The latest buzz word to join those most-hated headline grabbing words that editors love is post-truth. We are now in an era of appeals to our emotions as the evidence is swept away by a tide of nationalism. We have had two world wars driven by nationalism. Do we really want another?
It seems likely that in the new year prices of essentials like gas and electricity will increase as well as imported food. The US dollar is the international reserve currency and is used for international trade. The pound has been devalued against the dollar. Last November the pound bought $1.60, now it buys just $1.24. While food manufacturers try to absorb the extra cost, energy providers will eventually pass the cost on to us the consumers. Higher interest rates and a depreciating currency will drive inflation.
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.
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…
Investors are the experts when it comes to predicting the future but can still be taken by surprise by political events. Brexit wasn’t exactly a surprise but many investors hoped the remain side would win. We now have the triggering of article 50 to look forward to which could trash the markets yet again.
Yesterday the Bank of England announced a QE boost with another 60 billion of quantitative easing and a cut in the base rate to 0.5%. There will be no prizes for guessing who will benefit from this boost. The stock market surged by 1.5% yesterday and the trend continues today. The base rate cut will see mortgages cheaper and so stoke the London housing bubble a little more while there is stifling of the supply side.
The all share index on the London stock market is down nearly 4% this week, which is a lot for small private investors. There are some bargains to be had but falling markets have had a devastating effect on the value of portfolios in recent months. We have to think long term and consider buying. (more…)
The Federal reserve increased interest rates this week. So is this the first sign of a genuine global economic recovery? With a low oil price driving a recovery and stabilising inflation we could now have a chance for growth. (more…)
Today is Black Friday and people are fighting to get goods in major supermarkets. It seems it’s been chaos in Asda and Tesco as people go after 40 inch televisions. (more…)
It’s hard to predict the future, but if we are to survive in these austere times we have to try to prepare for even tougher times. It seems George Osborne plans even more cuts and austerity if the Conservatives win the next general election. (more…)
There’s a lot of speculation in the financial press about when or if interest rates will rise. The Bank of England issued ‘forward guidance’ that suggested that rates might be increased when the figure for unemployment is down to 7% and it’s close to that now. These figures are ‘seasonally adjusted, so spring could change that figure and the forward guidance is just that; guidance, not a certainty.
We all have expectations, but things don’t always go to plan. We can lose our jobs, have investments fail, have disasters on holiday or have a unexpected expense that leads to spiralling debt. Can we and should we prepare for the worst? Have you put some money away for a rainy day or is it raining already?
If you burn paper money, do you destroy it? The answer is technically, no. The value of money is all about supply and demand and so if you burn a 50 pounds note, a 50 dollar note or a 50 Euro note; you are decreasing demand and making all the rest of the money in circulation more valuable. You may be destroying one note, but you aren’t destroying overall value! The Bank of England is currently doing the opposite, creating rather than destroying money but in doing so they are increasing demand and so making the money already in circulation less valuable. (more…)