News

Please see below, an article from EPIC analysing the latest US labour market report. Received today -21/11/2025

America’s long-delayed labour market report has finally emerged, seven weeks overdue, offering a headline that looks steady while the underlying trend grows unmistakably weaker. September’s payrolls, postponed by the government shutdown, showed a 119,000 rise in non-farm jobs — slightly above expectations but increasingly at odds with the broader direction of the economy.

Unemployment climbed to 4.4 per cent, the highest level in four years, and its upward trajectory is now clearly established. The timing is unhelpful. With October’s data lost entirely during the shutdown, the next full reading will not appear until mid-December, leaving policymakers and investors facing one of the largest information gaps in recent memory at a moment when visibility is vital.

Revisions added to the softer tone. Job gains for July and August were reduced by more than 30,000 in total, extending a year-long pattern in which early estimates have overstated labour market strength. What previously appeared to be a stable, if subdued, summer now looks materially weaker.

The two main labour market surveys continue to diverge. The establishment survey delivered the 119,000 payrolls figure, but the household survey reported simultaneous increases in employment and unemployment, driven partly by higher participation. The year-to-date contrast is stark: payrolls suggest the economy has added more than half a million jobs; the household survey implies total employment has fallen by roughly a quarter of a million. Full-time employment is down by more than 700,000 since January, indicating a shift towards part-time and lower-quality roles rather than genuine labour market expansion.

Even September’s reported rebound in full-time jobs — more than 650,000 — sits uncomfortably alongside widespread hiring freezes and restructuring. Volatile swings in part-time work, combined with reliance on statistical adjustments such as the “birth–death” model, heighten doubts about data reliability at a time when agencies are still clearing a backlog.

Wage data did little to reassure households or investors. Average hourly earnings rose by nine cents to $36.67, a 3.8 per cent annual increase, yet continue to lag the inflation categories that dominate everyday spending. The average workweek held at 34.2 hours, while manufacturing hours edged slightly lower. Small reductions in hours, when spread across an economy of more than 160 million workers, translate into a meaningful fall in aggregate income — a quiet tightening that typically precedes outright job losses.

Alternative indicators point to further cooling. Real-time private-sector data suggests job creation has recently turned negative, while layoff announcements have risen to their highest level in two decades, led by technology and industrial companies responding to weaker demand and tighter financial conditions.

For the Federal Reserve, the message beneath the statistical noise is increasingly clear: the labour market is weakening, and the rise in unemployment is becoming firmly established. A labour market losing traction strengthens expectations of rate cuts in 2026 and underpins the ongoing rally in US government bonds. Rising joblessness, persistent downward revisions and softer wage pressure together create a distinctly bond-friendly backdrop, suggesting not a crisis but an economy gradually losing altitude — and an interest-rate path now turning decisively more supportive of lower Treasury yields.

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

Alex Kitteringham

21^st November 2025

Please see the below article from EPIC Investment Partners detailing their discussions on the AI Bubble. Received this morning 20/11/2025.

Talk of an AI bubble keeps resurfacing, yet Jensen Huang sees it differently, and Nvidia’s results back him up. Positioned at the heart of the AI stack, the company has unmatched visibility into demand and has repeatedly overdelivered on every forecast. Huang revealed $500 billion in combined 2025–26 orders, covering current Blackwell GPUs, next-year Rubin chips, and networking components, underscoring that demand shows no signs of slowing. Furthermore, with each 1 GW data centre representing roughly a $50 billion revenue opportunity, Nvidia has clear sight of tens of these gigawatt-scale builds over the decade.

Nvidia delivered another exceptional quarter. Q3 revenue hit $57 billion, up 22% sequentially and 62% year-over-year, comfortably above guidance. The January-quarter outlook is $65 billion, beating the $62 billion consensus and pointing to 65%yoy growth. Demand continues to outpace supply.

Data centre revenue reached $51.2 billion, up 66%yoy and rising $10 billion sequentially, the largest quarterly increase in Nvidia’s history. Supply commitments are up 63%yoy as Blackwell Ultra ramps. Management reiterated its $500 billion Blackwell/Rubin revenue target by end-2026, implying $300 billion+ from data centres alone.

Gross margins came in at 73.4% GAAP, supported by Blackwell Ultra. Q4 guidance calls for mid-70s margins despite rising input costs, highlighting Nvidia’s pricing power.

Nvidia expects $3-4 trillion in annual AI infrastructure spending by 2030, and given Jensen Huang’s proven track record, this projection should be taken seriously. If he is correct, Nvidia’s current valuation is well below its true potential, leaving substantial upside.

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

20/11/2025

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 18/11/2025.  

How are the U.S. and UK economies faring?

With the U.S. government shutdown ending and the UK Autumn Budget approaching, we analyse the state of the respective economies.

Key highlights

• U.S. government shutdown ends: the record-breaking 43-day shutdown finally came to an end.
• Autumn Budget speculation continues: the focus last week was dominated by speculation that risks undermining the government’s hard-won fiscal credibility.
• Geopolitical tensions: the U.S.-China trade dynamic remains an exercise in tactical de-escalation rather than fundamental peace, while Europe’s approach hardens.

Market sentiment challenged

Last week saw a challenge to the prevailing market sentiment, moving from cautious optimism to a more pronounced nervousness, triggered by fragile geopolitical truces, evidence of economic cooling and (for gilts) a potential U-turn in UK fiscal planning.

Semiconductor stocks slid back after an extraordinary run

Source: LSEG Datastream

In the current financial landscape, a dichotomy exists between high-growth structural technology demand i.e. artificial intelligence (AI), and short-term cyclical credit risks. The two shouldn’t be directly connected but, as is so often the case, the best performing assets are susceptible to pullbacks when investor anxiety rises. That seemed to be the case last week.

Macroeconomic and credit backdrop: Signs of cooling

The best news of the week was that the U.S. government shutdown finally came to an end. While it was in place, we were without the usual catalogue of economic indicators. Those that were available (from private sources) were downbeat. For example:

U.S. small business nervousness −the National Federation of Independent Business (NFIB) survey of smaller businesses showed weakness across several categories. Companies are less confident that the economy will improve, they are less likely to increase employment and have lower expectations for sales.

Evidence of credit distress − the structural issues in the credit market are worsening, especially in less-liquid areas:

• Commercial real estate (CRE): the commercial mortgage-backed securities (CMBS) market − the most timely indicator of distress − confirmed a rise in delinquency. The CMBS loan delinquency rate (30+ days past due) rose to 5.66% in the third quarter of 2025 (source: MBA). While traditional bank data is lagged, this shows concentrated distress in non-bank and office-sector debt.
• Private credit: the Federal Reserve’s (Fed’s) Financial Stability Report (FSR), released on 7 November 2025, confirmed elevated vulnerabilities, noting that while banks are sound, the ability of risky privately held firms to service their debt continues to decline amid high corporate leverage.

UK economic fragility − the UK economy is suffering from a cautious business sector in anticipation of a tax hiking Autumn Budget. The unemployment rate rose to 5% in the three months to September, increasing the risk of weak consumer demand and late payments for small-to-medium enterprises (SMEs).

UK Budget speculation: The tax U-turn challenge

The focus last week on the Autumn Budget on 26 November was dominated by speculation that risks undermining the government’s hard-won fiscal credibility.

The background to this was a slightly greater-than-expected increase in unemployment to 5%.

Unemployment in the UK has continued to rise, reaching 5% in September

Source: LSEG Datastream

• Doubt over “hard choices”: Chancellor Rachel Reeves has successfully anchored gilt yields by maintaining a stern rhetoric of fiscal prudence and signalling a willingness to make “hard choices.” The market appraisal of this restraint is fragile, relying entirely on the assumption that the government will deliver sufficient revenue-raising measures to plug the estimated £30 to £40 billion fiscal shortfall against its fiscal rules.
• The U-turn briefing: press reports last week indicated that the chancellor may feel she has to revisit plans to increase headline income tax rates due to internal political pressure. Instead, the final Budget is expected to rely on a complex mix of ‘stealth taxes’, such as extending the freeze on tax thresholds (fiscal drag) and targeting wealth through adjustments to capital taxes.
• Market risk: there are a couple of reasons to be concerned about this. Currently, there are an estimated 1,100 tax reliefs in the UK. These undermine the concept of tax neutrality, meaning that, when spending decisions are being made, government policy is tipping the scales in favour of one area or another.

This lack of tax neutrality risks causing inefficient allocation of resources. But also, if the final Budget’s numbers are perceived by bond investors to be based on unreliable future spending cuts or insufficient stealth taxes, the gilt market could react badly, resulting in a rise in the political risk premium and higher government borrowing costs.

Rumours of the existence of two Budgets (one with headline tax increases and one without) rattled the bond market, as did rumours of a leadership challenge within the government. The Starmer/Reeves combination may be under pressure politically but remains the ‘devil-you-know’ as far as the bond market is concerned.

Geopolitics: Fragile truce and structural de-risking

The U.S.-China trade dynamic remains an exercise in tactical de-escalation rather than fundamental peace, while Europe’s approach hardens.

A couple of weeks ago, we saw a thawing of relations, with a truce reached between the U.S. and China over trade. Investors realised it was temporary in nature, but last week, the concerns were for how complete the agreement was, specifically in relation to Chinese purchases of U.S. soybeans. These commitments have not been officially recognised on the Chinese side, and purchases don’t seem to have resumed.

Meanwhile in Europe, European Commission President Ursula von der Leyen expressed the region’s commitment to “de-risking” it’s relationship with China. This strategy led to the official anti-subsidy probe into Chinese Battery Electric Vehicles (BEVs) and the activation of new trade defence mechanisms like the Anti-Coercion Instrument (ACI). It creates a long-term headwind for Chinese exporters and accelerates the trends of supply chain diversification and global fragmentation.

Risk assets: Rotation into resilience

The combination of geopolitical tension, economic cooling, and valuation concerns triggered a clear shift to risk aversion last week, with investors rotating out of speculative growth and into assets offering stability and structural tailwinds.

• Tech sell-off: global equities experienced a pullback, led by the previously market-leading technology sector. The Nasdaq Composite gave back a fraction of recent gains as investors engaged in profit-taking, questioning the lofty valuations of AI-linked stocks and pricing in slower economic growth. This sector weakness comes at a time when RBC’s technical analyst noted the breadth of the market has been showing signs of improving, which is usually a good sign.
• Defensive sectors: this increased breadth was reflected more explicitly in defensive sectors like healthcare, utilities, and industrials. These outperformed, finally enjoying some benefit from their more predictable earnings, attractive dividend yields, and the long-term investment required for reshoring and supply chain diversification.

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

19/11/2025

The ADQ Spread: The AAA Anomaly in Abu Dhabi?

Please see below, an article from EPIC Investment Partners which details their thoughts on the Abu Dhabi Developmental Holding Company (ADQ) and the effect on markets: Received today – 18/11/2025:

For investors combing the globe for relative value, the pricing gap between Abu Dhabi Developmental Holding Company (ADQ) and the Emirate’s sovereign curve is a useful test of how markets judge risk. On paper, the distinction is academic: ADQ carries Aa2/AA ratings, fully aligned with its sole shareholder, the Abu Dhabi Government. Both sit atop one of the world’s deepest sovereign balance sheets.

Yet the market marks a difference. Abu Dhabi government bonds (ADGB) trade around 44 basis points over Treasuries, while ADQ paper sits closer to 58 bps — a 14bp premium. In a region where spreads are already compressed, that gap is meaningful. However tight the strategic embrace, investors still treat the sovereign signature as the cleanest, least ambiguous claim.

The explanation lies in legal form rather than economic substance. ADQ is a corporate issuer and therefore sits one step below the “full faith and credit” of the state. In any stress scenario the market assumes support would be forthcoming, but it is support that must be extended, not a direct obligation. This is structural subordination in its purest sense: the market prices the legal wrapper, not the underlying reality.

But the underlying reality is precisely what complicates the picture. ADQ owns a portfolio of essential, cash-generative assets whose scale is remarkable by international standards. Between its dominant stake in TAQA — the Emirate’s utility powerhouse — and substantial holdings spanning ports, food security, logistics, healthcare and industrials, ADQ’s asset base is widely estimated at well over $150bn. Its consolidated financial liabilities are a fraction of that, roughly $15bn. On a simple balance-sheet basis, its leverage is closer to that of a sovereign wealth entity than a corporate borrower.

If ADQ were evaluated as a conventional company, judged strictly on asset coverage and balance-sheet strength, it would sit comfortably in Aaa territory. The irony is that its connection to the sovereign — which underpins the rating agencies’ view — is the very reason markets assign it a modest spread penalty.

This creates a clear, if subtle, opportunity. Investors are being paid a 14bp pick-up for credit risk that is, in economic terms, arguably stronger than the sovereign’s. Where the state’s bonds are a promise, ADQ’s are a claim on real operating assets. That distinction almost never matters in the Gulf — but in the logic of fixed income, it is not irrelevant.

Ultimately, the market’s verdict is clear: the sovereign curve remains the purest expression of Abu Dhabi risk. Yet for investors prepared to look past the legal wrapper, ADQ offers near-sovereign quality, backed by substantial, cash-generative assets and exceptionally low leverage, while delivering a meaningful pick-up over the government curve. It is a neat illustration of how pricing conventions endure: the sovereign trades inside, even when the corporate beneath it is economically the sturdier credit.

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

Andrew Lloyd

18^th November 2025

Please see below, an article from Tatton Investment Management, analysing the key factors currently affecting global investment markets. Received this morning – 17/11/2025

Open and shut

Stock markets rallied early last week and then sold off – strangely, just after Trump signed a bill to open the US government. And, just like the previous week, in the last hours of Friday trading, equities rallied.

First, the UK: the Chancellor has reportedly ditched the simple income tax-raising plans, which isn’t good as it means a more complicated system with unintended impacts. We also had disappointing GDP data, though this largely came from Jaguar Land Rover’s factory closures after August’s cyberattack. Services reported stronger than expected. Bond markets reacted somewhat to the budget shifts although are still relatively sanguine.

The post-shutdown selloff is classic ‘buy the rumour; sell the fact’, and it was notable that US stocks outside tech (more affected by shutdown) had a relatively better week. The resumption of payments out of the US Treasury General Account (TGA) will relieve a liquidity constraint on markets, though it will take time to come through. There wasn’t a big downturn anyway (estimates say an $11bn GDP loss), and the AAII’s bull-bear index suggests investors have turned neutral. Unfortunately, the lack of October data means markets will continue flying blind. We will have to keep an eye on the US consumer through a crucial spending season.

Liquidity flowing from the TGA should mean less volatility, but that doesn’t mean stocks going up – just like recently high volatility didn’t mean stocks went down. The TGA isn’t the only liquidity factor either; AI capex is also taking money out of the financial system to build infrastructure. Oracle’s sharp rise in its credit spread this week shows that, as the computing firm’s demand for capital forces investors to reassess the credit (and consequently equity) valuations.

That’s what happens when businesses invest rather than distribute profits. It can be scary for investors, but it’s ultimately good for long-term growth. If we end 2025 merely at the levels reached at the end of October, this would mean a third strong year for portfolio investors.

Back to the 90s, but what year is it?

If AI is another dotcom bubble and we’re back in the 1990s, what year of the rally is it? Absolute Strategy Research overlayed current trends to the late 90s and found that US stocks are in a similar position to early 1999 – about 16 months before the bubble finally began to deflate in September 2000. We should take simple comparisons like this with a pinch of salt; profits and valuations for the current tech leaders look much healthier than in the 90s, in part because generative AI is prohibitively expensive. But the similarities are undeniable. The last leg of the dotcom rally was significantly more volatile as companies increased capex. We’re seeing record tech capex and bumpier markets now too.

Tech companies aren’t the only ones benefitting from the AI theme. European energy stocks have picked up thanks to plans to raise capital and build infrastructure. Investors normally wouldn’t like utilities companies spending big, but many explicitly reference the need to keep up with the energy demands of AI – showing that AI investment is spreading to other areas too. In the 90s, telecoms companies also benefitted, as new internet companies required greater communications infrastructure.

Back then, dotcom startups were concentrated in the US, while telecoms were prominent in Europe. Now, AI companies are overwhelmingly American, while second-round energy beneficiaries are more European (also related to Europe’s drive to build energy independence).

AI capex going into background infrastructure is good, and should multiply growth. But strong capex can mean lower liquidity in markets (money spent on datacentres is money not with shareholders now). That can make markets volatile, as they have been recently and as they were in the late 90s. Most expect the AI rally to continue for a while, even if the ride is bumpy. And if there is a pullback later, the current investment spend will be good for long-term growth.

The Precautionary Tale of Tony Dye

If we’re going to take the AI-dotcom analogy seriously, we should take lessons from the 90s dotcom doubters – like the infamous late fund manager Tony Dye. Dye managed UBS’ UK funds Phillips and Drew and argued as early as 1995 that equities (particularly US tech) were overvalued. Phillips and Drew underperformed for years as the bubble kept inflating and UBS eventually fired Dye – a week before the Nasdaq peaked. The standard narrative is that Dye was proved right, only too late. His son Jon Dye, now research director at Ruffer, recently wrote to investors about Tony’s commendable detail-oriented approach and not getting carried away with optimistic buzzwords.

However, we don’t think Dye’s badly timed dismissal means he was right to be bearish for so long. In the three-year bear market after dotcom, the S&P 500 never reached its 1995 lows – so you were better off riding the bubble than going bearish too early. Many thought that tech was overvalued in the late 90s but knowing what to do with that information is a different skill. The dotcom bubble might have burst earlier if central banks hadn’t soothed crises in 1997 and 1998, but these external factors always affect the timeline.

We’re not saying there is an AI bubble (big tech is profitable, but there are areas of concern). The point is that even if there is, the rally could run for another two years, at which point investors would likely be better off riding whatever downturn comes than jumping ship too early. Bubbles burst when liquidity runs out and, while liquidity has tightened recently, upcoming interest rate cuts weaken the bearish case for tech. Don’t get too excited but don’t get too gloomy either.  As ever, it’s about time in the market, not timing the market.

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

Marcus Blenkinsop

17^th November 2025

Please see the below article from EPIC Investment Partners discussing the upcoming COP 30 summit and what to watch as investors. Received today – 14/11/2025

This week countries are meeting in Brazil for the 30^th climate change conference. The aims are to strengthen targets and achievements in reducing CO2, and to provide much more money for developing countries to afford the transition. This is the thirtieth annual gathering, and the tenth since the 2015 Paris Climate Treaty. Despite all the efforts so far, the backdrop for COP 30 is news that world CO2 will hit another new high this year. Whilst the governments and lobbyists can look back on a substantial increase in renewable energy, the need for more fuel for growth has meant many large industrial countries have also opted for more coal, oil and gas to power their economies.

In 1992 in Brazil the UN brought together countries to establish the UN Framework Convention on Climate Change, UNFCCC. This gave international recognition to the idea that burning fossil fuels creates CO2, which acts as a warming gas when released into the atmosphere, affecting future temperatures. Countries acknowledged this effect and resolved to take action to limit man-made CO2.

In 2015 in Paris the regular meeting on climate change created the Paris Treaty, signed by 195 countries. This stated an objective to keep the rise in global temperature down to 1.5 degrees C above pre-industrial levels, with countries taking action and adopting targets to cut their use of fossil fuels. The aim was to get to a peak of greenhouse gas emissions by 2025, and to see a reduction of 43% by 2030, moving towards net zero emissions by 2050. These targets will now not be met.

The UN established an annual meeting or Conference of the Parties (COP) to monitor progress and strengthen targets. It has also added a major transfer of wealth from developed to developing countries to assist them with the high costs of transition from an energy system based on fossil fuels to one based on renewable electricity. This adds substantially to the financial burden on the developed countries who are incurring large costs for their own transition.

Before the start of COP 30, each country was meant to have submitted a memo setting out its “Nationally Determined Contribution”. This sets out promises of cuts in CO2, with details of progress and future plans. Only one third of the countries have done this, so this will turn out to be the implementation conference when more are urged to do so.

COP 29 tried to increase the money paid to developing countries to help them. It ended badly with insufficient pledges, and with big disagreements over the extent of the proposed financial transfers. The current aim is for the developed countries to provide $100bn a year to the developing for climate change investments. This takes the form of a mixture of grants and loans, and of public and private sector money. At COP 29 the developed countries promised to increase this to $300bn by 2035, with the developing countries dismissing this as “paltry” and demanding much more. COP 30 will revisit this sensitive issue at a time when the leading developing countries are seeking to curb their public spending as they battle large deficits. They will at best be trying to find more ways of leveraging private sector money, and at ways of providing loans rather than grants.

Brazil wishes to showcase the Amazon rainforest, a big carbon sink for the world, and gain wider financial help in maintaining and extending forests as absorbers of CO2. Unfortunately, they have cut a way through their forest to produce a new four-lane road for the conference, which has attracted adverse comment from environmental interests… The Conference suffered a protest with people also complaining about Brazil’s plans to expand its oil and gas output.

CO2 emissions have continued to surge throughout the last 33 years under the UNFCCC/ COP regime. Even since the 2015 Paris Agreement and its reduction targets, world CO2 output has increased from 35.4 G tonnes a year to a new peak of 37.8 G tonnes in 2024. The increases have been led by China and India as they use more coal and gas to accelerate growth. The UK has led the reduction, now down by 50%, with the EU also down. The UK closed all its own coal power stations and tried unsuccessfully to get coal out of power generation elsewhere through these conferences. Some of the UK and EU reductions however have been achieved by closing industrial plants, only to import more from Chinese and other overseas locations, with an inevitable corresponding rise in their domestic carbon dioxide emission.

The big emitters India, Russia, Indonesia and Iran are unlikely to offer major changes to start cutting their output. The USA has changed policy to actively promote more and cheaper fossil fuel extraction and use, as it does not accept the theory behind the UN work. China could make stronger announcements about starting to reduce its output of CO2 after years of big increases, which would be an important change. Germany could seek to make faster progress with shutting down its coal fired power stations and switching from imported gas to more renewable electricity. Most countries start by decarbonising their electricity generation, as it is a big source of CO2 controlled by a few large companies, easier to regulate and tax, to help change their behaviours. Progress is much slower to get the public to decarbonise, as most people find gas or solid fuel boilers more affordable than heat pumps, and most still prefer diesel and petrol cars to battery ones.

The Conference is likely to confirm to markets that climate change is no longer the priority issue it was a few years ago. However, there is still a considerable focus on how to satisfy overseas aid requests by the developing countries. It now looks very unlikely that the world will take all the actions agreed at Paris in 2015 and subsequent conferences, making emissions and temperature targets impossible to meet. There will however be continuing pressure to spend more on renewable energy and on shifting more industry and heating from gas and coal to electricity. We will see substantial further global investment in decarbonising technologies with investment opportunities as a result. Fossil fuel-based activities will attract higher taxes and tariffs, with the EU carbon border tax coming in, whilst renewables will be supported by subsidies and guaranteed prices.

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

Alex Kitteringham

14^th November 2025

Please see this week’s Markets in a Minute update below from Brewin Dolphin, received yesterday afternoon – 11/11/2025.  

Could this be the end of the U.S. shutdown?

We examine the potential breakthrough to the U.S. government shutdown and the positive news from earnings season.

Key highlights

• U.S. government shutdown breakthrough: after a record-breaking 41-day shutdown, U.S. senators vote in favour of a resolution.
• All eyes on tariffs: the U.S. Supreme Court heard evidence related to the legality of President Donald Trump’s sweeping global tariffs. A ruling is expected sometime in December or early 2026.
• A fractured look into the U.S. jobs market: while official data is still limited due to the government shutdown, independent figures showed an uptick in layoffs in October.
• Strains in the credit market: a widening credit spread raises companies’ cost of capital, prompting them to cut investment and output growth. Is there reason for concern?

Shutdown end in sight

After a record‑setting 41‑day impasse, the Senate voted 60‑40 on Monday in favour of a stop‑gap spending bill that keeps most of the federal government funded until January 30, 2026 (a subset of agencies are funded through to September 30, 2026).

The bill pays back furloughed workers and prevents layoffs but defers the decisive vote (which the Democrats had been holding out for), on extending the Affordable Care Act premium subsidies. The deal, brokered by a bloc of centrist Democrats who dropped the subsidy renewal demand in exchange for a promise of a mid‑December Senate vote, sparked an intra‑party backlash but secured the crucial Freedom Caucus Chair’s conditional support.

House Speaker Mike Johnson has signalled a swift floor vote on Wednesday, and with the Grand Old Party‑controlled chamber expected to approve the measure, the bill should soon land on President Trump’s desk for signature. Equity markets seem buoyed by the news. Nevertheless, analysts warn that air‑travel disruptions and SNAP (food stamps) benefit backlogs will linger, and the ultimate fate of the Obamacare subsidies remains uncertain.

Tariffs are back in the spotlight

The Supreme Court of the United States (SCOTUS) was in focus last week as it heard oral arguments on the legality of President Donald Trump’s sweeping global tariffs. You‘ll recall that these measures were the subject of legal challenges that were originally heard by the U.S. Court of International Trade, then moved to the Courts of Appeal, and eventually to SCOTUS. The tariffs were imposed under the International Emergency Economic Powers Act (IEEPA).

The challengers argue that the IEEPA doesn’t grant the president authority to impose tariffs; that power is reserved for Congress according to the U.S. constitution.

The session seemed to favour the complainants. A majority of the justices – including Chief Justice John Roberts and Justice Neil Gorsuch – appeared deeply skeptical. They focused heavily on the separation of powers and the “major questions doctrine,” questioning whether a law intended for emergency sanctions could be twisted to impose a massive, sustained, global tax (i.e., a tariff). This signals that SCOTUS is likely to rule that the president exceeded his legal authority under IEEPA.

What happens next?

The consensus among observers is that SCOTUS will strike down the IEEPA‑based tariffs, with a ruling expected sometime in December or early 2026.

The administration has said it will immediately try to reimpose the tariffs using alternative statutory tools, such as:

• Section 232 (National‑Security Tariffs)
• Section 301 (Unfair‑Trade‑Practice Tariffs)

However, the short‑term fix most likely involves Section 122 (Temporary Balance‑of‑Payments Tariffs). Legal experts believe the administration has the authority to use these provisions, so the substantive outcome may not change dramatically.

One important consequence of SCOTUS upholding the lower‑court decision is that the Treasury would have to refund all duties collected under the IEEPA authority – which is estimated at $90 billion to $130 billion (plus interest). This amount is roughly 5% to 7% of the federal budget deficit. The refund would go to the parties that paid the duties directly – primarily U.S. importers.

Much debate took place in the immediate aftermath of ‘Liberation Day’ over whether the taxes were borne by exporters or U.S. consumers. In reality, both groups shared the burden, but only importers would receive the refund. Consequently, the net effect is a wealth transfer from consumers and exporters to importers.

Broader economic context

The event is significant, but it doesn’t appear to be systemic in the short term.

However, assessing its impact is complicated by the record‑breaking federal government shutdown. Assuming this now ends, as seems likely, the U.S. economic data series will begin to resume.

A fractured look into the U.S. jobs market

Because of the shutdown, there’s limited data on the broader U.S. labour market. Some private sector sources, such as the Challenger Job Cuts report, continue to track announced layoffs.

Employment is highly seasonal, a nuance that’s obscured in seasonally adjusted data series like non‑farm payrolls or the unemployment rate.

The Challenger report highlighted an unusual uptick in job cuts during October, a month when companies typically avoid layoffs to preserve goodwill before the holiday season.

The second most cited reason for October cuts was artificial intelligence (AI). Most of these cuts came from the technology sector, which has experienced the largest amount of private sector job losses over the past two years (though the public sector surpassed it after the Department of Government Efficiency (DOGE) cuts earlier this year).midst concerns over their investment plans.

U.S. job cut announcements have picked up but are still dwarfed by the DOGE cuts earlier this year

Source: LSEG Datastream

AI‑related layoffs in 2025 total under 50,000 – a relatively small figure, especially given that most of those cuts occurred in the last month. At present, this looks more like a blip than a trend.

Strains in the credit markets

The high‑yield (HY) credit spread remains a robust leading indicator for both real economic activity and equity market performance.

A widening spread raises companies’ cost of capital, prompting them to cut investment and output growth. HY spreads are also predictive for equities; historically, high‑yield returns correlate with equity returns at a range of 66% to 92%. Essentially, equities and high-yield bond returns have a strong positive correlation.

Spreads have risen recently, but they started from a low base, so they’re not yet prohibitively high. A handful of credit concerns have emerged in recent weeks, involving names such as First Brands, Tricolor, Western Alliance, Zions Bancorp, Broadband Telecom, and Bridgevoice. This follows JPMorgan Chase CEO Jamie Dimon’s comment that the first credit worries, “like cockroaches”, often signal the presence of many more.

How to view the credit market

The recent uptick in credit spreads has been modest, and spreads remain relatively low in a long‑term historical context.

High-yield bond credit spreads have widened but don’t appear attractive on a long-term basis

Source: LSEG Datastream

High‑yield investors accept higher default risk in exchange for extra yield; even with the recent spread widening, the overall yield on high‑yield bonds is still modest compared with safer credit.

There’s room for defaults to increase without indicating a systemic financing crisis – this is what we would expect in a normal credit cycle.

Consequently, we can tolerate a further widening of spreads or additional distressed credit cases before becoming overly concerned about an economic slowdown.

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

12/11/2025

Please see the below article from Brooks Macdonald detailing their discussions on Markets, US Government Shutdown and the UK Labour Market. Received this morning 11/11/2025.

What has happened?

The S&P 500 staged a strong rebound with a +1.54% gain—its best day in four weeks—lifting it about +3% above Friday’s lows. Tech stocks drove the rally, as the NASDAQ advanced +2.27% and the Magnificent 7 jumped +2.79%, fuelled by Nvidia’s standout +5.79% rise. After dropping -13.6% from recent highs, Nvidia is now just -3.9% off those peaks, highlighting a mega-cap skew in the recovery. Broader indices also participated, with the equal-weight S&P 500 up +0.52% and the Russell 2000 gaining +0.94%. European benchmarks outperformed too, including the STOXX 600 (+1.42%), and the DAX (+1.65%). The uplift spread to other assets, with gold climbing +2.86% in its best session since May.

US government shutdown edges towards resolution

The Senate passed a stopgap funding bill by a 60-40 vote, with some Democrats crossing party lines to support Republicans, setting the stage to end the longest government shutdown on record. President Trump endorsed the deal earlier, and House Speaker Johnson expects swift passage tomorrow, despite delays from shutdown-related airline disruptions. Once resolved, a flood of delayed US economic data will follow—potentially including the September jobs report as early as next week, based on the 2013 precedent where similar backlogs cleared quickly. This could provide fresh insights into the economy amid ongoing volatility.

UK unemployment hits 5% as Labour markets weaken, strengthening BoE easing bets

UK unemployment climbed to 5% in the three months to September—the highest since early 2021—while payrolls dropped by 32,000 in October, the steepest decline since November 2020. Private-sector wage growth slowed to 4.2%, its weakest since the pandemic, amplifying signs of labour market deterioration. Markets now price an ~85% chance of a 25bps Bank of England rate cut in December. Governor Bailey has signalled openness to easing from 4% if inflation cools, supporting dovish views after last week’s narrow 5-4 vote to hold rates.

What does Brooks Macdonald think?

As the US shutdown appears poised for resolution, we’re closely monitoring the upcoming backlog of economic data releases, which could offer clearer signals on labour market trends and broader growth. Meanwhile, the recent market rebound has been heavily skewed toward mega-cap tech stocks, which may continue to amplify overall volatility if broader indices like the equal-weight S&P 500 and small caps fail to sustain their gains.

Bloomberg as at 11/11/2025. TR denotes Net Total Return.

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Alex Clare

11/11/2025

Please see below, an article from Tatton Investment Management, analysing the key factors currently affecting global investment markets. Received this morning – 10/11/2025

Liquidity, actually  

After stocks sold off 2-3% last week, with big tech particularly vulnerable, Monday morning has seen a decent bounce. S&P 500 futures are now only 1% down from a week ago. The US Senate’s Sunday vote to push on with the bill for 2025’s government funding could mean an end to the current shutdown this week. While this will help the economy, the market’s weakness hasn’t been about a fear of a recession; this is a liquidity and volatility story.

Starting with the UK, the Bank of England’s (BoE) 5-4 vote to keep interest rates steady was closer than expected. Unless anything remarkable happens, the BoE will cut in December – and may even repeat in February. The chancellor’s pre-budget briefing (and leaks on Friday) confirm tax rises ahead, but UK stocks held up better than most and UK bond yields fell more sharply. This was helped by weaker sterling (making our markets more attractive and overseas revenues higher). The Chancellor’s fiscal discipline is attracting bond managers too.

European data was lacklustre (covered below) but Eurozone loan demand is improving, thanks to the ECB allowing greater liquidity than the Fed.

The media put US tech’s wobble down to valuation vertigo – fear that profits won’t live up to the hype. The longest US government shutdown in history, and a surge in layoffs (according to Challenger, Gray and Christmas) didn’t help. However, the overall data is more mixed; ADP reported stronger hiring than expected; the ISM purchasing manager surveys were stronger; growth was resilient enough to keep inflation on the high side of expectations.

But big tech is relatively insensitive to US growth. We agree that the sell-off has been shutdown-related, but for a different reason: reduced federal spending means less liquidity in the financial system. That means fewer asset buyers and greater volatility.

Investors have sold equities (and speculative assets like crypto) to raise cash. The effects spread all over the world, thanks to interconnectedness (Japan’s Nikkei sold off sharply). Amid the jitters, we should remember that the long-term outlook is solid. That suggests that an end to the shutdown could mean an end to the cash squeeze and, perhaps slowly at first, investors may return to the markets. When liquidity loosens, we expect more buyers than sellers again. So, we’re in the same position as we have been for weeks: volatility is a bumpy ride to a good destination.

October Asset Returns Review 

Global stocks gained 4.8% in October in sterling terms, but it was a bumpy ride. The US government shutdown had minimal impact on equities – at least initially. It did prevent economic data releases and eventually weighed on activity, hurting small caps.

Large cap tech stocks rallied 7.3% after solid quarterly earnings, a strong antidote to fears of an ‘AI bubble’. The shutdown also compounded tight liquidity conditions (the US treasury is collecting and not spending money) which increased volatility. We saw this in a $19bn ‘flash crash’ for cryptocurrencies mid-month. Heightened nerves also amplified discussion about private credit lending standards. Recent defaults have tightened credit conditions.

Falling bond yields provide some offset – though they bumped up after the Fed’s hawkish meeting. UK bond yields fell particularly sharply (gilt prices up 2.7%), which helped UK equities gain 4.1% and remain one of 2025’s best performers.

Japanese stocks had their best month (in local currency terms) in 35 years, as investors approved of new Prime Minister Takaichi’s policies. The yen’s fall crimped sterling returns to 5.9%. Emerging markets surged 6.7%, despite the largest EM, China, falling 1.2% amid tighter liquidity. South Korea was by some distance the standout EM, and is going through a corporate revival similar to Japan.

South Korea hosted the APEC summit and a nerve-wracking Trump-Xi meeting. It ended better than expected, with a mini-deal pausing tariffs and export restrictions and assuring investors that geopolitics isn’t as bad as feared. Dissipating risks might be related to gold prices coming off their highs, or that the rally might just have ran out of steam.

Q3 corporate earnings reports were strong, not only for US tech but for global banks too. When fundamentals are solid but volatility is high, investors tend to see opportunity in the dips.

Germany engineers a recovery 

Markets aren’t as enthusiastic about Germany as they were in early 2025, but we see improvement coming next year.

Europe’s largest economy was in recession from late 2022 to Q4 2024 (the longest concession since WWII), thanks to global manufacturing woes and high energy prices. It climbed out of recession just as the CDU-SPD government removed Germany’s constitutional debt brake for defence and infrastructure investment, but is contracting again. Many doubt the government’s fiscal follow-through; reports suggest some of the €500bn infrastructure spend will just be re-allocated from existing plans to make the core budget look better.

Still, we always knew stimulus wouldn’t come until 2026, and it will significantly boost activity when it does. Conditions are already improving: businesses are feeling more confident, due to efficiency gains and expanding profit margins (counteracting sluggish revenues). German corporates usually save when growth is weak and spend when it’s strong – but they’ve been investing even through recent struggles. This investment will result in higher revenues, particularly when combined with the public spending boost. Higher revenues and higher margins is a powerful combination, and we expect more investment as profits strengthen.

The profit and margin story isn’t unique to Germany. European companies are improving, industrial orders are on the rise and European loan demand is strong (as noted by the ECB). Germany was previously a passenger in this revival, rather than a growth engine (a historical role reversal) but now it is joining in the fun. Europe’s growth renaissance needs its largest economy firing. We expect that to happen next year. Businesses and households are getting more confident, and will get a shot in the arm from fiscal spending. In 2026, we expect Germany to be at the heart of Europe’s growth story.

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Marcus Blenkinsop

10^th November 2025