The stock market is closed today after a 4 day week that saw a lot of nervousness. Geopolitical risks seemed to be heightened by tensions between the EU and the UK and the US under the leadership of Donald Trump seems to lack direction. The Federal Reserve plans to increase interest rates, Trump wants them to stay low. The United States needs its own people to save and invest. They can’t rely on more inward investment from China and so a more regulated and less risky financial system coupled with higher interest rates would seem to make sense. Meanwhile, we small investors need to avoid putting all our eggs into one basket by diversifying.
By a strange coincidence, my car insurance is due today and the premium has gone up 20%. This seems the norm this year across the industry. I have my insurance with the AA who have been upgraded by brokers Morgan Stanley this morning to ‘overweight’. The share price has shot up by 4.85% in early trading. Every cloud has a silver lining…
The economy is still recovering from the Brexit vote, but the pound is still down. There is still a glut of oil worldwide and so we can expect rising food prices just like in 2008 but at least this time petrol prices shouldn’t go up too much. It’s not only imported food that could rise in price but home produced food too as farmers face rising costs. The rising prices could be offset by the supermarket price war, but they won’t be cutting prices across the board.
After the stock market was trashed last Friday we had the aftershocks that saw banks and house builders losing up to 30% of their market capitalisation. Then, the dead cat bounced, the market recovered a little this week. So why did it crash so spectacularly on Friday and what can we learn from it? We have to understand the role of market makers in all this. We need to understand the Brexit aftershocks.
It is Sunday morning and the sun is shining here in the Black Country despite everything. So I will start the day by sharing my thoughts with my readers because the news was a little revolting. I’ll start with a nice picture to cheer you all up.
This is the town I grew up in, with its filth, smoke and rampant disease. Do I miss the days of the British Empire and National Service? If the photographer had turned left a bit when he took this picture, he would have got the Chest Clinic in, where we had x-rays done on antiquated equipment. Good old days? I don’t think so. (more…)
The EU referendum debate rumbles on and the stock market suffers and so do the balance sheets of investment funds and pension funds. Record low-interest rates have also been hitting pension funds. With half of Britain’s savings wrapped up in these funds and many of them facing bankruptcy we should be worried. Most people don’t seem to worry, nationalism has taken over their brains. It is the people with real money at stake that are suffering Brexit phobia. (more…)
All investors need a crystal ball right now. Will Britain leave the EU? Will interest rates change? Will the oil price go up or down? Will Trump be the next president of the United States? Will things get even worse in the Middle East? Will the global economy go back into recession? (more…)