By Fabian Wiesner, Head of Distribution Partnerships, Simplybiz
2024 is nearly gone already, and if, like me, you’ve spent most of the year looking at politics, markets, and regulatory announcements, all whilst trying to fit in being a good worker bee and a decent parent, you’ll agree that “phew” doesn’t quite cut it on the scale of relief. Or, alternatively, you’ll agree when I say, “That went quick”!
So, what actually happened this year? Let’s take a moment to reflect on everything that’s happened – the good, the bad, and the ugly.
Every presentation I walked into at the beginning of this year told me that in 2024 X countries of the world were heading to the voting polls over the next twelve months. The year of change! Now, I won’t go through all the results. The two in the spotlight today are the US and UK elections along with some of the aftermath.
A fistful of dollars/pounds?
In the UK this year, we all marched to the voting stations on the 4th of July and the masses overthrew – in their opinion – an oppressive Tory Government. Ironically, this is also the day of the year upon which our American cousins celebrate having broken the shackles of their oppressors all those years ago. The upside of this is that the USA did then go on to become the economic and investment powerhouse of the world, so that’s what we must look forward to! We’ll only have to wait 248 years to find out…
For a few dollars more
With this new Government, we found out there’s a huge 10–30-billion-pound black hole that needs to be filled. I guess we’ll have to put that wide gap down to rounding errors, right? Unfortunately, and crudely, there are only two ways to fill that kind of gap – austerity or taxes. We all knew what was on the cards.
The newly appointed Chancellor of the Exchequer, Rachel Reeves, introduced the new Budget to the world and it caused some upset, however, not as much as Truss and Kwarteng. The adage “be careful what you wish for” does spring to mind. So, in the wake of our recent Budget, in 2024 we now have farmers fighting or striking, companies talking about not giving pay rises to retain profitability while increasing NI contributions, economic growth projections for the UK downgraded, and the NHS not likely to see the upside of the proposed changes until 2026.
The wild bunch
Across the pond in the US, we watched a man with mugshot re-win the White House. After his win, he proceeded to give a wandering walk of a speech, including a detour into talking about Elon Musk’s rocket, inviting the president of The U.F.C. up on stage to speak mid-speech, and calling on a P.G.A. player to come speak too. In a strange turn of events, a few days later the TV star turned President went on to employ the world’s richest man to start looking at where they can cut back on government spending, before hopping onto a private jet and posing for a photo with a few burgers from McDonalds. The reality of this is stranger than fiction.
This is scratching the surface and making light of where we find ourselves currently in this political zoo – but the truth is that 2024 will be remembered by many of us as being a crazy year in politics.
The magnificent seven (more or less!)
After a few years of pain, inflation has eased back and growth has started getting back on track. At the start of the year, we were all hopeful for big rate cuts from central banks to spur on the economies. In Q2, the ECB started to cut rates. Since the start of the year, we have had three rate cuts by the ECB, with a fourth cut predicted for December. In the UK we saw our first cut in August, followed by a second in November. These two rate cuts are the first we have seen since 2020, after experiencing the frantic rate hiking cycle we have seen in an attempt to combat inflation.
The FED held off for longer than Europe and the UK, introducing the first cut in September, and again in November with expectations high for another cut before the end of the year. So, despite a volatile backdrop, these are great positive we can take away from this year.
What about markets?
Well, spurred lightly by rate cuts, and despite a crazy political backdrop, markets have been a silver lining to an odd year out there.
Despite the volatile political backdrop, the USA. has again outperformed the rest of the world. The S&P500 is up 25%, and NASDAQ is up 28% YTD, with Nvidia up 205% – great time to be invested in tech and the US.
Here in the UK. we’ve seen our FTSE100 up a mild 5% YTD and the FTSE250 up about the same. The FTSE250 giving back some performance since the aforementioned Budget. So, confidence and performance both seem low.
The Japanese Nikkei is up 15% after a very volatile year too, showing that common sense and going from “bad” to “passable” can have major upsides to the outlook for a country and the companies within.
The Chinese stock market is up 17% YTD, after six years of difficult returns. This year marking changes and a willingness from the Chinese government to spark growth. Interesting times ahead here.
True grit
What a busy and chaotic year 2024 turned out to be. However, if we zoom out a little and look at the bigger picture, things aren’t as bad as they seem. Sometimes there is benefit in taking a step back.
If at the end of 2023, we were told that 2024 would see; a change in government voted for by the people, markets globally up and building wealth for clients, central banks dovish, and cutting rates spurring on the economy, no housing crisis, no recession (so far) – I think we all would have taken this as a good year!
Sometimes with a little perspective, we can move away from what appears to be a busy and chaotic world below. I’ll be trying my best to take this new perspective into next year… where things will be far calmer, right?
