The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
This morning had quite an interesting segment on the current situation following the Bank of England's announcement last night about gilts and pension funds. The guest on the programme explained that pension funds are having to sell equities even at depressed prices because they have to "balance their books" by a given time. From what I understood from the segment was that pension funds have used leverage to buy assets - probably equities amongst other things - and whereas up until the mini budget the other week everything was hunky dory, with the increase in the gilt yields, pension funds have become over exposed and as gilt yields aren't/haven't been coming down pension funds have had to sell assets at depressed prices to conform/balance their books - they could have probably waited (like the rest of us) for a recovery in the markets before selling so that may be the reason we are seeing so much downward pressure everywhere.
On this morning of doom and gloom (again) I thought I'd mention a couple of headlines I noticed on the weekend - the first was on Bloomberg news and it said something like retailers should expect to have a "revenge" Xmas - can't access the full article as I don't subscribe, but the start of the article was saying something like now that the energy crisis has been averted, people are going to go all out to enjoy a good Xmas because of the "miserable" past few years. Another headline I saw was on CNBC and it stated that shipping costs have reduced dramatically so retailers should see the benefits of that shortly.
In addition, on twitter (I know everything on twitter should be believed - not) but a graph has been posted with the comments that since 1932, major market bottoms have occurred in October which is more than any other month - October leads the way with 9, the next closest is March with 5 with the other months of the year ranging from between 1-3.
West - thanks for posting the link - I'm useless at doing things like that. I've only just got up which is very unusual for me as I like to research what news has landed before the markets open - when I saw that article last night I thought there was going to be an absolute blood bath here this morning so decided to stay in bed a bit longer but to be honest I am pleasantly surprised that the share price isn't down further than it is.
I'm not sure if you read what I was posting the other day with all the information about fund managers, gas prices, inflation, bear market end date- I was trying to "lift spirits" in a way and to say the end of the downtrend is near which I do believe it is. All this negativity/fearmongering in the press reminds me of when the Omicron variant of covid was first identified in this country - we went full on panic mode even though they were saying in South Africa where it was first recognised that it was nothing to worry about - just a mild form and that it would help to see the end of the pandemic which when you look back it has effectively downgraded to endemic.
The point I'm trying to make with the above is its always darkest before the dawn - August and September trading wise fell off a cliff because there was so much fear about what was going to happen with the energy costs - the fact that the Government took so long to sort it may have been a deliberate ploy on their part (destroying the economy at the same time) so that they could be seen riding in on their white horse rescuing the country by giving us all help and that we would be forever grateful and be more than happy to vote them back in at the next election - which I think has backfired tremendously.
The next couple of weeks may be a bit rocky, but if the inflation rate does drop significantly as some forecasters are saying, and the furore over interest rates also dies down then I think we are in for one hell of an Xmas rally.
Have just released an article about retail sales in September - not good unfortunately - 2nd worst month since shops reopened following covid and online sales didn't fare any better by the looks of things. The worst month was August I think they said and the comments are it was all down to the cost of living crisis.
I think we're just going to have to agree to disagree in respect of what goes on with Universal Credit as we're only going to go around in circles and perhaps you are right - maybe we need to spend time in identifying the underlying reasons for people being left behind and try and identify what can be done to encourage them to want to play a bigger part in society rather than "survive" on benefits.
My apologies - I was quoting from something else I read - I've just checked and its actually 33% of the budget that is spent on welfare which is a high figure - something like £192 billion I think I read, and yes, I am disappointed rather than angry at the number of single mums that are allowed to screw the welfare system when we all know they are not doing what they are to enrich their lives so your comments about them having a life of fulfilment and personal realisation is someone living on another planet.
Derek - I've only given one example of my experience of where they system (in my opinion) is wrong - I could go on about many other cases. I don't disagree with what you're saying about the plundering of the public purse - the high levels of fraud that went on with the furlough scheme and covid in general are evidence to that. I just don't think its right that people are better off by not having to work and when you consider that I think its something like 60% of the UK budget each year is taken up by Universal Credit then something is seriously wrong somewhere.
You are being rather blinkered with your opinion Derek - the individual I interviewed wasn't making a conscious decision to live on a lower income - they were better off by not working full time and were living very well and made a conscious decision not to work full time but to "take advantage of the system" and screw the tax payer out of £1200 per month but it seems to me that you are just fixed in your view/opinion so its not really worth me wasting my time even trying to debate it with someone so blind.
Sorry, I've just read some of the posts here and thought I would stir the pot a bit - only because I get really annoyed about how many people just abuse/take advantage of hand outs.
I'm not saying there's not some genuine cases, but I thought I'd mention one particular experience that I found absolutely shocking - I used to be a Financial Advisor with a High Street Bank and used to undertake "fact finds" with some staff as part of a training programme to help them to understand what a "customer experience" was like. I undertook a fact find with a part time cashier who was married with 2 children and was absolutely gobsmacked when she told me that her and her husband only worked part time as it wasn't in their interest to work full time as they used to get £1200 a month in Universal Credit (and I'm going back a few years here) so where is the incentive/motivation for them to work? I also get frustrated with the single mothers (as mentioned on a previous post) where they know how to claim for everything.
It's high time that the benefit system was dramatically overhauled and if people can't find jobs/refuse to work then they should have to do charity/voluntary work or maybe all these single mothers should be made to be child minders for other single mothers so that they can go out to work.
Pokerchips - the weekly jobless figures are out in the States at 1.30 today - so its going to be a question of whether bad news is going to be good which is apparently part of the reason the markets rallied earlier in the week. CPI figures are as you say out on 13 October but you are quite right in what you say that this is all a game and trying to understand the tactics is mind boggling to say the least.
I don't think they will be going up again - they've been at the mercy of the hedge funds while countries were trying to source supplies from other places away from Russia - now that countries are coming out confirming that they have enough supplies to last through the Winter to me that's why the hedge funds started selling off back in August because there's nothing in it for them to try and push prices up even further and that's the reason the prices have been coming back down.
Ubik - you may be right - it's only time will tell. What I would say is I think that we are nearer the end of the downtrend and once inflation figures come out - provided they are lower given the impact of the lower cost of gas and the energy cap - then I see that as the turnaround time. Until then we may well be at the mercy of the shorters.
Pokerchips - again I don't disagree with what you're saying about the hedge funds - after all, they are the ones that seem to be in control of everything.
I'm not naive enough to "believe everything I read or hear" - I was employed in various roles including senior management positions in financial services for over 30 years and actually started trading during the financial crisis so I do have some knowledge/experience and whilst I have said "tongue in cheek" about Bloomberg and their date for when the bear market will end, I do believe that the markets will start to look forward shortly.
Again, everyone has a view, and its only hindsight that will tell so let's wait and see.
I would add is that everything I am saying is based on the Russia/Ukraine war not deteriorating any further and for the N weapon threat to subside.
Anyway, thought this may also be of interest - an article published in the Telegraph yesterday about why the FTSE 100 hasn't as an index really gone anywhere for years (excluding divis) which was interesting. One paragraph stood out, which sums up the current trading situation.
"I've hardly bought or sold anything recently" one veteran fund manager told Questor last week. Everyone is waiting for the first sign that inflation, interest rates and bond yields are peaking which looks likely to be in the first or second quarter of next year. Markets could experience a surge upwards at that stage.
The fact that wholesale gas prices have fallen two thirds from their peak in August to my end will filter through massively in respect of inflation - does anyone else think that fund managers will be waiting until the start of next year before they start buying again or will they start positioning themselves shortly with all the bargains that are on offer at the moment?
Printed an article yesterday apparently explaining why the FTSE 100 hasn't as an index really gone anywhere for years (including divis) which was interesting. One paragraph stood out which went "I've hardly bought or sold anything recently" one veteran fund manager told Questor last week. Everyone is waiting for the first sign that inflation, interest rates and bond yields are peaking, which looks likely to be the first or second quarter of next year. Markets could experience a surge upwards at that stage.
Does anyone else think that fund managers won't be waiting until next year to position themselves when there's such bargains to be had?
There was a segment on GB News just now where a property analyst/expert was being interviewed about the current situation in respect of fixed rate mortgages - he was saying that the rates are already starting to come down, and in his view, with the energy rescue package filtering through, inflation should reduce by between 4-6% which will then reduce the need to keep increasing interest rates. Whilst it was acknowledged that it is likely that Base Rate will increase by 0.50% at the next rate setting committee meeting, the view is that after that rates are likely to start coming down again and "normality" will return - again, his view (which actually matches mine which I think I mentioned here) is that as a country we cannot afford for mortgage interest rates to be no more than 3-4% and the Government would do everything in their power to ensure that was the case as pandemonium in the property market would prevail.
I can't remember what news channel I was watching yesterday, but a lady that runs a wool/yarn shop was interviewed about her thoughts on Liz Truss' speech at the Tory conference - the interesting comment she made was that her business has already started to see a pick up in trade since the energy rescue package was announced - which I would expect to be reflected across the retail sector going forward. I understand that Tesco have said things have been brutal - but in all fairness they are talking about a period where there's been extreme fear about people's energy costs - everything has now changed as far as they are concerned.
I find it amazing that the good news yesterday of wholesale gas prices having fallen two thirds from their high in August was drowned out by the fear mongering of increasing mortgage/interest rates - to my mind, once all this fear mongering subsides and the interest rates stabilise (which probably won't get as much media attention) consumer confidence will start growing again which will have a knock on effect on all businesses.
Valueplay - I hear what you're saying about the "risks" with any retailer at the moment, and specifically Ocado, but for the reasons I mentioned above, I do think we are at peak fear at the minute and as Warren Buffett says "buy when others are fearful".
I know I'm going against a lot of other opinions with what I am saying but it's only as things play out will we be able to see how things transpire - I think its certainly going to be an interesting few months going forward.