The Notebook: Victoria Scholar on defensive plays, BA’s new uniforms and Elon Musk’s fall from fortune
The Notebook is a new feature for 2023, allowing the City’s biggest names to get a few thoughts off their chest. Today it’s the turn of Victoria Scholar, Head of Investment at interactive investor
It has been widely reported that the UK is on the brink of recession while a third of the global economy will face a similar fate according to the IMF. Double-digit inflation, costly energy bills, rising mortgage rates and a softening consumer are hampering demand causing reverberations for companies and the markets as well as individuals, households and government tax receipts.
2022 was a torrid year for investors after the punch bowl of cheap money was removed with central banks desperately U-turning on rock bottom interest rates in an attempt to curtail spiralling price levels.
The pound suffered its worst year against the US dollar since 2016, the FTSE 250 fell nearly 20%, weighed down by economic and political uncertainty and the MSCI index of global stocks suffered a similar sized slump, its largest since the global financial crisis in 2008. However the FTSE 100 held up, outperforming many global indices thanks to its favourable sectoral mix of energy, mining and banks.
As we come into 2023, investors are battening down the hatches, braced for an economic downturn and are shifting portfolios accordingly. Consumer discretionary stocks that sell goods we want rather than need may suffer as household budgets get squeezed.
Housebuilders which logged a dire performance last year are facing continued headwinds from rising mortgage rates and falling house prices.
So what investments are market participants turning their attention to?
In an inflationary environment, companies which are price makers tend to fare better than price takers given that they can pass on their additional costs to consumers through higher prices without seriously denting demand.
On top of that, many investors are on the hunt for countercyclical stocks that outperform when times get tough such as consumer staples or pharmaceuticals which offer goods we simply cannot live without.
After an unfortunate year in which both equities and bonds were punished, some analysts are pinning their hopes on a bounce back for credit and government debt as aggressive interest rate hikes and inflationary pressures ease. Plus 2023 could be the year that gold and silver finally start to regain their shine, having disappointed amid the turmoil last year, weighed down by a strong US dollar. A combination of the global economic downturn and the potential for King Dollar’s reign to end could help spur gains for the precious metals.
Jump seats to jumpsuits
From jump seats to jumpsuits. In the first major sartorial revamp for two decades, British Airways has unveiled a brand new uniform for its workforce worldwide. Created by British fashion designer, Ozwald Boateng who was previously creative director at Givenchy, the new line includes a modern jumpsuit, a hijab, and a tunic. This isn’t Boateng’s first foray into the airline sector, having previously designed Virgin Atlantic’s amenity kits. BA’s swanky new collection is set to be rolled out this spring.
Chocolate coins as a Christmas bonus
Chocolate coin bonuses. It is a rather sad state of affairs when Christmas bonus season comes around and instead of a nice paycheck bump to help with the cost-of-living, you are landed with a box of Quality Street. It is a race to the bottom on price among the Big Four who are desperately trying not to give away market share to the extremely price competitive German discounters Aldi and Lidl. Tesco is clearly looking for innovative ways to cut costs, perhaps sadly at the expense of its workers.
Another unwanted record for Elon Musk
Much to his dismay, Elon Musk has won himself a Guinness world record for the largest loss of personal fortune in history. He is estimated to have shed somewhere between $182 billion and $200 billion dollars, outpacing the previous record by more than $120 billion. His has suffered under the weight of Tesla’s share price which has tumbled around 65% over the last year. Musk is no longer the world’s richest man, surpassed by luxury goods mogul Bernard Arnault. Although I can’t see Musk garnering much sympathy.
Therapeutic medicine
Jonah Hill, who is best known for his comedic roles in films such as The Wolf of Wall Street and Superbad has shown a more intimate side to himself in the Netflix documentary ‘Stutz’ about his therapist, Phil Stutz. Hill says his life is ‘immeasurably better’ thanks to therapy. The movie attempts to guide viewers through Stutz’s methods, which include visual aids and exercises designed to help patients with their mental struggles. However, the twist is that while the film initially focuses on Stutz himself, it later flips into a look at some of Hill’s own mental health struggles including his insecurities when he was young. The poignant
documentary even includes a discussion with Hill’s mother about how the actor felt pressured to lose weight as a child and the impact this had on his relationship with women in his adult life.