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Reflect & Prepare


15
DEC

Reflect and Prepare

The week of central banks and Brexit, the central banks are not able to give us any new information at the moment. The ECB, BoE and the Fed all keep plans and stances the same, with the main issue still wage inflation. The Fed hiked their main rate by 25bps to 1.25% and projected 3 rate hikes next year at a 'slow and gradual pace' as long as the data remains positive. To me it seems all of the central banks are normalising to have some ammunition left in the tank if there is another recession. The ECB stated they will keep rates at the present levels for an extended period of time after the end of the asset purchase facility in Sept. Mr Draghi was more upbeat about the 2% inflation target saying he can see some light at the end of the tunnel now.

 

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Blog Calendar

8
DEC

Reflect & Prepare

So there you have it, a deal has been made! With all the drama of a christmas Eastenders special UK PM may has delivered a suitable deal for Ireland and the Brexit talks can move on the the next phase. There were some embarrassing moments, most notable not showing the DUP the deal before taking it to Brussels.



1
DEC

Reflect & Prepare

This week has had its events, more brexit drama, Trumps tax proposal moves on, OPEC extensions and data. First of all this week we had a surprise UK press announcement stating that an exit bill had been agreed! Looking further into the article,  it had been stated that it was agreed for a week.



24
NOV

Reflect & Prepare

An interesting week with some busy days (UK Budget) and some very quiet ones. Let go straight into the budget the main point was the drop in stamp duty you would think this would have a positive impact on the homebuilders. The chancellor also put pressure on the developers who land bank which led the likes of Barratt Developments to fall. So all in all a massive saving for those first time buyers who want to buy under the 300k threshold. 



17
NOV

Reflect & Prepare

Brexit talks have dominated this week, UK PM May has been in the press with some strong suggestions that the UK are willing to move on the divorce bill (reports of £20bln). Interesting, as the previous rhetoric has been stern, today the Brexit minister Davis signaled that the Govt. may well budge on date amendment. There are clear signs that the UK are struggling with the whole process.



10
NOV

Reflect and Prepare

The start of the week was quiet following the previous week’s excitement. Two things to really talk about one, is the Brexit talks and the other is the Trump tour of Asia. The Brexit talks are moving painfully slow at the moment, it makes me wonder how long things can go on for at this pace before massive amounts of pressure are piled on by business leaders. Theresa May has had her problems this week and replacing Patel with someone who is pro Brexit or sensible looks like it could be a problem. Managing a cabinet that can get this deal moving might be an impossible task. There had been reports this week that the PM may be willing to up the divorce bill and this was met with support from the EU but all we seem to hear about is the complications of dwindling down of freedom of movement. Data in the UK has been surprisingly encouraging with manufacturing and industrial results out this morning, both came in above expectations and the only one of concern was construction output which fell 1.6% month on month.



3
NOV

Reflect & Prepare

Probably the biggest Bank of England meeting in months and it didn't disappoint. The central bank hiked rates by 0.25bps and the FX market took the news in a negative light a sold off. The issues surround the UK economy will not go away, wage inflation and growth still seem to be the biggest concern along with Brexit. Carney and Co. said they think inflation has not yet peaked and also signalled that this is not the only rate hike to come but it seems that the weak sterling is here to stay.



27
OCT

Reflect and Prepare

This week has been interesting, but the main event for financial markets was the ECB meeting yesterday. Mario Draghi extended QE to September 2019 reducing the purchases to €30bln. The tone of the language was also interesting, with the ECB president saying the program can be extended and expanded if necessary. This sent the EUR falling against most major pairs breaking strong trend lines and key levels. This will be seen as a win for the ECB as the strong EUR has been a hurdle to the main goal of the inflation target. My main issue with the scheme is bond scarcity, yields have been suppressed for some time now by monetary policy and this is a clear signal that the ECB won’t let markets decide true value. The western world calls their markets the 'free markets' but are they really? What would investors be getting for government and corporate bonds if QE was not extended and brought to a close?









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