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Its Not Harry

Comment and opinion for retail investors in the UK

Economics

A cunning plan!?

26th September 2022 by Mark Potter Leave a Comment

I had been writing about the collapse of bond prices and I will continue to expand my series of posts explaining how to research this market as it becomes cheaper and, as I had I thought , hopefully ‘normalises’.

However, I like everyone else (except perhaps the scribblers at the Daily Mail?) have been truly astonished by the ‘not a budget but still called a mini-budget by everyone’ announced by Mr Kwarting.

There had, in the run up, been suggestions by fixed income market dealers that the expected cost of energy price subsidies would strain the gilt market if the associated levels of extra government borrowing were added to the flow of stock into the market from quantative ‘tightening’. But even those pessimists will have been taken aback by the potential impact of what was announced.

Not being rich, NotHarry is rather upset by recent government announcements

But is it just a cunning plan? Maybe the Chancellor knew that Sterling would bomb (he ought to have done) and thinks that will make British Government debt so cheap that overseas (and maybe a few home) investors will buy it up by the truckload? It might well work, if discounts get big enough to make interest payment in feeble Pounds come at a high enough yield to beat those in strong Dollars.

Personally, I think he and his colleagues are backing the theories of a small number of discredited (some 40 years back) academics who have never worked outside of a university. That is a huge gamble.

Now is, disappointingly, not the time to be buying Sterling assets unless you are very brave. They could end up even cheaper. Is it not odd the the UK government has made it that way? Expect some takeover announcements before long as the private equity vultures go scavenging.

Filed Under: Economics, Politics, Rants

Watching Brief – April 2022

4th April 2022 by Mark Potter Leave a Comment

Pottering About

I note that in previous years I have adopted a ‘first quarter end’ review approach in writing April briefings.  That still makes sense to me – we are now far enough into the year to get a feel for what will make 2022 different in economic terms and we can get an idea of what central banks are likely to do to try and manage economic growth and avoid a recession.

How good was my crystal ball?

I did some crystal ball gazing in January and identified a number of risks. Of the potential negatives, inflation and increasing geo-political tensions have turned out to be the two most significant headwinds, although increased US regulation is now coming through and we have not seen the back of Covid19 yet, especially in the Asia Pacific region.

One factor that I touted as a momentum positive, ESG investing, looks like being a little less of a useful guide short term than I predicted.  As the war in Ukraine and the associated sanctions on Russian energy have pushed the oil price up, so have the price of energy company shares, which will not fit in the portfolios of investors whose ESG filters are focused on sustainable energy and fossil fuel free energy production. This is a subject I address in the second part of this blog.

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Filed Under: Economics, Markets, Members Only, Monthly commentary, Portfolios, Sustainability/ESG

Midweek Musings – to buy or not to buy, that is the question

15th March 2022 by Mark Potter Leave a Comment

With the truly horrific Putin’s war continuing to destroy Ukraine and kill hundreds of civilians, soldiers on both sides and sending Russia’s world status back to the Stalin era, it is difficult to think objectively about matters of as little consequence as the value of electronic vouchers for money.

But obviously, we must.

More of this?

The general state of global equity markets this week could be described as ‘stabilised’. Markets particpants in both the equity and fixed income markets are now able to make some judgements about the likely impact that Putin’s war will have on world order, although any such assessments will be assuming the war does not escalate outside Ukraine, either to NATO member counries like the Baltic states and Poland, or to other former Soviet Union outposts like Serbia and Moldova.

My personal asssessment of the economic consequences are that the reduction of food, energy and other primary goods coming to the market, plus the potential shock of a major Covid 19 outbreak in China (which will reduce suplies of manufactured goods) will together make the problem that triggered the end of the long bull market in November 2021, that being a fear of runaway inflation, that much worse.

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Filed Under: Economics, Education, Markets, Monthly commentary, Portfolios, Trading, Uncategorised

Energy prices skyrocket 🔜 inflation 🔜 recession?

9th March 2022 by Mark Potter Leave a Comment

The headline may represent the main fear being expressed by investors at the moment. Of course, I know that uncertainty about the future, as opposed to specific fears will always be a heavy weight on global stock markets.

It is obvious that as long as the war in Ukraine goes on getting worse and the risk of interaction between Russia and NATO forces is on the table, stock markets are going to keep trending down. I note with some nervousness that some Russian public figures (including incredibly the leader of the Russian Orthodox Church) are rabble rousing for an invasion of the Baltic states and basically anywhere that was once in the USSR. Serious commentators are going into print suggesting that nuclear war is really quite possible.

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Filed Under: Economics, Markets, Members Only, Monthly commentary, Politics

Watching Brief – December 2021

3rd December 2021 by Mark Potter Leave a Comment

Pottering About

I often cross check what I have written in the past about economics and markets, partly to see how my looking into the future has inevitably been exposed as frequently ‘off beam’ (this tends to keep my current writing away from the wildest of speculations!) but more to assess what surprises or new trends have emerged and the more common reality: over many periods how little changes in 12 months.

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Filed Under: Economics, Markets, Members Only, Monthly commentary, Politics, Portfolios, Sustainability/ESG

Midweek Musings – labour votes Conservative?

13th October 2021 by Mark Potter Leave a Comment

A whole range of news coverage leads one to the inevitable conclusion that we are at a potential inflection point in the long term relationship between what economists call ‘the factors of production’. These factors are usually stated as being land, capital and labour, with enterprise touted as a potential extra when I was at college – possibly because top managers did not like being classified as labour!

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Filed Under: Economics, Members Only, Monthly commentary, Politics

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