After a weak start to the year, the economic picture is improving in the US as we move into the second half. There is a positive outlook for equities over the medium term, as softer data from the first quarter has been replaced with a clutch of figures that indicate an accelerating economy, although this does bode poorly for bonds.
This confluence of positive developments, though constructive for equities, is quite the opposite for bonds, as it increases the likelihood of a rate rise. The Federal Reserve (Fed) is already tapering its asset purchases, with the latest edition of quantitative easing drawing to a close in late October/early November. As this date approaches, a more natural supply/demand dynamic should take hold, and interest rates again will be determined by market participants rather than by a buyer with a printing press. Additionally, the cost of living continues to increase: US inflation climbed by 0.3% for the month of June, in line with the consensus forecast, bringing the gauge up 2.1% year-over-year. This marks the second consecutive month in which inflation has been higher than the Fed’s target of 2.0%. The combination of strengthening economic data and above-target inflation increases the probability of rising interest rates, perhaps even sooner than the Federal Reserve currently contemplates.
Interest rate increases will put downward pressure on the prices of fixed income securities, leading to mark-to-market losses for bond portfolios. We have expressed concern about rising rates for some time, and have advised clients to shorten portfolio duration, rotate from fixed-rate to floating-rate debt, and from public to private markets. We have been focused on taking credit risk (rather than duration risk), allowing us to remain comfortable with an overweight in high yield bonds for much of 2014, though recent developments warrant a reassessment of this positioning.
Absolute yields and credit spreads for the high yield complex have fallen to levels that suggest an increasingly asymmetric risk-return profile for the asset class. The deterioration in credit underwriting standards for the leveraged loan market is also troubling. This is a trend that has been a focus of our concern for some time now, and recently has been highlighted by the Federal Reserve as a source of potential problems if it continues unabated.
Given these concerns, we have taken the decision to lock-in profits in high yield bonds and leveraged loans, and rotate the proceeds into cash, for the short term. This brings our high yield allocation to a neutral stance in portfolios, and a strongly underweight position at the broader asset class level (high yield and emerging markets bonds). We expect the overweight cash position to be a temporary one, and will redeploy funds as assets are re-valued in light of rising interest rates.
A psychology and sociology student for Queen Margaret University (QMU), Edinburgh, has begun a world-class communications internship with global healthcare company, GlaxoSmithKline (GSK), thanks to the Saltire Foundation.
The prestigious Saltire Foundation programme, ‘Saltire Scholars’, opens the door of the world’s leading companies to some of Scotland’s most talented students and provides them with an unparalleled chance to engage with global thought leaders and entrepreneurs.
Peter Jacobs, 22, will spend nine weeks as part of the communications team at GSK in Worthing, West Sussex, where he will be working on internal communication and community engagement projects.
Record numbers of ambitious young Scots have been attracted to this year’s cohort of Saltire Scholars, the internship programme run by The Saltire Foundation, Scotland’s world-class entrepreneurial leadership programme.
The number of Scholars has risen by nearly a third, with 132 undergraduate students taking part – up from 103 in 2013, which itself was a record-beating Undergraduate Programme. The cohort will be working amongst 44 host companies and over 5 continents across the world.
Professor Petra Wend, Principal of Queen Margaret University, said: “The Saltire Scholars programme provides students with global business experience and we are delighted that one of our top students has been able to benefit from these outstanding learning opportunities.
“It’s very rewarding to see QMU students like Peter creating their own goals, rising to the challenges set by high profile businesses like GSK, gaining exposure to a corporate environment and being able to offer their own ideas and solutions to business issues.
“There is no doubt that the skills, knowledge and life experience gained during Peter’s internship will give him a competitive advantage when entering the jobs market.”
Professor Wend continued: “Queen Margaret University is committed to enhancing the student experience. As a direct result of Peter’s positive experiences with GSK we’re continuing to strengthen our Saltire Foundation University Partner status. This should open up more world class placement and networking opportunities for future QMU students.”
Commenting on his communications internship experience with GSK so far, Peter Jacobs said: “I’m very grateful for the opportunity I’ve been given by the Saltire Foundation. Before my internship I had no idea of what to expect and generally had very little idea of what happened within GSK. Being honest I was slightly nervous about the idea of working for a company as big as GSK and the thought had crossed my mind that I would end up as an office coffee boy, as many of my friends are currently experiencing.
“However, I can say now that my experience at GSK has fully exceeded every expectation that I had. It’s been a personal journey for me and has been great to work with so many nice people who are willing to take time out of their day to help me with my project even when they all had a million and one other things to do.”
“Overall, it’s been a great journey for me. Working for a company that saves lives has really opened my eyes to the world of pharmaceuticals. It has given me a lot to think about for the future and what career path I would like to follow. The internship has allowed me to learn new transferrable skills and make new connections.”
Sandy Kennedy, chief executive of the Saltire Foundation, said: “It’s very gratifying to see such a surge in the numbers of young people, including students from Queen Margaret University, who are keen to build their confidence, skills and ambition.
“Scotland’s commercial reputation in the global arena can only be enhanced by this fantastic response, which beats all previous years, and we are delighted to welcome these confident, entrepreneurial and driven young potential executives.”
Peter hopes to pursue a career in events after completing his degree at QMU.
Peter has already started blogging about his internship experience with GlaxoSmithKline on the Saltire Foundation website. You can follow Peter’s journey here: http://saltirefoundation.thegither.com/#/blog/peter.jacob
- GDP growth in Q2 2014 was 0.8%, the same increase as in Q1
- The level of GDP in Q2 2014 was 0.2% higher than its previous peak in Q1 2008
- Year-on-year increase in Q2 2014 was 3.1%, marginally higher than in Q1
- The service sector led the recovery with quarterly growth of 1.0%
- Manufacturing output rose by 0.2% in Q2 2014, while construction recorded a fall of 0.5%
Commenting on the preliminary GDP estimate for Q2 2014, published today by the ONS, John Longworth, Director General of the British Chambers of Commerce (BCC) said:
“The fact that Britain’s economy is now bigger than it was in 2008 is great news, and will provide a shot in the arm for businesses and consumers alike.
“Yet even though we’re one of the fastest-growing developed economies, there’s no room for complacency. Without sustained action, these growth figures could be ‘as good as it gets’ for the UK. The government and the Bank of England must pull out all the stops to encourage business investment, help exporters and get finance flowing to growing firms who still aren’t seen as a safe bet by the banks.
“Above all, interest rates need to stay low for as long as possible, and rise slowly and predictably when they do go up – to avoid undermining the solid business confidence that’s driving the growth we’re seeing in businesses across Britain.”
David Kern, Chief Economist at the BCC, added:
“The 0.8% quarterly increase in GDP confirms that the UK economy is continuing to expand at an encouraging pace. The service sector remains the main driver of the recovery and the economy is still heavily reliant on consumer spending. While it is welcome news that we have surpassed the pre-recession GDP peak of Q1 2008, this has occurred much later than in some of our major competitors, such as the US and Germany.
It is important that we work to increase the contribution of exports and investment if this recovery is to become truly sustainable. In order to support the businesses driving the recovery the MPC must provide assurances that interest rates will not be raised until there is a clear case to do so.”
Commenting on the news that Scottish manufactured exports rose by 3% in the first quarter of 2014, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“The news that Scotland’s manufactured exports have returned to growth is to be welcomed and reflects the feedback we have been receiving from our members throughout the year so far. Indeed our Quarterly Business Survey has also detected an increase in service sector exports in 2014.
“This is great news for Scotland’s economy, particularly against a background where many of our international markets are still experiencing economic issues of their own. This growth needs to be supported and sustained. Scottish Government figures show that our total exports, including goods and services, grew by only 5% in real terms between 2006 and 2012 and we have lower exports per head of population than the UK average.
“More needs to be done to realise the export potential that Scotland possesses. Chambers of Commerce are already actively engaged in facilitating trade with over 100 countries but with the right support we can do more. The world has come to Scotland with the Commonwealth Games and we must take the opportunity to export more Scottish goods and services across the globe.”
Scottish Chambers of Commerce’s Quarterly Business Survey engages with 6 of Scotland’s key sectors: Construction, Financial & Business Services, Manufacturing, Retail, Tourism, and Wholesale.
These findings, released in conjunction with the University of Strathclyde’s Fraser of Allander Institute show the position of businesses for Quarter 2 of 2014.
Liz Cameron, Chief Executive of Scottish Chambers of Commerce said:
“These results show that business is focused on what we do best; doing business and achieving results. Majority of sectors are experiencing continued growth with key indicators maintained from the last quarter, showing that business is on the right track.
“Construction and manufacturing reported better than expected results, exceeding the expectations from last quarter. Confidence in manufacturing and construction is near record high, signalling a move towards solid growth prospects, indicated by increased orders. The construction industry hired more people, enabled by better than forecast orders which are expected to continue into the next quarter. The manufacturing industry reported an increase in export orders and investment with investment at its highest level since 2007.
“Employment is a key measurement of business mood and our findings show that with increased growth and confidence, businesses are now moving away from employing temporary staff towards new permanent full time positions. This is good news for everyone providing employees and business with a level of stability.
“Skills shortages existent in the workforce are making it difficult for business to source and employ the skilled staff required to maintain this growth. Our continued failure to address these issues will block the ability of business to continue on this path. The positive results from business should act as motivation for swift action. Colleges, universities, Government, with business at the core and in the driving seat, need to develop and implement a realistic plan to plug these gaps urgently.”
Edinburgh’s five-star whisky visitor attraction, The Scotch Whisky Experience, has been shortlisted in the Best UK Leisure Attraction category of the 2014 British Travel Awards (BTA).
The attraction was the only Scottish venue to make it onto the shortlist, alongside the Eden Project in Cornwall, LEGOLAND Windsor and Titanic Belfast.
The awards are the largest consumer voted awards programme in the UK, with over one million votes cast last year across 10 different awards categories. Voting is open until 30 September, with the winner unveiled at an awards ceremony on 26 November.
Susan Morrison, director and general manager of The Scotch Whisky Experience, said: “We are thrilled to be the only Scottish nominee in the British Travel Awards Best UK Leisure Attraction category. Being nominated alongside some of the UK’s best known attractions is a great honour and proves the strength of the tourism sector in Scotland.
“We are up against some iconic competition, but we’re confident of strong support from our wonderful visitors. Hopefully, this November, we might be raising a dram in celebration!”
Located at the top of the Royal Mile, The Scotch Whisky Experience has been educating visitors about Scotland’s national drink for over a quarter of a century. Seen as the flag-bearer for whisky tourism in Scotland, the attraction had its busiest ever year in 2013, with over 300,000 people passing through its doors.
To vote for The Scotch Whisky Experience in the Best UK Leisure Attraction Award at the 2014 British Travel Awards, visit www.britishtravelawards.com
– Survey Reveals Need for Scottish Businesses to Invest in Workforce of Tomorrow-
New research into the current state of youth unemployment in Scotland has revealed a desperate need for Scottish businesses to support young people into work.
Findings from The Skills Pulse Survey, developed by Scottish Council for Development and Industry (SCDI) and Skills Development Scotland (SDS), show that 85 per cent of businesses believe they should offer more work experience opportunities to young people in order to develop the right skill set for future employment.
Currently 53,000 young Scots (aged 16-24) are not in employment or training, yet only 8 per cent of employers feel they are doing enough to engage with the education and training system to help prepare the future workforce. At the same time, less than a third (27 per cent) of employers currently offer work experience.
Over half (56 per cent) of those questioned called for apprentices to receive more advanced training in skills that are more relevant to business growth such as science, technology, engineering and maths.
Publication of the Skills Pulse Survey follows the launch of a new initiative from Investors in People Scotland, called Investors in Young People (IIYP). Supported by the Scottish Government, IIYP offers an accreditation scheme encouraging employers to work with and invest in young workers.
IIYP will assist organisations in implementing a nationally recognised framework helping them to engage and develop a talent pipeline for the future. Working across the private, public and third sector, the framework provides advice, recommendations and best practice regarding the recruitment, employment and training of young workers.
Peter Russian, chief executive at Investors in People Scotland, said: “The results of this important survey highlight the requirement for Scottish businesses to be given the confidence and support to employ and invest in younger members of staff.
“Giving people the opportunities to succeed is at the heart of our operations and we recognise the challenges faced by businesses in recruiting the right people. With IIYP we aim to help Scottish businesses recruit and develop young people, to ensure we build a dynamic and productive workforce across the country.”
Ross Martin, chief executive at SCDI, said: “The Scottish workforce needs young people, for new ideas, for creativity, for future-proofing successful business strategies. This survey shows how far we have to go in terms of engagement, starting with a recognition that relationships with young people are key in a society that has often demonised them, decried their abilities or simply dismissed their input. I’d encourage all employers to consider benefitting from work placements, modern apprenticeships or graduate interns, as we ourselves do; giving young people that crucial first step on their road to being productively economically active.”
For further information about IIYP, please call 0131 625 0155 or visit www.investorsinpeople.co.uk/investors-young-people
To view the Skills Pulse Survey, please visit http://www.ourskillsforce.co.uk/media/514966/scdi_summer_2014.pdf
We’re back with another bumper-length show for a fantastic cause! Hosted by Jo Caulfield, this comedy extravaganza gives you a chance to preview a selection of this year’s top Fringe shows from the likes of Susan Calman, Fred MacAulay, Patrick Monahan and many more. Having raised over £10k for Barnardo’s work in the last two years, there is no easier way to support a cause than to sit back and laugh at our fantastic line up.
This is an ideal festival night out for a group of colleagues or friends so get everyone together and get your tickets from:
https://tickets.edfringe.com/whats-on/barnardo-s-big-comedy-benefit
For an updated line up and clips of our comedians, check out our facebook page:
https://www.facebook.com/events/447090342090477/
More than £100 million has been cut from the water bills of business and public sector organisations by Business Stream in Scotland since retail competition was introduced in the country in April 2008.
A combination of water efficiency measures (£43m) and price discounts (£51.7m) have been the primary sources of savings.
Scotland’s public sector is on track to save more than £36m as a result of a four-year deal with Business Stream, which is the largest supplier of non-household water and waste water services in Scotland.
Competition was introduced to Scotland in April 2008, creating the first market of its kind in the world. Business Stream was established as the incumbent provider with several other competitors coming to the market in the last six years.
England’s non-household market is targeted to open to competition in 2017, after the Water Act passed into law in May of this year.
Mark Powles, chief executive of Business Stream, said: “Competition has been the driving force behind these savings. We responded to this challenge by listening to our customers and working with them to reduce their costs and improve their environmental impact.
“We’re proud of what we’ve been able to achieve in partnership with our customers, who have been very keen to see where they can benefit not just financially but make their organisations more efficient.
“Before the non-domestic water market in Scotland was opened, energy efficiency was a well-established concept but water was very much the forgotten utility. A lot of our customers are now very sophisticated in their approach to water management, and treat water as an important business asset. That’s a significant achievement and together with the savings and efficiencies achieved demonstrate the success of the competitive market in Scotland.”
The financial savings achieved also represent 20 billion litres of water which have been removed from use across Scottish organisations, equating to 34,000 tonnes of carbon.
In addition, customer satisfaction has increased due to the introduction of more than 60 innovative new services, a greater focus on customer service and keener pricing.
Nearly three-quarter of customers are now getting a better deal through a competitive market than if competition hadn’t been introduced.
Water efficiency measures range from those suitable for small customers with light water use, such as tap aerators and water saving devices in toilet cisterns; to larger-scale interventions like boreholes, water recycling facilities and underground network mapping to identify leaks.
Technology has also played a key role in the savings, with automated water readers able to spot spikes in water consumption and alerting customers to leaks.
In waste water, Business Stream has invested in a range of plant hire equipment to help customers with significant trade effluent or waste water requirements. These can be hired for short- or long-term projects, and Business Stream can also design, build and operate tailored waste water treatment works on customer sites.
Mark Powles added: “Competition has made water a much more mainstream business issue, which has had clear financial and operational benefits for many customers. The money customers save on water bills can be reinvested, making it a very sustainable way to reduce cost.
“The achievements in Scotland have been watched closely by policymakers in England, influencing the introduction of legislation which will provide the same opportunities for businesses and public sector organisations south of the border. That’s a very exciting development and we’re actively contributing to the development of the competitive market in England to help create an approach which follows the best of the Scottish model by placing the interests of customers at the heart of the market.”
Denise Strohsahl, owner of marketing consultancy sandstonecastles, is absolutely delighted to announce that her client, Edinburgh-based tour operator Wind & Cloud Travel Ltd, have won a Green Apple Environment Award and have been shortlisted for the prestigious Goldstar Award 2014 from the Green Tourism Business Scheme (GTBS).
Commenting on this news Denise said: “Awards are a great way to raise a company’s profile and attract more customers, hence the decision to start an extensive award campaign for the green tour operator. I’m thrilled to see that our efforts resulted in such a great outcome.”
Wind & Cloud Travel offers German speaking visitors to Scotland an alternative to mass market tourism. Their goal is to promote sustainable tourism by keeping the impact on the environment as low as possible as well as supporting local businesses and communities in the Highlands and Islands.
Both awards focus on rewarding sustainable business practices like theirs: GTBS is the world’s leading sustainable tourism accreditation programme and the Green Apple Awards are one of the major environmental recognition schemes, both in the UK and internationally.
The green tour operator brought Denise on board to help them improve their existing marketing and consult on new ways to grow the business. Managing Director Katja Wündrich comments: “We are still a bit overwhelmed by the response but it is great to receive recognition and acknowledgement for our very own brand of green tourism.”
sandstonecastles would like to extend their congratulations to all the finalists and winners.
For more information on both businesses visit www.sandstonecastles.co.uk or www.schottland-reise.com (German).
