This week saw the release of preliminary of GDP figures for the UK. We saw growth of 0.8% growth quarter on quarter, supported by an increase in demand for services, manufacturing and household consumption. Growth was behind expectations however, with the consensus forecast having been for 1%.

In potentially an early warning shot however that the increase in the cost of living was starting to bite, economic growth for March was marginally negative at -0.1%. With this reading coming before the removal of the energy cap, indications that the slowdown could deepen will be closely sought. Whilst the government is reportedly looking at ways to support the cost of living crisis, reports this morning suggest that the government are looking to reduce the number of civil servants back to the 2016 level to support this. That could lead to the potential loss of 90,000 civil service jobs.

This week has proven a difficult one for the tech sector as a whole and some of the darlings of the COVID era are darlings no more. In perhaps a classic reminder of Aesop’s fable the of the Tortoise and the Hare, Cathie Wood’s ARK Innovation ETF, which invests in the theme of disruptive innovation, has given back all its gains relative to the S&P 500.

Many of the stocks which saw their share price rocket during lockdown, such as Peloton, Zoom and Netflix have seen their value reduced substantially. Since their closing level on the 28 June, 06 July and 17 November their share prices are down -89.3%, -78.9% and -74.8% respectively.

Tech stocks more generally have had a rougher time of it, with data from Bloomberg showing that only around 16% of companies on the Nasdaq Composite index trading above their 200 day moving average. The Nasdaq is now approaching the scale of loss which we saw at the onset on COVID. At that point the US Federal Reserve was soon to intervene to support both the economy and asset markets. This time however, with further interest rate hikes on the horizon and quantitative tightening commencing, the introduction of a ‘Fed put’ to protect asset prices looks some distance away.

It's not just technology which has been troubled by the threat of liquidity withdrawal, but also cryptocurrencies. Bitcoin and Ethereum have seen their values plunge by almost 25% and over 30% since the 08 May. Those losses pale into insignificance however when compared to lesser known crypto, such as Luna, which is now essentially worthless. It’s not the only one!

As liquidity conditions tighten we will potentially get to see the true worth of some investments and asset class, although undoubtedly there will be some bargains to be had. But to quote Warren Buffet, “Only when the tide goes out do you discover who’s been swimming naked.”

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