Make like a bank in the search for yield….

Tuesday 11th October 2016

In this issue of Money Truths….

  • A quick spin through the big picture….
  • A new game for yield-seekers….
  • Make like a bank and put your capital to work….
  • Be aware – rewards come with attendant risks….

A quick spin through the big picture….

Ex-chancellor George Osborne admits that low interest rates have served to help the rich get richer whilst damaging the interests of savers.

Thanks for confirming what we already knew, George. Thanks for bringing us yesterday’s news tomorrow….

Meanwhile, Back of England Governor Mark Carney has come out and said that there is little more monetary policy can do to help Britain’s long-term prospects.

He’s effectively batting the ball back to government and inviting them to rethink fiscal policy – tinker with tax rates, borrow and spend or both….

Sterling plummeted to a 32-year low against the dollar. Britain’s economy didn’t immediately evaporate following the vote for Brexit. But markets know that the dis-engagement process hasn’t even begun and that the road out will be long, complex and troublesome. Uncertainty rules – and the current weakness of the pound reflects it….

There is potential trouble elsewhere too. Italian banks are carrying too much bad debt.… Click here to read more

A new world….

Tuesday 4th October 2016

In this issue of Money Truths….

  • A new world….
  • The winners….
  • The losers….
  • The challenge ahead….

A new world….

I’ve been banging on about low interest rates – and closely-related issues – for the last few weeks….

I expect you’ve noticed. You probably think I’m a bit of a pointy-head – one of those pipe-smoking pseudo-intellectual types who likes to while away the hours thinking deeply on big floaty ideas and themes….

But I can assure you I’m not. My wife will confirm as much. I can often get quickly out of my depth helping the children with their homework assignments.

But sometimes these big ideas have to be grappled with.

Big ideas like ‘the economy’, that seem only to exist somewhere far removed from reality or in the editorial columns of big newspapers, have this funny habit of filtering down the food chain and making a big impact on the life and prospects of the man in the street.

Interest rates are at an all-time low. The price of money has never been cheaper. And the point I really want to make – and have probably not been clear enough about – is this: low interest rates are here to stay deep into the foreseeable future.Click here to read more

Words, actions & meaning….

Tuesday 27th September 2016

In this issue of Money Truths….

  • Janet Yellen has a bad habit….
  • Mark Carney is afflicted with it too….
  • Words divorced from meaning….
  • What exactly is being managed here?

Janet Yellen has a bad habit….

It’s a funny thing but in the world of money there is frequently a clear disconnect between words put out into the public domain and the attendant actions that follow them….

Take the words of Janet Yellen, for instance. The Chair of the Board of Governors of the Federal Reserve System in America – their equivalent of the Bank of England – has been saying all year that the market can expect an interest rate hike.

The words have seemed reasonable enough. After all, back in December last year she raised interest rates for the first time in 8 years. She appeared to have set the ball rolling.

But the Federal Reserve has not actually raised rates at all during the whole of 2016.

It’s as though Yellen is suffering from a case of the yips. She knows what part of the board she wants to aim at, but doesn’t seem able to let go of the dart….

In May a poor jobs report stayed Yellen’s hand….… Click here to read more