Author: Barclay Butler

Will the United States Avoid a Recession?

Despite conflicting views from various experts and analysts, signals coming from the Federal Reserve suggest that officials are optimistic of avoiding a recession. Such is their optimism, there is a feeling that they can win the war with inflation without inflicting too much pain on the economy. Even though the Federal Reserve is committed to returning inflation to 2%, it appears that officials do not want to miss the opportunity of a “Soft Landing” by raising interest rates even higher. One expert pronounced the Federal Reserve when battling inflation tends to overtighten straight into a recession, and policymakers are determined to avoid this mistake this time round.

Bearing this in mind, experts suggest the Federal Reserve will now hold interest rates at the next meeting slated for later this month on the 19th/20th September. However, the common consensus is they may well increase them one more time if the officials feel one more hike in interest rates will finally put to bed the war with inflation.

The Federal Reserve, and indeed their Chairman Jerome Powell, have been on the wrong end of criticism suggesting that they, (along with the Bank of England) acted too late to fight rising prices. If indeed the Federal Reserve can restore price stability after an electrifying increase in inflation, without the economy going into recession, this would be a standout and even rare achievement in modern day policy decisions. 

The FOMC (Federal Open Market Committee), has raised interest rates eleven times since March 2022, and currently sit at their highest level of 5.5%, which is their highest level since 2021. Chairman Powell has been at pains to emphasise that the aggressive interest rate hikes are reaching the end of their cycle, and that economic data will decide whether or not there will be any more rate hikes.Despite the signals coming out of the Federal Reserve there are some experts who expect the hawks to keep a bias to keeping interest rates high as some of those who make policy have been let down by false dawns due to disinflation and are therefore mindful of confirming an end to interest rate hikes and quantitative tightening. Officials at the Federal reserve will see one more key data on inflation before their next meeting. Experts suggest that the FOMC will pass on a rate hike this month but are suggesting it is 50/50 as to whether or not interest rates are raised by a ¼ of 1% at the next meeting on October 31st – November 1st.

Gloucester City 0 – 1 Farsley Celtic

After a run of 2 defeats our congratulations go to Farsley as they bounced back with an away win at Gloucester City. Although Gloucester had a number of chances in the first half, the Celts defended extremely well and scored a goal on the counterattack to lead one nil as the referee blew for the end of the first half. Although Gloucester changed their formation from 433 to 422 for the second half, the Celts goalkeeper made some notable saves helping the team to run out one nil winners. This leaves the Celts in 13th place but only 4 points off the leaders, in what is turning out to be a very tight division. Our congratulations once again go to the team and the staff, and we look forward to a win in the FA Cup qualifier this Saturday when the Celts play Scarborough Athletic.

Inflation in Spain, France and Germany Looms Large on the ECB’s Radar

The will they won’t they debate rages on as to whether or not the European Central Bank will raise interest rates by 25 basis points at their next meeting on 14th September. Experts suggest that recent data released shows Germany’s inflation slowing at a less than expected rate, as inflation in Spain increased. Whilst inflation remains low in Spain, it quickened again in August where consumer prices rose by 0.3% from July to 2.4% with analysts advising that the increase was driven by fuel costs.

Furthermore, recent figures released showed inflation accelerating in France rising by 5.4% from August 2022, with analysts advising the increase in the eurozone’s second largest economy was due to the cost of energy. Figures released today for August, for the eurozone which encompasses 20 countries confirmed overall inflation remained at 5.3% defying expectations that there would be a drop to 5.1%.

This has left the markets with a conundrum as to whether or not the ECB will raise interest rates again. However, with the latest data emerging from France, Spain, Germany and the rest of the eurozone, the markets appear to be leaning towards a hike in interest rates. The feeling is that if there is any evidence of strong consumer price growth, the ECB may well err on the side of caution and raise interest rates, especially if there are signs that any underlying pressures remain doggedly high.

There are growing signs that the bloc itself is heading for an economic downturn, however many investors feel that the price data will be enough to tip the balance in favour of the hawks whereby the ECB will raise interest rates for a 10th consecutive time on September 14th.  However, the doves on the ECB’s governing council will argue for at least a pause due to a rapidly deteriorating economic background across the eurozone.

Meanwhile, many economists are split on the subject of a rate hike. Some favour no rise saying that the upward pressure on underlying prices has continued to ease thereby negating a decision by the ECB to hike interest rates. Opposing opinions suggest that the latest inflation figures will probably ensure one more rate hike. Whichever way it goes, Christine Lagarde the president of the ECB is playing her cards close to her chest and has yet to give any indication as to where the cards will fall.

Is the City of London No Longer the Premier Financial Capital of Europe?

The City of London, The Square Mile or the affectionate term which has been used since the 1950’s “The City”, has, since Brexit, come under considerable pressure from Paris, as the financial centre of Europe. Sadly, the Brexit deal was bereft of any financial services agreements, and considering the city was earning 10% of GDP and provided 11.5% of tax receipts, this has been an unmitigated disaster both for the City itself and the British economy. 

An Exodus

It is estimated that in excess of 7,500 personnel and £1.1 trillion in assets had already fled the City to the European Union prior to the Brexit agreement. Back in November 2022, Bloomberg’s released figures showing that in US Dollar terms primary listings in Paris overtook London, and to add insult to injury, Paris is now home to Europe’s largest stock market by value. 

Even Wall Street is benefiting from the demise of the City as ARM, the titan of the UK’s Tech Sector announced it would do its IPO in New York, whilst CRH (the world’s biggest materials supplier), announced it would move its primary listing to the USA. This in itself is an indictment on the City, and further bad news may be lurking on the horizon with rumours that the City’s largest listed company Shell, may be considering upping sticks and moving to another jurisdiction.

As far as the City is concerned there was no Brexit deal. The City has already lost in excess of €6 billion to Paris and Amsterdam in euro trading revenues, and staff have been repositioned in various centres of Europe, with Paris being the major beneficiary. Even before Brexit, many of the big city firms anticipated that the City would be bereft of a Brexit deal, and as such companies such as Bank of America are now headquartered in Dublin, and in Paris they have opened a trading floor with a capacity for 1,000 traders and back-up staff.

The Post-Brexit Landscape

As of Q2 2023, the financial landscape post-Brexit had changed dramatically with a clear shift being seen across the English Channel, especially from the big Wall Street companies with the spoils being split amongst various EU cities, of which the lion’s share has gone to Paris. For example, Goldman Sachs co-head in Paris confirmed that Paris is their largest trading hub in Europe, with their staff at the global markets team more than doubling in the last two years. The staff at Bank of America Paris has increased by 600% since the 2016 Brexit vote, whilst JPMorgan Chase has increased their staff more than 20-fold since 2019. Currently Citigroup is building a new trading floor and even hedge funds have increased their staff, such as Millennium Management who circa doubled their employees in the last year.

The ‘ Edinburgh Reforms’

The UK government is so alarmed they have put in place the “Edinburgh Reforms”, which is, for the first time in twenty years, a major revamping of Britain’s financial services spanning insurance, asset management, capital markets and banking. This, they hope, will stop the haemorrhaging, and hopefully from a capital markets standpoint, the City will be able to provide a first-class and best possible funding environment for both global and UK companies.

However, all is not lost for the City, as over USD 3.8 trillion of foreign exchange trades (forex) are transacted in London, which is more than the combined forex trades of Tokyo, Hong Kong, Singapore and New York. Furthermore, according to the London Stock Exchange, 70% of global secondary bond market trading takes place in the City. The City, unbeknownst to many, is also the third largest fintech hub in the world. 


With regard to European finance, the City and London in general still remains the big fish in a big pond with their headcount still way above what the rest of Europe has to offer. It is still much bigger in terms of volume of business and assets, but since Brexit their status has been somewhat eroded. In essence, some of the companies who would use the City as the “default location” to obtain capital from the bond and stock markets are now looking elsewhere. 

The lack of access to EU markets and clients will continue to hamper the city for years to come and it is hoped that the City will be able to reverse the outflow of traders to Europe, otherwise their standing in the global financial markets will continue to diminish.

Farsley Celtic 0 – 0 Kings Lynn Town

Farsley Celtic were looking to bounce back from an away loss to Chester last Monday, but in the end managed a hard-fought draw against Kings Lynn Town. The Celts certainly had the better of the first half, but in the second half Kings Lynn defended their box with great determination. This result leaves the Celts in 11th place in the league, but only 5 points off the leaders Brackley Town. There is still a long way to go until the end of the season and we at IntaCapital Swiss guarantee our continued support and look forward to the team climbing back up the league.

After Four Games Farsley Celtic Remain Unbeaten

On Tuesday 15th August Farsley achieved a notable draw with a penalty goal in the dying moments of their home game against newly promoted South Shields. They had a number of near misses during the game but Farsley’s fighting spirit saw them through to a draw.

Moving forward to Saturday 19th after a four-hour plus coach trip to Bishops Stortford, Farsley produced an excellent goal on the half hour, which allowed the visitors to walk away with all three points.Farsley remain unbeaten this season and their impressive start leaves them in 6th place on 8 points, 2 points off leaders Scunthorpe United. Our congratulations once again go to the team and their management for an impressive start to the season.

 Is the UK Economy Beginning to Buckle?

The outlook for construction companies in the United Kingdom is certainly gloomy, as developers with concerns regarding inflation, high borrowing costs and the economy in general have slowed up on house building projects. In fact, in London itself, new home sales have fallen to an 11-year low not seen since 2012 thanks mainly to the cost-of-living crisis and once again the high cost of borrowing. 

Interestingly, Country Garden Holdings, China’s largest privately owned home builder, and considered one of the safer bets, missed payments on international debt obligations. Their cash flow problems have also impacted on land in an impoverished part of east London, where 5 years ago a site was purchased to build hundreds of apartments, sadly to date not one brick has been laid. The plans for the land are therefore being impacted not only by the cash crisis in Country Garden Holdings but also the problems facing the UK economy.

Construction however only forms part of the problem as after a strong Q1 and Q2, sadly in August private-sector companies suffered their first contraction in seven months. Experts and economists advise that the impact of higher interest rates is finally beginning to be felt throughout the economy. This had led to more companies and households adjusting their spending downwards thereby reducing demand throughout the economy. 

In other parts of the economy, consumers are cutting back on their spending on non-essentials which is impacting on the services sector, which not only represents the largest part of the economy but is now showing signs of weakness. In August data released by the CBI (Confederation of British Industry), showed that retail figures suffered their largest year on year drop for nearly 2 ½ years. Analysts at the Marks and Spencer Group have recently advised that there is a risk that as the year progresses the consumer market may tighten even further.

A number of experts and analysts suggest that as the year progresses more negative data will be released into the market, which may show signs of a further slowdown in the UK economy. According to recent data released, circa 445,000 firms are today in Significant Distress, a year-on-year increase of 8.5%. The Bank of England recently warned the increase in the cost of borrowing has also accelerated the risks of corporate defaults, with some companies cutting back on employment and reducing investment. 

Indeed, the Bank of England is expected to raise interest rates again to 5.5% with some commentators suggesting a high of 6% in 2024, the highest for 23 years, further squeezing the pocket of Britain’s consumers. The British economy may or may not be heading for a recession. Many commentators feel this has been avoided, no doubt we will all know by the end of the year. 

Farsley Celtic 2 – 2 Tamworth

Another hard-fought draw leaves Farsley unbeaten this season and they remain 6th in the league on 9 points, 3 points off the leaders Spennymoor Town. There are six other teams on 9 points, so this season is already showing signs of being highly competitive. Farsley went in at half time one nil down but came out firing on all cylinders in the second half and levelled the score early on with an excellent goal. Farsley went two one up and only a bizarre penalty, where no Tamworth player appealed, denied the Celts a well-deserved three points.

Will Germany Enter a Recession by the End of 2023?

Is Europe’s largest economy heading for another downturn? Data released from the highly respected Munich based ifo Institute* said that following their monthly survey they found confidence has been falling in all four main sectors of the economy: retail, services, manufacturing and construction. The survey found that many German companies have a negative outlook on the current future of the economy.

*ifo Institute – This is a highly regarded Business Climate Index and is representative of early indicators of economic development in Germany with data being published on a monthly basis.

As companies become increasingly pessimistic about the current state of the economy and indeed in Q4, the confidence index has fallen to a 10-month low of 85.7, a fall of 1.7 points. These findings reflect another survey of purchasing managers, where falling new orders, inventories and output, showed German companies had suffered a steep decline in activity not seen for three years.

The across-the-board decline in leading economic indicators suggested another contraction in the German economy for Q3 and Q4 of this year. Indeed, the German economy has been slower to recover from the Covid-19 pandemic than the rest of the Eurozone and the United States. Germany has not seen positive growth for Q1, Q2 and Q3 indicating that Germany’s huge industrial base has been hit hard by a sudden downturn in manufacturing. 

Recent data released showed a further sign of weakness where new orders in the construction sector fell by 2.7% compared to that of June 2022. Such figures show how high interest rates have filtered through to the housing market thereby negatively impacting on activity. Furthermore, recently revised data on German GDP showed the German economy stagnating three months to June compared to the same period in 2022. 

Experts suggest that a lack of momentum in the foreign trade arena combined with high interest rates will keep weighing on the economy in Q3 and Q4, with some senior figures in the finance industry suggesting that the economy could slip into a recession by the end of the year before mounting a recovery in 2024.

Analysts are suggesting that due to the grim outlook for the German economy, the European Central Bank ECB, may not raise interest rates (10th consecutive time) at their next meeting in September. Since reaching a record high of 10.5% in October 2022, headline inflation in the eurozone is expected to be in the region of 5% in August 2023, however core inflation (excludes food and energy data) remains a problem. So, will the ECB attack core inflation in September with another rate hike or will Germany catch a break with the ECB keeping interest rates where they are?

Eurozone Makes Winter Gas Storage Target 2 1/2 Months ahead of Schedule

According to data released by Gas Infrastructure Europe, the European Union has hit their gas storage target 2 ½ months ahead of schedule by posting a 90.1% capacity as of August 16th, 2023. However, be warned, according to expert’s prices will probably remain volatile over concerns regarding the depth of the winter. 

The EU set the benchmark or threshold for gas storage for November 1st, 2023, as they try to loosen reliance on Russian gas to see them through the coldest parts of the winter. However, this is the first time since records began (2016), that storage targets have attained this level at this time of year.

The European gas benchmark TTF Futures, (Title Transfer Facility) fell by 2.5% on 18th August, but still remains high because as experts advised, full inventories during the summer may not compensate for very cold weather in the winter. 

Sadly, the European Union’s demand for gas cannot be met by storage alone, and in the event of colder temperatures, as well as global supply disruptions, Europe could once again be left looking everywhere for gas as they did in 2022.

Experts suggest that the EU will have to compete for liquefied natural gas (LNG), despite current storage levels. Indeed, since the Russian/Ukraine war, and with Russia cutting supplies, the EU have had to purchase supplies from the market to make up the shortfall and this can make them vulnerable to shocks in the global energy market. 

A recent example is potential strikes at LNG export sites in Australia, which together account for circa 10% of global supplies. The market reacted accordingly with the TTF exploding upwards by 40% in the week ending August 12th, 2023. 

Whilst exports of LNG are basically confined to Asian markets, if there was a decline, Asian buyers would have to search elsewhere to make up the shortfall, pitching them directly into competition with the European Union.

If, as some sources suggest, the winter 2023/2024 will be colder than the previous winter, LNG prices may well increase along with that of demand. As the Russian/Ukraine war shows no sign of abating, we can only hope for a milder winter than that which some forecasters have predicted.