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Interest rates and the markets #investments

Interest rates

I’m watching interest rates around the world. It seems the Federal Reserve will be the first to normalise interest rates. It could be as early as next month but many pundits are betting on December. That could be the trigger for other central banks to raise their rates too. It would certainly have an effect on the value of the US dollar as more money would be invested in the US as international investors look for better returns on their funds. That, in turn, would have a negative effect on other currencies including the GBP.

interest rates

Premier Foods

The share price of Premier Foods suddenly dropped by more than 10% this week when they announced a slight drop sales due to the mild autumn reducing demand for products used to make hot meals. People were making less gravy! There was an element of panic in that drop. Who was panicking? Computers or humans? It seems our move to using artificial intelligent is already showing it has vulnerabilities. Premier Foods dropped way too low and the share price is still lower than the price Nissin paid this year for its share of the company. It is also lower than the bid price for Premier Foods early this year. More importantly, the directors of Premier Foods paid an average of 81p for their shares which makes today’s price of 48.25 a snip. I’ve owned PFD for 5 years now, through all the ups and downs and expect the price to soar when the economic and political problems are settled.

Oil

The oil price is recovering a little as production is likely to be cut. I still have high hopes for Solo Oil but in the meantime, I’m making quite a good return on my recent purchase of RDSB and they pay a dividend too!

Supermarkets

Tesco was down this week because of the Marmite fiasco and Poundland cashed in by advertising they had the products in question in stock! I think Tesco has made some changes and the lower value of the pound benefits them. Aldi and Lidl are less of a threat too, now. I see a lot of upside for Tesco’s share price.

The housing market

The housing market has stalled a little but we still have a housing shortage. Demand has dropped because of austerity but I expect it to recover quickly and house builders like Taylor Wimpey will recover too. At 146 Taylor Wimpey is way off its high of 200. I’m also looking at the big construction firms especially those involved with big projects like HS2.

Pharmaceuticals

GlaxoSmithKline continues to do well for me on the back of a falling pound. I think the pound has probably fallen as low as it is going to go. GSK does pay great dividends so I might stick with it for a while. Verona Pharma is very promising and my small holding continues to make a small paper profit. I have high hopes for that one long-term as well as Immupharma that is developing an important drug for lupus. I suffer from lupus so I hope that succeeds.

Insurance

RSA insurance came good for me in the end. Is it time to sell? Insurance premiums are up this year and RSA does pay a dividend. There does seem to be intense competition to attract new customers in the insurance market. While existing customers are getting clobbered with 20% increases, those switching their policies to different companies are finding absolute bargains. Yes, I shall switch my motor insurance and home insurance next year and maybe breakdown cover too. I shall watch the insurance market  with interest, both as a customer and as an investor. Higher interest rates could be good for insurance and for the banking sector.

I’m still getting around 4% with Zopa which looks like a good return when the stock market is so volatile, it adds to my diverse portfolio anyway. It’s worth having a few quid invested in gold too, which appreciated on the back of the Brexit vote.

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