There is a caveat. AI may create high barriers in chips, models, and data centres. These sectors are capital-intensive and may remain concentrated. But most companies will rent that infrastructure rather than own it, and the cost of using it is likely to keep falling. A small firm does not need to build a frontier model to use one, just as it did not need to build a power station to benefit from electricity.

That is the crucial distinction. The infrastructure layer may be expensive to build, but cheap to access. The disinflationary pressure comes from the industries built on top of it. If a small legal, software or financial firm can do with five people what once required 30, the incumbent’s pricing power weakens. AI does not need to make every sector perfectly competitive. It only needs to make competition cheaper.

This shift challenges the Fed’s traditional reaction function. The central bank’s inherited model assumes a familiar sequence: strong demand tightens labour markets, pushing up wages, which then feed into prices. Policy therefore leans against growth before inflation becomes embedded. A strong economy is treated as a risk to be restrained.

AI complicates that instinct. If supply is expanding through productivity, growth is not necessarily inflationary. If routine knowledge work becomes cheaper, services inflation may no longer behave as it did in a labour-heavy economy. The Fed’s question changes from “is growth too strong?” to “what kind of growth is this?”

The argument has limits. AI will not bypass planning rules for housing or solve oil supply shocks. But it may change how productivity gains pass through the economy. That is the core of the Warsh doctrine: the economy’s supply side may be changing in ways the old labour-market framework cannot see. The Fed’s task is not to assume inflation has disappeared. It is to decide whether the old signals still mean what they used to.

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Alex Kitteringham

15^th May 2026

Please see todays Daily Update from EPIC Investment Partners received this afternoon (14/05/2026):

Momentum has outperformed quality so decisively that, at times, it appears to be the only game in town. Extreme concentration in index leadership, persistent passive inflows, and continuous earnings upgrades within a narrow group of semiconductor and AI infrastructure names have created a self-reinforcing structure that mechanically rewards trend persistence.

Momentum strategies thrive when market leadership narrows and earnings dispersion widens. That is precisely what has unfolded across semiconductor and AI infrastructure equities. Companies within this cohort have combined genuine fundamental strength with relentless incremental capital inflows. Importantly, this is not purely speculative momentum. It is momentum anchored in businesses generating structurally high returns on capital, dominant competitive positioning, and multiyear visibility into AI driven demand expansion.

However, these dynamics are self-reinforcing, not necessarily self-sustaining. As positioning becomes increasingly one sided and valuation assumptions begin to embed near perfection, market sensitivity to incremental disappointment rises materially. Momentum regimes often appear most stable precisely at the point where underlying fragility is accelerating beneath the surface.

Quality investing operates across a different spectrum. Earnings trajectories tend to be smoother, valuation rerating is typically more gradual, and relative underperformance is common during periods when investors prioritise narrative concentration and thematic exposure over balance sheet strength, pricing durability, and long duration free cash flow generation.

We continue to maintain exposure to businesses such as NVIDIA, TSMC, and Broadcom, where we see substantial long term value creation potential. The AI infrastructure buildout remains firmly in an expansion phase, supported by strong hyperscale capital expenditure visibility and broad based enterprise adoption trends. These businesses remain exceptional quality compounders embedded within one of the most powerful investment cycles seen in modern capital markets.

At the same time, periods of extreme concentration inevitably create valuation distortions and narrative blind spots elsewhere in the market. One of the clearest examples today is high quality luxury compounders, particularly Ferrari.

Over the past year Ferrari shares have materially underperformed as broader automotive sentiment deteriorated under the weight of tariff concerns, cyclical fears, and global growth uncertainty. Yet Ferrari is fundamentally misclassified when viewed through a traditional automotive framework. Its economics are structurally inconsistent with the broader OEM universe. Production volumes are intentionally constrained, not demand constrained. Pricing power is structural rather than cyclical. Order books are supported by multiyear waiting lists rather than promotional activity or financing incentives.

The critical distinction lies in earnings quality through the cycle. Unlike traditional manufacturers, Ferrari’s earnings power is not primarily exposed to volume volatility or macroeconomic sensitivity. It is driven by brand equity, engineered scarcity, and sustained pricing authority. Historically, this combination has translated into materially higher and more stable returns on invested capital than the broader automotive sector, alongside significantly lower earnings cyclicality than is implied by its sector classification.

Please continue to check our blog content for advice, planning issues, and the latest investment, market and economic updates from leading investment houses.

Andrew Lloyd

14/05/2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 12/05/2026.

What’s driving market optimism?

We explore what’s driving market sentiment as U.S. stocks soar to record highs despite continued Middle East tensions.

Key highlights

• Potential U.S.-Iran deal rallies equities: Equities saw a boost as the U.S. initiated discussions towards a potential deal to reopen the Strait of Hormuz.
• UK political changes are afoot: UK elections saw a substantial swing from the Labour Party to Reform – could this lead to the departure of the prime minister and chancellor?
• The U.S. jobs market holds up: Job openings have plateaued and a significant number of people are still quitting their jobs – despite this, job cuts increased in April.

Potential U.S.-Iran deal rallies equities

The Iran-U.S. war dominated proceedings once again last week. It began with the fallout from a U.S. operation to force the Strait of Hormuz open by facilitating the transport of tankers with naval escorts. The convoys came under fire and investors were concerned that this would trigger a collapse of the ceasefire, providing a downbeat start to the week.

The operation was halted after a day. By mid-week, President Donald Trump used it as the basis for a reattempt at negotiation. Secretary of State Marco Rubio stated in exceptionally direct terms that “the combat phase is over” – language that was unusually conciliatory.

The Trump administration confirmed it had sent a proposal for the reopening of the Strait of Hormuz to Iran. This triggered a substantial rally even though Iran was initially cool towards the proposed terms, particularly any moratorium on uranium enrichment.

The possibility of a deal saw equities – particularly European equities – rally, with government bond yields falling sharply. But at the beginning of this week, negotiations have only highlighted how far apart each party is.

The broader picture remains one of an energy shock, with compounding implications for Europe, such as:

• Elevated gas prices (materially above U.S. levels)
• Fiscal constraints, with debt-to-GDP ratios converging on, or exceeding, 100% in several countries
• The additional burden of increased defence spending

These challenges are connected rather than isolated.

So, when the U.S. and Iran re-engaged in ballistic operations following assaults on U.S. ships, and even as the U.S. awaits a response on its offer, equities have retreated, cyclical sectors have underperformed, and the more defensive corners of the market – including technology – have held up relatively better.

We believe both sides would like to see the Strait reopened, so while there have been several false dawns, eventually one of these potential agreements is likely to take hold

UK political changes are afoot

Last week also saw the UK hold local elections.

The results showed a remarkable swing from the Labour Party towards Reform. To a substantially smaller extent, the Conservatives and independent councillors lost out to the Liberal Democrats and Green candidates.

Source: Associated Press

The results were not hugely surprising and there was little reaction in the bond market. However, there is now a concern that these poor results could bring about a leadership challenge resulting in the fall of Prime Minister Sir Keir Starmer and, more specifically, Chancellor Rachel Reeves.

Potential candidates could be more inclined to increase spending, leading to more bond issuance and possibly higher inflation.

Prediction markets place approximately a 45% probability on the prime minister departing by the end of June, and a 60% to 70% probability of him departing by year-end – a number that fell when he vowed not to resign, but rose once more as signs of rebellion from the party, and even within the cabinet, started to grow.

The gilt market has been concerned about the impact of a new prime minister as they may feel compelled to jeopardise fiscal sustainability to meet their political objectives. It seems likely that any future leader will be aware of how important it is to respect the bond market – however, they’ll also need to cope with external factors (such as the U.S.-Iran war), which put additional pressure on the government finances.

In recent weeks it’s been made clear that the Persian Gulf war has been the most significant bond market concern.

Source: Bloomberg

The U.S. jobs market holds up

In the U.S., frustration continues to grow with the economy.

Polling suggests that attitudes towards the war are fairly static, but attitudes towards the inflation it has created are becoming increasingly uniform.

Earnings reports cited the increasing pressure on the lower income cohorts, but so far, the jobs market is holding up. Job openings have plateaued, and there are still a significant number of people quitting their roles (implying they’ve found better employment elsewhere).

The latest jobless claims data remains subdued. Last month, 100,000+ new jobs were created in the U.S. Jobs growth has been slowing in recent years, but recent months have seen it stronger than anticipated.

Source: LSEG Datastream

The only concern is the increase in the number of job cuts in April, which the monthly Challenger Jobs Report attributed to AI. Jobs growth can slow due to cyclical factors, such as interest rate or gasoline price increases. But it can also slow due to structural factors, such as the roll-out of labour-replacing technology-driven investment.

So far, this is the second consecutive month we’ve seen AI mentioned as the reason for U.S. jobs cuts. It has been cited as the reason for 49,135 job cuts – about 16% of all job cuts this year. The numbers are very modest, but the trend is one that will be scrutinised.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

13/05/2026

Please see the below article from EPIC Investment Partners detailing their discussions on the current geopolitical landscape. Received this morning 12/05/2026.

The closure of the Strait of Hormuz remains an ongoing issue for the global economy. China’s factory prices grew at the fastest pace since the COVID pandemic with April producer prices rising 2.8% y-o-y in April, much higher than market expectations.

Supply chains are changing rapidly and are unlikely to return to normal. Gulftainer, based in the United Arab Emirates, is the manager of a number of container terminals in the Middle East. This includes the Khor Fakkan port that sits just outside the Strait of Hormuz, facing the Gulf of Oman. Shipments through Khor Fakkan has climbed from roughly 2,000 containers a week prior to the conflict to 50,000 a week today. About 7,000 trucks enter and exit the port each day compared to just a few hundred prior to the conflict. CEO Farid Belbouab makes the important point that the shippers, shipowners, and importers are focussed on reliable delivery dates regardless of the higher cost or longer transit times.

Another example is Iran ramping up trade with China via railway shipments in a bid to blunt the impact of a US blockade of its ports and adapt to pressure designed to strangle its economy. The number of cargo trains going from Xi’an in central China to the Iranian capital Tehran has risen from around one per week before the conflict to one every three or four days since the start of blockade on April 13.

Certainty is invaluable even if it means higher prices.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alex Clare

12/05/2026

Please see the below article from Tatton Investment Management discussing improving market sentiment driven by easing geopolitical tensions, resilient global growth and strong US (AI-led) corporate earnings, received this morning – 11/05/2026.

Reasons to believe

Operation Epic Fury is over and markets are betting that the Strait of Hormuz will be open soon. Both stocks and bonds bumped up; equities helped by strong corporate earnings especially in the US; bonds benefitting from lower inflation expectations for the next twelve months.

Oil prices dropped through last week with the nearest Brent crude futures contract (July) falling below $100 pb. However, Iran’s refusal to engage in discussions on the nuclear issue has seen it rise back to $105 pb. Nevertheless, most traders believe that US-Iran peace talks will probably wrap up around Trump’s visit to China at the end of this week – given Beijing’s pressure on its Iranian all to reopen the Strait. The risks look less risky than a week ago. Oil prices won’t fall rapidly (reserves need to be rebuilt) but the long-term energy outlook has tipped back to oversupply.

The next Trump show episode could be another tariff tirade against Europe, though that could be coupled with warming of US-China relations and hence lower tariffs on China.

Global growth has been much more resilient than expected – particularly in the US. The US added 115,000 jobs in April and there is little sign of AI impacts. That’s feeding through into phenomenal corporate earnings. Large cap indices are heavily concentrated on a few AI winners, but small and midcap indices show strong earnings too. It’s a little surprising the dollar has fallen back after this strength, but that could be about the long-term fragmentation of global trade (as we’ve covered before). Dollar weakness might now be the default trend.

Equity valuations have cheapened since the start of 2026, global growth has improved and, this week, bond yields have come back from their highs (especially in the UK, due to gilts’ inflation sensitivity). Tighter monetary policy detracts from the outlook, but central banks might loosen if energy prices fall. The Fed will probably cut rates under new chair Kevin Warsh – but that will require a balance sheet reduction, to avoid overstimulating a strong US economy. Many are sympathetic to Warsh’s low-rates, lighter-balance-sheet approach, but the reduction in liquidity could knock markets in the short-term. The need to convince committee colleagues (including Powell) will keep the reduction slow, at least.

April asset returns review

Global equities rallied 6.9% in April in sterling terms, recovering from the March sell-off despite the fallout from the US-Iran war. US stocks gained 7.2%, climbing above their level from before the war. They were helped by the resilience of US growth and strong corporate earnings – particularly for big tech companies. The capital rotation away from e saw at the start of 2026 is now reversing, with the AI theme dominating again.

UK and European stocks didn’t reach their pre-Iran war levels and both stalled into the end of the month (+2.3% and +4.5% respectively), reflecting energy vulnerability.

Global bond prices gained 0.3% but saw significant volatility, and UK bonds (gilts) dropped 0.5%. Higher inflation and interest rate expectations shifted demand to shorter-term bonds, pushing up long-term yields. The fact the UK was worse hit is down to an imbalanced gilt market (more long-term and inflation-linked bonds than elsewhere), rather than politics.

Central banks held rates steady, but the BoE and ECB suggested rate hikes might be needed in June, to stop the energy shock becoming a price spiral. The BoJ is also likely to hike next month, but Japanese stocks still gained 5.9% last month. The Fed paused its rate cuts but maintained a dovish bias – despite some objections and the continued strength of the US economy.

Emerging markets gained 11.3%, powered mainly by three chip manufacturers involved in the AI theme: Taiwan’s TSMC and South Korea’s Samsung and SK Hynix. That doesn’t mean other EM stocks were bad; in fact, we saw a broad outperformance in EM earnings.

Oil prices unsurprisingly bounced around but finished April only 3% higher in sterling terms. Futures pricing suggests a swift end to the conflict and resumption of the long-term global oversupply. Risks grew in April, but investors climbed the wall of worry.

How open is too open for AI?

Chinese start-up DeepSeek promised to disrupt US tech companies with its low-cost AI model last year, but its valuation is still dwarfed by big US tech.

Investors have swung back towards big tech stocks in recent weeks, after a brief rotation into small-cap and non-US stocks in early 2025. Goldman Sachs’ measure of S&P 500 market breadth narrowed to a historic low last week, with returns heavily focussed on the AI winners. Investors are nervous about excessive AI spending (exemplified by Meta’s recent fall) but are favouring companies already monetising the technology. That’s generally the so-called “hyperscalers” with large moats around their models and businesses.

The standout winner is Alphabet, with all its data and proprietary AI models. The AI race in the US is a winner-takes-all brand of techno-capitalism, where being the first to make the latest model is what matters. That’s led to increasingly closed-off tech companies, unlike the open-source approach of Chinese AI start-ups. DeepSeek plans to make its latest V4 models open-source. After the proliferation of open-source AI in China, Chinese models now account for a large share of global AI usage. Beijing sees the open-source competition as essential to keep up in the AI race, but it requires significant public investment and compresses start-up profits.

Europe is basically absent from the AI race, hampered by data restrictions. There may be good reasons for those restrictions (India’s Modi similarly argued for “data sovereignty” at a recent AI summit) but they still hinder AI development. Meanwhile, security risks are mounting: Anthropic’s powerful cybersecurity AI Mythos was allegedly subject to unauthorised access from state actors. That underscores the fact AI is increasingly a frontline geopolitical issue. Whether to make AI open or closed source could be a key dividing line in 21st century geopolitical rivalries.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

11^th May 2026

Please see below, an article from EPIC Investment Partners which analyses the latest data release for US employment. Received today – 08/05/2026

Later today, the US gets a payrolls number that may be harder to read than usual. In the old version of the trade, strong jobs were bad for bonds because they delayed rate cuts, while weak jobs were good because they brought the Fed closer to easing. This one is less tidy. The question is not just whether hiring is slowing; it is whether companies are learning to produce more while employing fewer people.

Consensus is for April payrolls to rise by about 60,000 to 70,000, with unemployment expected to remain at 4.3 per cent. That would be a clear slowdown from March’s 178,000 gain, but not yet a recessionary number. It would fit a labour market cooling without quite cracking. The difficulty is that the headline has become less useful. A modest gain may hide a sharp split between sectors still hiring and sectors quietly reducing staff.

ADP added to the ambiguity. Private employers created 109,000 jobs in April, stronger than expected, with annual pay still rising at 4.4 per cent. But the composition was less comforting. Education and health did much of the work, while professional and business services lost jobs. The economy is still hiring, but not necessarily in the higher-paid white-collar areas that signal corporate confidence.

Manufacturing is more revealing. The April ISM manufacturing index held at 52.7, above the expansion line. Yet the employment index fell to 46.4, its 31st consecutive month in contraction. At the same time, the prices index jumped to 84.6, the highest since April 2022. That is the uncomfortable mix: output up, labour down, costs up. It is not the clean disinflationary slowdown the Fed would like.

This is where the argument about artificial intelligence becomes useful. AI should ultimately be disinflationary by raising productivity. This view is politically convenient, but not obviously wrong. If firms can produce more with fewer people, weaker hiring need not carry the same recessionary message it once did. That may be disinflationary in time, though it is less helpful today if companies also report rising input costs.

The awkward part is the transition. Productivity stories are rarely painless for workers. Coinbase offered an example this week, with Brian Armstrong announcing roughly 700 job cuts—about 14 per cent of staff—while saying the company needed to become leaner and more AI-native. Crypto has its own cycle, but the corporate logic is universal: fewer people, more output from remaining staff.

That makes today’s payrolls report more interesting than the headline suggests. A weak number once pointed directly to softer demand. Now it may reflect companies choosing not to replace workers or using software to absorb tasks. A strong number, meanwhile, may show that healthcare and lower-wage sectors are adding staff while other parts of the economy are adjusting.

For markets, that distinction matters. If payrolls are weak because demand is falling, bonds should rally. If payrolls are weak because companies are defending margins while input prices remain high, the signal is less bond friendly. The Fed can look through a softer labour market more easily when inflation is also falling. It is harder when manufacturers report rising costs and shrinking headcount simultaneously.

The base case remains a “muddle through” number: soft enough to show cooling, but not enough to force a Fed rethink. The point is not that today’s release proves machines are replacing workers. Payrolls are too blunt for that. The point is that investors are reading the number in a different economy. For years, the question was whether the labour market was too hot or too cold. Today, there is a third possibility: it may be becoming thinner—still producing, but with fewer people needed to keep the machine running.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Alex Kitteringham

8^th May 2026

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 06/05/2026   

What’s driving market resilience?

We explore what’s driving continued market resilience as the war between the U.S. and Iran continues.

Key highlights

• New peace proposal? The U.S. began escorting vessels through the Strait of Hormuz over the weekend, leading to news of a potential peace plan with Iran.
• Interest rates held: Major central banks held interest rates, though they’re expected to start rising in June.
• Mixed stock market results: European indices fell around 1% on Thursday while the U.S. bucked the trend – driven by generally good earnings numbers last Wednesday.

Strait talking

Last week saw the Iran-U.S. war enter its ninth week, and what had been cautious market optimism around a negotiated resolution gave way to a more sober assessment.

Early last week, reports emerged via Axios that Iran had submitted a proposal to reopen the Strait of Hormuz. This would reportedly involve the U.S. lifting its naval blockade, agreeing to a new legal framework for the Strait and deferring nuclear negotiations to a later date.

The U.S. indicated the offer was insufficient, and by mid-week, reports suggested President Donald Trump was being briefed on new military operations and had told aides to prepare for an extended blockade.

Over the weekend, the U.S. began escorting vessels through the Strait, coming under fire in the process. The escort plan was dropped after just one day, but has been followed by news of a potential peace plan between the U.S. and Iran. The deal is expected to revolve around a moratorium on uranium enrichment by Iran, sanctions relief by the U.S., and both sides lifting restrictions on transit through the Strait of Hormuz.

These developments were reflected in the oil market. Futures prices are still sloping downward, suggesting that prices are high now but will fall in the future. Spot prices (the cost of buying an actual barrel of physical oil) fell on the latest news but remain elevated, above even the short-term futures prices.

As supplies of crude have been slow to arrive at the refineries, companies have drawn down on inventories of oil products, which have been declining. For example, kerosene inventories in Europe have dropped sharply, leading airlines to cancel flights.

There’s growing optimism that these inventories will begin to be replenished through an eventual return of Gulf supplies. If not, the European market will end up buying kerosene and other oil products from other regions, allowing oil to flow through the markets that are prepared to pay the highest price. For example, a supply decline of 10% would necessitate a 10% reduction in energy consumption, but this may not happen in the regions with the lowest inventories. Therefore, the most obvious implication is the inflationary impact. This was something for policymakers to ponder last week, when all the major central banks were reporting.

Source: Bloomberg

Central banks: Hawkish drift and no action

As anticipated, none of the central banks changed their policies last week.

The Federal Reserve (the Fed) held rates at its final meeting under current Chair Jerome Powell. He will almost certainly be replaced as chair by Kevin Warsh, who’s in the process of being confirmed by the Senate.

RBC Wealth Management (U.S.)’s Tom Garretson, a senior portfolio strategist specialising in fixed income, points out that there hasn’t been much pushback on Warsh. Blanket statements that he’s an ‘impressive’ and ‘outstanding’ candidate who used to be at the Fed have been nearly universal.

Tom questions that appraisal: “The highlight of his entire CV is basically his time at the Fed during the Global Financial Crisis, but his only notable accomplishments were seeking to raise rates when unemployment was still around 8%, and then warning about the potential hyperinflationary impact of quantitative easing, which he ultimately resigned from the Fed over, and which ultimately never occurred.”

Kevin Warsh is President Trump’s selection because the president was frustrated that Jay Powell’s Fed wasn’t cutting rates fast enough. But now that Warsh is about to arrive, he’ll find it hard to persuade the Fed to cut given that inflation is on an upward trajectory due to the Iran-U.S. war.

It wouldn’t be surprising if his relationship with President Trump were to become a tense one from the start.

Elsewhere, the European Central Bank, Bank of Japan (BoJ) and Bank of England (BoE) all held interest rates. However, these are expected to start rising in June.

The key development was a hawkish shift in market pricing. At the start of last week, UK and Eurozone markets were discounting approximately two rate hikes by year-end. By Friday, this had edged towards the possibility of three – reflecting the inflationary impulse from elevated energy prices.

The Bank of England’s Monetary Policy Report laid out three scenarios:

A – energy prices follow the futures curve lower, with no second-round effects – still justifying roughly two rate hikes.

B – prices remain elevated between current levels and the curve, with moderate wage effects.

C – prices rise further with significant second-round effects, implying rates will rise by over one percentage point to 5.25–5.50%.

Even the benign scenario now appears to justify further tightening. This contrasts with comments made by BoE Governor Andrew Bailey over the past month – for example, when he described how the market’s “still pricing us to raise rates… I think they’re getting ahead of themselves.”

Additional anxiety over the direction of interest rates and oil prices was a headwind to markets but the earnings season was a tailwind.

Equity markets adopted a risk-off tone as last week progressed, with European indices falling around 1% on Thursday. U.S. equities bucked that broader move, driven by generally good earnings numbers on Wednesday, when the four hyperscalers of the ‘Magnificent Seven’ mega cap stocks (Microsoft, Meta, Amazon and Alphabet) reported their Q1 earnings.

The results were mixed, with Alphabet’s impressive results seeming to validate the full stack vertically-integrated model (infrastructure, language model, tools and applications). Meta, on the other hand, disappointed due to the costs of investment.

The dollar strengthened gradually, and Japanese government bonds sold off across the curve, with the yen breaching the 160-per-dollar level before an intervention by the BoJ to stabilise it.

Energy importers like Japan have suffered downward pressure on their currencies from the rise in energy costs and resulting higher import costs. Others include Turkey and India, which have also used reserves to attempt to stabilise their currencies. At the same time, Gulf states that would normally accumulate reserves, especially at times of high energy prices, haven’t done so while their cargoes can’t reach the market.

Source: Bloomberg

Taken together, these two groups have reduced the pace of reserve accumulation and, therefore, the structural demand for gold. This creates short-term pressure on the gold price, which will continue until reserve accumulation can return to normal.

Thereafter, the case for holding gold seems as strong as ever. The U.S. runs a large and persistent current account deficit and a deeply negative net international investment position, consuming more than it produces and financing the difference by accepting dollar-denominated loans from the rest of the world.

It’s understandable why other countries would balk at holding the majority of their foreign exchange reserves in dollars, and gold benefits as result.

Please continue to check our blog content for advice, planning issues and the latest investment market and economic updates from leading investment houses.

Charlotte Clarke

07/05/2026

Brooks Macdonald – The Daily Investment Bulletin

Please see the below article from Brooks Macdonald detailing recent market moves amid signs the US–Iran ceasefire is holding. Received this morning 06/05/2026.

What has happened?

Global equities and bonds gained, supported by signs the US–Iran ceasefire is holding. This pushed oil prices lower and eased escalation fears. The S&P 500 (+0.81%) reached a new record high, alongside the NASDAQ (+1.03%) and the Magnificent 7 (+0.26%). Chipmakers once again led the gains, supported by strong results from AMD, whose shares rose sharply in after-hours trading. The Philadelphia Semiconductor Index climbed +4.23%, bringing its total gain since late March to over 50%. European markets also moved higher, with stronger gains across major indices including the DAX and CAC, although the STOXX 600 advanced more modestly as UK equities lagged.

Tentative progress on geopolitics supports sentiment

President Trump indicated that the US would pause its “Project Freedom” initiative in the Strait of Hormuz to allow space for a potential agreement. He pointed to “great progress”, although the outlook remains uncertain, with Iranian officials continuing to push back against US demands. While the situation is still fluid, markets appear encouraged by signs that dialogue is ongoing and that further escalation may be avoided.

UK assets remain under pressure as political uncertainty builds

In contrast, UK markets faced pressure. Gilt yields moved higher, with the 10-year reaching 5.06% and the 30-year hitting its highest level since 1998. The spread between UK and German yields widened to its largest level since October. Investors appear increasingly focused on domestic political risks ahead of the local elections, including speculation around the Prime Minister’s position and the potential implications for fiscal policy and future gilt issuance.

What does Brooks Macdonald think?

Looking ahead, the focus will remain on incoming data and any further signals from policymakers. Today’s final PMI readings across Europe will offer a timely check on economic momentum. More broadly, while markets have responded positively in the near term, maintaining a balanced and diversified approach remains key given the range of risks still in play.

Please continue to check our blog content for advice, planning issues and the latest investment, market and economic updates from leading investment houses.

Alexander James Roberts

06/05/2026

Please see the below article from Tatton Investment Management discussing geopolitics, interest rates and market moves received this morning – 05/05/2026

Markets making the best of it

Oil prices spiked back above $120pb last week and have remained close to that level as the US-Iran ceasefire frays. But the equity market casualties have been UK and European stocks, while the US has gained. Asian trading is essentially paused for “Golden Week”. Thus, global stocks show a slight aggregate gain. Equity investors don’t think the oil shock is insurmountable but falling bond prices say different.

Washington’s blockade on Hormuz is no TACO; the White House is effectively telling everyone to stomach oil prices until Iran relents. Reports suggest that could happen within weeks, as Iranian storage reaches capacity or Tehran runs out of funds. Things could come to a head at the Trump-Xi summit later this month, as the block on Iranian oil now impacts China. Long-term oil pricing has barely moved – helped by the UAE’s exit from OPEC. It’s a reminder that the previous global oversupply is still there if trade reopens.

Interest rate expectations have moved up but, acknowledging that they can’t influence the oil shock, central banks kept rates steady last week. However, Australia has raised rates today to 4.35% and the BoE and ECB have signalled they will follow in June. Despite economic weakness, neither can afford to let inflation become embedded. The Fed seems minded to see the price shock as temporary (objections from some members notwithstanding) but the resilient US economy should arguably make policymakers nervous. Incoming Fed chair Warsh, picked by Trump to cut rates, has a tough few months ahead.

US mega-cap stocks revealed stellar profit growth and more AI spending. Worryingly, that spend is more about higher costs than expansion – hurting Meta’s stock. Our measure of earnings acceleration is actually coming down, suggesting that the AI spending spree is plateauing, albeit not coming down. That won’t help tech valuations.

Last week was a microcosm of the last two months: US-Iran tensions rose, but patient central banks and resilient earnings saw markets through. It can’t always be like this. If oil prices and bond yields stay high, a week without supportive growth news will hurt markets.

Emerging markets keep emerging

Despite global headwinds, Emerging Market (EM) stocks have comfortably outperformed Developed Markets (DMs) over the last year. MSCI’s EM index has gained 46.7% since April 2025’s “Liberation Day”. That is almost entirely down to three AI chipmakers: TSMC (+144%), Samsung (+289%) and SK Hynix (+604%). Taking those out, EMs only slightly outperform MSCI’s all-world index (28.6% versus 27.5%). Still, the fact three stocks have done so well doesn’t mean the rest have done badly – especially considering China’s economic struggles. Underlying EM earnings growth is outpacing DMs, even for markets without tech dominance, like Brazil.

That’s largely down to the weaker US dollar. A weaker dollar doesn’t help EM exporters, but deglobalisation is benefitting domestic-focussed EMs by forcing countries to build domestic consumption. A few months ago, we wrote that Trump-era regionalisation is a boost for EM currencies because it pushes them closer to purchasing power parity (PPP) levels (by equalising production and reducing asset risk differentials).

It’s not an economic story per se. Historically, high growth economies like China and India have struggled to turn growth into equity performance. Part of the positivity for EM assets is that this last roadblock is clearing.

EMs are becoming more like DMs, moving up the value chain and decreasing export dependence. They even have the same big tech dominance! Local-currency EM bonds have grown dramatically, which we take as less of a risk signal and more of a signal of deeper, financially mature asset markets. Many EMs are looking to get reclassified as DMs (Greece is confirmed, Korea is rumoured). That requires corporate governance improvements but opens those markets up to more capital. Changing your MSCI label might help individual EMs, but the point isn’t that some players are joining the big leagues. Rather, it’s that EMs overall are maturing. Emerging markets are emerging.

Bond yield moves expose structural weakness 

Sharply higher oil prices pushed up bond yields everywhere – but nowhere more than the UK. 10-year UK government bond yields (gilts) are now above 5%. This isn’t just about inflation. The 10-year forward yield (a synthetic construct measuring the last 10 years of a 20-year bond to current 10-years) rose, driven by higher real yields, both in the UK and US. The long-term real yield increase should indicate higher growth, but that’s not what happened here. Rather, it was a rise in the term premium – the extra amount investors demand for long-term lending. This reflects a stronger cash preference, particularly in the gilt market.

People standardly point to perceived government failure to explain gilt troubles. That doesn’t match up with gilt investors past approval of the government’s “fiscal rules”, but perhaps the worry is those will change after local elections. We prefer to think about it structurally. The gilt market is severely imbalanced, with a high proportion of inflation-linkers (making gilts more sensitive to inflation) and a higher average maturity than nations. The maturity issue is due to historic pension fund demand, which dropped away once regulation changed. That set the scene for the Liz Truss episode and it hasn’t gone away.

Outstanding gilts are skewed to the long-term, and investors are less keen on long-term debt. We said that gilt yields were attractive when they sold off last month and they have risen again; the 10-year forward yield is around 6.5% on our count. Why aren’t investors buying in? In primary bond auctions, they are. But the demand in secondary markets is fragile and fickle – as the gilt market struggles to recoup the stable, institutional demand that used to come from pension funds. Shocks and political dramas therefore have an outsized effect on gilts. That doesn’t change the fact that long-term yields are attractive.

Please continue to check our blog content for the latest advice and planning issues from leading investment management firms.

Marcus Blenkinsop

5^th May 2026

Please see todays Daily Update from EPIC Investment Partners received this morning (30/04/2026):

Alphabet, Meta, Microsoft, and Amazon continue to sit at the centre of global equity indices, and their latest results reinforce why. Sceptics question their size, sustainability, index exposure, and capital intensity, yet AI is no longer a forward-looking narrative for these firms. It is already embedded in revenue generation across advertising, cloud infrastructure, and enterprise software. The scale of monetisation is increasingly visible in reported results rather than speculative positioning.

At the same time, their growing weight in major indices raises a structural issue that cannot be ignored. A small group of companies now drives a disproportionate share of benchmark performance, meaning passive portfolios are increasingly dependent on outcomes tied to a narrow set of business models. This creates clear structural risk in equity markets, particularly during periods of earnings volatility or valuation compression.

Alphabet reported revenue growth of 22% to $110 billion, with Google Cloud expanding 63%, underscoring its growing relevance in enterprise AI workloads. TPU development is expected to become a more meaningful driver from 2027 onwards, reinforcing Alphabet’s vertical integration in AI infrastructure and compute.

Meta delivered 33% revenue growth to $56 billion, driven by continued improvements in AI-powered recommendation systems that enhance engagement and ad targeting. This is translating into stronger near-term monetisation, but it comes alongside a significant increase in capital expenditure. The central question for Meta is not adoption, but whether incremental AI investment continues to generate proportional returns without sustained margin pressure.

Microsoft remains the most established enterprise AI platform. Revenue rose 15% to $82.9 billion, while Azure grew 39%, reflecting continued demand for cloud and AI infrastructure. Persistent capacity constraints indicate that demand is still outpacing supply, highlighting both strength and the scale of ongoing investment required. Long-term returns will depend on how deeply AI workloads embed into enterprise operations beyond early adoption cycles.

Amazon reported revenue growth of 15% to $181.5 billion. AWS continues to benefit from accelerating AI workloads, while improvements in retail logistics and fulfilment efficiency strengthen its core consumer ecosystem. However, cloud competition is intensifying, and AWS growth remains sensitive to pricing pressure and workload diversification across providers.

These companies continue to defy their size and deliver above-market revenue growth at scale, reinforcing their status as structural compounders with entrenched advantages in data, distribution, infrastructure, and software ecosystems. Their scale enables levels of AI investment that smaller competitors cannot replicate, further strengthening their competitive positioning.

Collectively, we are seeing the redeployment of hundreds of billions into AI investments. These companies have not reached their current position by playing it safe; they have done so through aggressive, high-conviction investment in long-term strategic bets, often contrarian relative to Wall Street consensus. That pattern continues today. However, the difference in the current cycle is that the outcomes now carry system-wide implications, given the degree of concentration within US equity markets.

Please continue to check our blog content for advice, planning issues, and the latest investment, market and economic updates from leading investment houses.

Andrew Lloyd

30/04/2026