In June, the US central bank upped its benchmark interest rate by three-quarters of a percentage point, the largest hike since 1994. This increase followed a quarter-point increase in March and a half-point increase in May. 

In the coming months, further rate hikes are expected. On average, Fed policymakers said they expect interest rates to rise to approximately 3.4% by the end of this year, up from the 1.9% increase projected back in March.

Speaking to CNBC, Scharf said that while the consumer and small businesses have remained strong, the impact of rising rates has not been properly taken into consideration with regard to the broader economy.

“We know rates are going up, it couldn’t be clearer,” Scharf told CNBC on Wednesday. “We know that consumers and businesses, while strong today, are going to see deterioration, and we’re going to act surprised when it happens.”

“That doesn’t mean the world is coming to an end,” Scharf continued, though added that “we should do our best to recognise that and focus on what the solutions are.”

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WBA’s move marks the conclusion of a review that commenced in January and saw the British retailer valued at £5 billion. 

WBA said that the sale of Boots attracted significant interest, though global markets have suffered substantially since it launched the sale. Bidders including billionaire businessmen Mohsin Issa and Zuber Issa are understood to have missed out on acquiring Boots, which is the largest pharmacy in the UK.

“As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company,” WBA said.

Rosalind Brewer, CEO of WBA, said: “We have now completed a thorough review of Boots and No7 Beauty Company, with the outcome reflecting rapidly evolving and challenging financial market conditions beyond our control. It is an exciting time for these businesses, which are uniquely positioned to continue to capture future opportunities presented by the growing healthcare and beauty markets.

“The board and I remain confident that Boots and No7 Beauty Company hold strong fundamental value, and longer-term, we will stay open to all opportunities to maximise shareholder value for these businesses and across our company.”

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When the Federal Reserve made the unprecedented move in March 2020 to pump trillions into the economy, it was a global milestone. Because USD is the world’s reserve currency, the Fed is effectively the world’s central bank, overshadowing all others. 

With such a drastic increase in circulating supply, the USD lost value, coupled with low-interest rates which resulted in cheap access to borrowing, we saw a worldwide inflation spiral. The UK closely follows the US inflation rate, as both have reached 40-year highs. 

The UK Economic Woes A Mirror Of The US

While the US inflation reached 8.6% in May, UK inflation outpaced it even further, at 9% in April, the highest of the G7 nations. The cost of fueling up a family car in the UK is now £100.27, according to Experian Catalist’s database.

Compared to the US, this means that a gallon of gas in the UK is equivalent to ~$8.8, which is 76% higher than the US gas price national average of $5. This has had such a huge impact on the cost of living that one in four people have resorted to skipping meals, according to a Sky News survey.

Consequently, both the Federal Reserve and the Bank of England have started raising interest rates to lower consumer spending and borrowing, which levels down inflation. The latest FOMC meeting placed the target interest rate at 3.4% by the end of 2022. At the same time, the Bank of England is hiking its interest rate for the fifth consecutive time, to 1.25%, which is the highest it has been in 13 years.

Unfortunately, the hikes themselves, as a remedy to inflation, are decimating stocks and cryptos alike. Blue-chip representatives for Europe and the US are both down by over -20% year to date. On the upside, London’s “Footsie” index (FTSE 100) has been outperforming them.

Unquestionably, these are withdrawal symptoms of a market habituated to cheap, near-zero interest rate capital. Furthermore, the housing market is getting hit, as higher interest rates on mortgages are anticipated to price millions of individuals out of home ownership.

In other words, a remedy for inflation can trigger a recession—a period of declining output and hiring freezes as companies consolidate their capital under new conditions. 

Funds To Escape The Inflation Vice

While this economic cycle seems particularly harsh, they come and go as they always do. For this reason, one must adopt a long-term outlook. An outlook, so to speak, that aims for a 5-year investment gain. More importantly, it is crucial to consider assets that are in demand regardless of either inflation or a recession.

In the UK, open-ended investment company (OEIC) funds are equivalent to open-ended mutual funds in the US. They are priced once per day, diversifying investor money across a wide range of assets. For this reason, they are considered a long-term investment, of up to 10 years, spreading the risk widely so the growth outweighs the potential of losing the principal.

Because OEIC funds are professionally managed and diversified, their maintenance is relatively higher. The funds are generally available through many of the leading apps for trading stocks in the UK. They typically charge an annual management charge (AMC) between 1% to 1.5% of the allocated shares’ value. Here are three OEIC fund candidates for your consideration.

1. VT Gravis Clean Energy Income

By 2030, the UK will no longer allow for new gas-operated vehicles to be sold on the market. This speaks volumes about the relentless regulatory green push. Moreover, energy investments have been a historical safe haven against inflation. 

In the near future, the UK government announced that it will phase out Russian oil imports as a result of the Ukraine-Russia conflict. This will be as early as the end of 2022. Both the intermediate geopolitics and long-term legislation translate to a mass adoption of renewable energy. 

At $459.26 million and targeting 4.5% annual income, VT Gravis counts on that future by diversifying investor money on smart grids, energy efficiency, storage and other zero-emission alternatives. The fund charges 0.81% AMC.

2. LF Ruffer Diversified Return

Although launched in September 2021, it is based on the time-tested Ruffer Investment Strategy. Having received a “cautious balanced” rating, LF Ruffer is on the lower end of the risk spectrum. Its portfolio diversification is focused on times of market distress. 

Specifically, high inflation is currently plaguing the world. LF Ruffer ties precious metals, energy stocks and index-linked bonds in a capital-protection bubble that are least likely to lose money on an annual basis. At a size of $751.29 which targets above 4% annual income, RL Ruffer charges 0.93% AMC.

3. M&G Global Listed Infrastructure

Infrastructure goes hand-in-hand with energy stocks, precious metals and renewables as guardians against inflation. Although high inflation impedes new infrastructure projects, all governments are aware that the cost of not building and maintaining roads and civic and utility buildings is higher in the long run if left behind.

That is why M&G Global covers infrastructural assets that are critical for any nation - social and economic. Furthermore, the fund counts on the growth of emerging markets - smart gridding the cities, data centres and communication towers. However, its portfolio does include a tighter range of investments, so a drop in one could significantly impact the fund’s value.At $634.96 million size and targeting 3% - 4% annual income, M&G Global charges 0.70% AMC.

Taking Advantage Of The Davos Agenda

In prior decades, it was more difficult to pick the right fund. One had to choose between an actively managed or a passively managed (index) fund. The latter typically have lower annual fees but are less likely to take advantage of changing market conditions. A strong case could be made that actively managed funds are also superior to life insurance policies, in terms of financial protection.

There is also the credit rating and default risk to consider. While all of these metrics still stand, the concentration of economic power has grown to the point where one metric is more important than others. Does the fund cater to the Davos Agenda?

Whether it is the World Economic Forum, UN’s 2030 Agenda or the World Government Summit, they all tie every economic act worth of note in a unified front. Furthermore, they deploy ESG framework - environmental, social, governance - to rate them above the immediate profit-return considerations. 

This creates a streamlined investment outlook in which emerging infrastructure, renewables, digitisation and smart grids take priority regardless of market upheavals. From this perspective, the three listed funds pose the least risk in these uncertain times.

This article does not constitute financial advice. The author and Universal Media Ltd. are not qualified financial advisers. All investments are made at the reader’s own risk.

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The US central bank increased its policy rate by 75 basis points on Wednesday to a range of 1.5% to 1.75% as officials increased their fight against stubborn inflation.

Wells Fargo & Co now expects a “mild recession” for the end of 2022 and into early 2023. 

“The Federal Reserve is going to hike interest rates until policymakers break inflation, but the risk is that they also break the economy,” Ryan Sweet, Moody’s Analytics head of monetary policy research, said. “Growth is slowing and the effect of the tightening in financial market conditions and removal of monetary policy have yet to hit the economy.”

A recession is generally defined as a downturn in overall economic activity that is broad and lasts for more than a few months. The United States has only just emerged from the economic slump that was triggered by the Covid-19 pandemic. 

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The 2-year rate increased by more than 10 basis points to 3.1535%, hitting its highest level since 2007. The benchmark 10-year Treasury yield was also up, trading at around 3.1762%.

This week, a highly anticipated Federal Reserve meeting will be held, with the US central bank likely to announce at least a half-point rate hike on Wednesday. The Federal Reserve has already upped rates on two occasions this year, including a 0.5 percentage point increase in May in a bid to stave off surging inflation.

Last week, it was reported that the US consumer price index was up 8.6% in May on a year-over-year basis. This is its fastest jump since 1981, according to the Bureau of Labor Statistics. 

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On a monthly basis, headline consumer price index (CPI) was up 1% while core increased by 0.6%. Estimates had been 0.7% and 0.5% respectively. 

Surging fuel prices, food prices, and housing costs all contributed to the record-high jump. 

Energy prices broadly increased 3.9% from a month ago, bringing the annual gain up to 34.6%. Housing costs rose 0.6%, the fastest one-month gain since March 2004. Food costs, meanwhile, jumped another 1.2% in May, taking the year-over-year gain up to 10.1%. 

“What we need to see is clear and convincing evidence that inflation pressures are abating and inflation is coming down — and if we don’t see that, then we’ll have to consider moving more aggressively,” Chair of the Federal Reserve Jerome Powell told the Wall Street Journal last month. 

“If we do see that, then we can consider moving to a slower pace.”

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Joining other major bank CEOs warning about global economic health, Fraser said that conversations during her world tour with stops in Asia, Europe, and the Middle East focused predominantly on “the three Rs”. 

"It's rates, it's Russia and it's recession," Fraser said at an investor conference in New York, warning that, in Europe, "the energy side was really having an impact on a number of companies in certain industries that are not even competitive right now."

"Because of the cost of electricity and the cost of energy, some of them are shutting down operations. So Europe definitely felt more likely to be heading into a recession than you see in the US," Fraser added.

The Citigroup CEO said that, in the US, interest rates are a greater concern than a recession. 

"It's certainly not our base case that it will be, but it's not easy to avoid either.”

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Applications for mortgages for home purchases dropped 1% last week compared with the previous week, according to data from the Mortgage Bankers Association (MBA). Volume was 14% lower than the same week of 2021. 

“Mortgage rates fell for the fourth time in five weeks, as concerns of weaker economic growth and the recent stock market sell-off drove Treasury yields lower,” commented Joel Kan, MBA’s associate vice president of economic and industry forecasting. “Mortgage applications decreased to its lowest level since December 2018, as the purchase market continues to struggle with supply and affordability challenges.”

Rising interest rates in the US, as well as steep gains in house prices, are having a heavy impact on affordability. However, while prices continue to rise due to limited market supply, different types of property buyers are having very different experiences. 

“Demand is high at the upper end of the market, and the supply and affordability challenges are not as detrimental to these borrowers as they are to first-time buyers,” Kan explained.

At the beginning of the pandemic, Congress formed several new programmes to support the millions of people who lost their jobs due to the introduction of lockdowns and the onset of economic uncertainty. These programmes, which officially ended last September, worked together to increase weekly benefits, extend their duration, and make more people eligible to receive them. 

Over this period, the federal government issued nearly $873 billion in total unemployment payments, with the Labor Department also revealing that criminals were able to defraud the system due to programme weaknesses. 

“The unprecedented infusion of federal funds into the UI program during the pandemic gave individuals and organized criminal groups a high-value target to exploit. That, combined with easily attainable stolen personally identifiable information and continuing UI program weaknesses identified by the OIG over the last several years, created a perfect storm that allowed criminals to defraud the system,” the agency’s report said. 

“Applying the 18.71 percent to the estimated $872.5 billion in pandemic UI payments,36 at least $163 billion in pandemic UI benefits could have been paid improperly, with a significant portion attributable to fraud. Based on the OIG’s audit and investigative work, the improper payment rate for pandemic UI programs is likely higher than 18.71 percent.”

For example, those who suffer from injury, protracted illness, or congenital pathology of the body or mind often have difficulty finding a place in the job market. In addition, the simple capacity to get around can likewise be a challenge. These are the reasons for societal "safety nets" - to aid those who suffer from limited capacity, through no fault of their own, to navigate life without the crushing forces of poverty and isolation. This is where Social Security disability benefits come into play.

A History Of Social Security And Disability Benefits

What most people understand as Social Security, i.e., a participant-funded insurance program to be redeemed at the time of retirement, was made law by the United States Congress in 1935. Responsible for administering this vast program to assist the aged is the Social Security Administration (SSA). In addition to retired persons, SSA also partially provided - in partnership with states - for certain needy elderly individuals and those who have blindness.

Nearly 30 years after its inception, the SSA took full charge of these "adult categories" by instituting the Supplemental Security Income (SSI) program. Ensuing years saw tweaks to SSI relative to cost of living adjustments (COLAs) and work incentives. In addition, the Social Security Disability Insurance (SSDI) program provides benefits to those who have worked for a certain period, paying into Social Security while working.

Who Is Eligible Now For SSI?

The Social Security Administration applies a five-point test as an initial threshold for a disability to qualify for benefits:

• Is the applicant presently working? This question goes to the issue of substantial gainful activity (SGA). SGA demands a certain dollar amount of compensation, so the applicant will be rejected if the work is SGA. Some work, though, is not SGA.
• Is the disabling condition "severe," i.e., does it inhibit the capacity to perform rudimentary work-related tasks and executions? If the determination is made in the negative, the application is rejected.
• Does the condition appear on SSA's list of disabling maladies? If it does, the application moves forward. Otherwise, further evaluation is needed.
• Does the condition preclude doing anything the applicant had done previously? If not, a decision is made as to whether it is feasible to return to such income-producing activity.
• Is there any GSA work the applicant can perform?

Other factors may mitigate these broad questions, but they can indicate an application's success ahead of submission. It is best to let a social security lawyer review your case before you do anything. A specialised attorney will do their best to strengthen your case and ensure there is nothing about your application that might grant a denial. 

How To Apply For Disability Benefits

Step 1: Collect all documentation about the disabling condition

Nothing is trivial here, so if it is tangentially related to the condition, make a copy and include it with the application. These could include test results, hospital bills, nursing reports, social worker evaluations, etc.

Step 2: Compare the information against the Adult Disability Checklist

This checklist is a tool to ensure all the supporting documents are complete. It also assures every question the SSA has can be answered quickly and efficiently.

Step 3: Complete the application and submit it

The application can be presented online or mailed in as a hard copy document. Alternatively, the applicant can complete the paperwork on-site at a local SSA office.

Step 4: Get updates on the status of the application

Those who apply electronically have the option of opening a MySocialSecurity account. Through this portal, applicants can discover at what stage of evaluation the application sits. Otherwise, petitioners can call 1-800-772-1213 on weekdays. The final determination will be issued by mail.

Bottom Line

Filing for SSD benefits is challenging, and many claims get denied. The best course of action is to hire an attorney to help you prepare your case and maximise your chances. If your claim is denied, your lawyer will help you appeal the decision and go through all the motions to receive the benefits you need.

Mid-week, investors wiped nearly 25% off Target shares after its profit halved. Meanwhile, Walmart was down 1.3% on Thursday after already falling more than 17% in the two sessions after it announced poor results on Tuesday. 

Target’s earnings revealed consumers have been spending more on food and household essentials but cutting back on high-margin items. Meanwhile, Walmart’s earnings revealed consumers had moved to buy lower-margin basics. 

On Tuesday, Federal Reserve Chair Jerome Powell pledged the US central bank would rise interest rates as high as necessary to combat spiralling inflation.

"We think the developing impact on retail spending as inflation outpaces wages for even longer than people might have expected is a principal factor in causing the market sell-off today," commented Paul Christopher, head of global market strategy at Wells Fargo Investment Institute. "Retailers are starting to reveal the impact of eroding consumer purchasing power."

Scammers have reportedly been tricking consumers into paying significant sums through fraudulent online stores. They have been luring “desperate parents and caregivers” via fake social media profiles and websites with images of reputable formula brands. Consumers believe they’re purchasing from a brand’s official website, but the formula never arrives. 

“Scammers exploiting the high demand for baby formula have sunk to new lows,” the FTC writes. “If you suspect a scam, let us know about it at ReportFraud.ftc.gov. Your reports help the FTC and our law enforcement partners stop scammers.”

Since the beginning of the Covid-19 pandemic, there has been a significant shortage of baby formula across US stores. Current shortages have been largely caused by supply chain issues as well as a recent recall of certain baby formula products over contamination concerns. 

Last week, The White House announced it would make it easier to import baby formula from overseas and would also introduce other measures.