August 2023

I trust everyone is enjoying their summer. While we basked in the warmth of a glorious June here in Ireland, July’s weather didn’t follow suit, serving us a downpour of rain instead. Let’s keep our fingers crossed that August and September bring us more clement weather.

On a global scale, it’s essential to mention the pressing issue of global warming. July has alarmingly set a new record as the warmest ever, a stark reminder of our changing climate. More worrying still, sea temperatures, which usually reach their zenith in September, have already matched last year’s peak as early as July. These anomalies underscore the urgency of addressing climate change.

In last month’s Markets in 1 Minute, I highlighted how H1 brought profitable returns for equity investors, a trend that continued through July.

We’ve witnessed a slight dip in inflation, while, conversely, interest rates have experienced an upward nudge.

Consumer resilience has been commendably robust, resulting in better than expected economic news. This buoyancy is fostering renewed discussions around potential ‘soft landings’ in the economic landscape.

This month I take a moment to explain why controlling inflation is important and for something a little different – take a look at the piece below on the top 100 global brands.

Why is Controlling Inflation Important for Everyone?

Understanding the importance of controlling inflation is vital for everyone as it significantly impacts personal finances and overall economic stability. High inflation can diminish the value of money, eroding the purchasing power of your savings and earnings. On the other hand, a stable, low inflation rate safeguards your economic well-being by preserving the value of money.

Inflation rates also determine the broader economic climate. When inflation runs high, it fosters uncertainty, deterring spending and investment, and consequently hampering economic growth. By effectively managing inflation, an environment of economic stability is fostered, promoting business confidence, supporting job creation, and stimulating growth.

Although the idea of rising inflation leading to increased wages might initially seem beneficial, if the cost of goods and services increases faster than wages, then real income actually decreases. This impacts lower income people more, thus exacerbating income inequality in society.

Controlling inflation is therefore not just an abstract economic concept but a matter of tangible importance to everyone as it directly influences our financial well-being.

Headline Inflation Down Further but Core Inflation Remains High

Headline inflation in the Euro area fell slightly in July to 5.3%. Core Euro inflation (yellow line) at 5.5% remains high. The target of getting inflation back to 2% remains some way off.

Interest Rates Still Rising

The European Central Bank (ECB) and the FED in the US both raised interest rates in July by a further 0.25%. The Bank of England followed suit at its meeting on 3rd August.

Better Cash Returns Available

Higher interest rates can benefit investors provided they are willing to move away from bank deposits. We continue to help clients access better cash returns that aim to deliver returns in line with the Euro short-term interest rate which is now at 3.66%. Meanwhile banks delivered bumper profits in H1 2023 benefiting from higher interest rate margin (the difference between what they can earn on people’s cash and what they pay them).

Equity Markets

The following chart shows the global equity market rose 18% in the first seven months of the year in local currency terms. This translates into a return of close to 15% for Euro investors.

Source: MSCI, ACWI, local currency

  • The US equity market, as represented by the S&P 500, was up over 19% in USD.

Nasdaq-100 Index Completed Special Rebalance

Last month I wrote about the performance of seven stocks (the so called “magnificent seven”)  – Nvidia, Tesla, Meta, Apple, Amazon, Microsoft and Alphabet (Google) – driving performance in the US stock market so far this year. By mid-July these stocks made up over 54% of the Nasdaq-100 index, leading to concerns about concentration risk. A “special rebalance” was completed on July 24th to reduce the weightings of these companies in the index. In broad terms the impact was to reduce the weightings of most of these companies by between 1% and 3%.

Top 100 Global Brands

I have always enjoyed keeping an eye of how the top global brands change. Below is a visualisation of the top 100 brands for 2023. Some of the top brands did not feature just 20 years ago. I wonder what new brands will dominate in another 20 years?

Source: Ranked: The Top 100 Brands by Value in 2023 (

July and YTD Market Numbers

Following a good first half of the year July saw equity markets up further while corporate bonds also had a good month.

Our Investment Outlook

Despite the positive vibes in July, we remain cautious about what happens next, recognising that (a) it takes time for higher rates to have an impact, (b) that core inflation remains high and (c) we continue to see lots of indicators pointing in different directions.

  • The impact of the fractures in the banking sector and tighter credit conditions seen this year is to ultimately put further downward pressure on economic growth.
  • That downward pressure, if it translates into a reduction in company earnings, may ultimately lead to an uptick in unemployment (the jobs market has remained incredibly resilient up to now).
  • Central bankers likely need to be more data dependent going forward and see core inflation begin to fall if they are to avoid raising rates further. The risks of a policy mistake (by raising rates too far) have also increased, particularly in the EU.
  • Ukraine and other geopolitical risks remain significant with bad outcomes not currently priced into markets. The core assumption of markets remains that the Ukraine war will not end, or escalate significantly, any time soon.
  • Overall, markets are likely to remain volatile until there is more certainty around (a) financial stability (b) core inflation falling back to the target of 2% and (c) the depth and length of economic slowdowns / recessions.

For short-term investors, this is not a market to be in but for our clients who are long-term investors, we continue to advise them to follow their plan and use market weakness to build on positions.


John Tuohy is Chief Executive of Acuvest, an Irish-owned, independent advisory firm specialising in wealth management, pensions, and investment advisory services for individuals, companies, pension schemes, charities, and institutions. John is a Chartered Financial Analyst (CFA) and a Fellow of the Chartered Association of Certified Accountants.