The Finance Thread

[SillyBilly]

http://www.zoopla.co.uk/for-sale/details/37265338?tmad=c&tmcampid=35&utm_campaign=buy-alert&utm_content=contact-type-listing&utm_medium=email&utm_source=alert#lemO2dve25PD1mLs.97

I wonder if we are in a property bubble?

[Ramarena]

http://www.zoopla.co.uk/for-sale/details/37265338?tmad=c&tmcampid=35&utm_campaign=buy-alert&utm_content=contact-type-listing&utm_medium=email&utm_source=alert#lemO2dve25PD1mLs.97

I wonder if we are in a property bubble?

We certainly are in London, that part of Esher, near Claygate train station has always been expensive though.  I wonder how the Chinese crisis is going to affect that market? Will they withdraw from London to pay debts at home or invest more in London too "protect" their money?

Problem is that this is also a political hot potato, with governments happy to see a bubble give a boost GDP figures.  

[SillyBilly]

We certainly are in London, that part of Esher, near Claygate train station has always been expensive though.  I wonder how the Chinese crisis is going to affect that market? Will they withdraw from London to pay debts at home or invest more in London too "protect" their money?

Problem is that this is also a political hot potato, with governments happy to see a bubble give a boost GDP figures.  

Most people don't realise that house prices are most affected by the demand and supply of credit (some compelling research on this). House prices can't go up beyond the borrowing appetite of the people buying them! If they can borrow more (lured by low % IRs and help-to-buy) then house prices will obviously go up. Take away the crutch and they can't, its that simple. So, why do we never look at the credit (or debt) side of the equation? We have created a bubble through the abnormal conditions in the wider economy and government policy, it just so happens that most politicians and people can't look beyond the obvious issues of lack of building and high migration (contributory factors). A interest rate of 3-4% would wipe 20%+ of property prices in next to no time. We have a debt mountain built on low interest rates resting on our property market.

Factors to consider for prime property London:

- Malaysian Ringgit down 16% on the pound in 1 year. 16% more expensive for a significant % of London prime buyers.

- Russian Roubles down 40% on the pound in 1 year. 40% more expensive.

- Brent down around 53% in 1 year. Compound effect on Russians whose currency is weaker and oil derived income lower. Wealthy investors in Saudi Arabia, UAE and other petrol states face dramatically lower incomes and weaker currencies relative to a strengthening pound.

- China crash

Number of properties coming to market is spiking (typical of when people start trying to dump at the top) yet number being sold is markedly declining.You can monitor the posh London postcodes to see this play out (see link). I think the market is on a knife edge personally, just needs a catalyst by some big drops.

http://www.rightmove.co.uk/house-prices-in-my-area/marketTrendsTotalAvailableListingsAndNew.html?searchLocation=sw8

 

 

 

[SillyBilly]

http://www.tradingeconomics.com/united-kingdom/gdp-per-capita

One of my favourite graphs, proves we are NO better off from 2008 (some recovery) and that the problems have been hidden by MASSIVE immigration which have helped pull nominal GDP up. Of course, massive immigration tends to slow the recovery in per capita income as wages compress.

 

[SillyBilly]

Interesting film (based on a true story), supposedly had to have European funding to get the go-ahead. Mentioned previously in this thread but this guy was a heavyweight in the world of economics and a top adviser to governments and banks for many years, he was imprisoned for over a decade, serving 7 years of that for civil contempt. He has been scarily accurate in the past and has a bit of a cult following, he has called just about every major event ahead of time with the latest being the Swiss Euro peg (which took the rest of the market by surprise). Criminal or genius?

 

 

[GeneralRam]

I started investing in the FTSE June last July with a timeframe of 3 years. I can't wait to buy some cheap shares to be fair. I'm going to continue what I'm doing and plan weathering the storm.

However, I might move half my monthly investment into the EU stock markets too - in the hope they produce more QE.

[Cisse]

What does all this mean for the normal family?

Why do you ask? Do you perhaps know one?

[ketteringram]

I started investing in the FTSE June last July with a timeframe of 3 years. I can't wait to buy some cheap shares to be fair. I'm going to continue what I'm doing and plan weathering the storm.

However, I might move half my monthly investment into the EU stock markets too - in the hope they produce more QE.

Three years is a pretty short time frame for shares. Is there a reason for this? 

[GeneralRam]

Three years is a pretty short time frame for shares. Is there a reason for this? 

I thought generally it was 3-5 years for investing? Don't need the money necessarily so I can keep it in for a while. I definitely won't take them out at a loss anyway - just seeing it as an opportunity for cheap shares at the minute.

[SillyBilly]

I thought generally it was 3-5 years for investing? Don't need the money necessarily so I can keep it in for a while. I definitely won't take them out at a loss anyway - just seeing it as an opportunity for cheap shares at the minute.

Good luck with it chap, keep it in the market and you'll do fine but on a longer scale than 3-5 years. We could feasibly hit new highs in 1-2 years based on a couple of scenarios (not cheap stocks):

- Bond market collapse causing rush of money into equities (bond yields at record lows, central banks scaling back QE supposedly...so who will buy the bonds?). Personally, not so sure on this one but the likes of Armstrong and co. sit in this camp. This to be a temporary shot in the arm to be timed though.

- More QE, or pitiful interest rate hikes creating more of the same distorted markets

Either way though, the FTSE 100 will crash within the next 3 years back below 5000 (my view only) so I see more downside risk than upside (8000 to the upside maybe), I will load up by the bucket load at 5000.

[Ramarena]

Wonder what's going to happen on Monday and Tuesday. Chinese stock market not been open since Wed and US Bank holiday tomorrow, with everything else that's going on, wonder if the Chinese will fill their boots so to speak. Interesting times ahead if they do. 

[SillyBilly]

Wonder what's going to happen on Monday and Tuesday. Chinese stock market not been open since Wed and US Bank holiday tomorrow, with everything else that's going on, wonder if the Chinese will fill their boots so to speak. Interesting times ahead if they do. 

Nice bounce today. We're looking mid Sept for Fed's rate meeting then very end of Sept/end of Oct for American default/debt ceiling rise. 2 very turbulent news events. Expect to see quite a few ups and downs in between.

[SillyBilly]

http://charybd.com/zerohedge/2015/09/03/zWgBLF/suddenly-the-bank-of-japan-has-an-unexpected-problem-on-its-hands

So, over in Japan, their national debt hit over a quadrillion Yen this year and no plans to even balance a budget before 2021 (won't happen anyway). The Bank of Japan is buying ALL newly issued government debt now so by 2018 it will own over 50% of the government's debt!!! The supply can't actually meet their intended massive stimulus programme. Japan is truly f**ked, I hope to god we don't go down the more QE route. Their stock market is worth less than half of what it was in 1989 as a result of incessant QE, that is the takeaway lesson here - QE = short term high, long term crash. This is our only historic example to go off.

 

 

[SillyBilly]

http://www.bloomberg.com/news/articles/2015-09-09/citigroup-sees-55-risk-of-a-global-recession-made-in-china

Very unusual for a bank not to blow hot air like the rest of the media.

[Ramarena]

China entering a period of deflation? 

http://www.reuters.com/article/2015/09/10/us-china-economy-inflation-idUSKCN0RA05P201509

[Ramarena]

http://www.zoopla.co.uk/for-sale/details/37265338?tmad=c&tmcampid=35&utm_campaign=buy-alert&utm_content=contact-type-listing&utm_medium=email&utm_source=alert#lemO2dve25PD1mLs.97

I wonder if we are in a property bubble?

http://www.bloomberg.com/news/articles/2015-09-08/luxury-homes-unsold-after-a-year-seen-showing-south-london-glut

That bubble may already be started to deflate. 

[Ramarena]

China entering a period of deflation? 

http://www.reuters.com/article/2015/09/10/us-china-economy-inflation-idUSKCN0RA05P201509

That said, prices often decline overtime. I suppose it depends if these prices are falling because of lack of demand or not. 

[SillyBilly]

http://www.bloomberg.com/news/articles/2015-09-08/luxury-homes-unsold-after-a-year-seen-showing-south-london-glut

That bubble may already be started to deflate. 

Interesting article. Although, listened on the radio today that prices accelerated again this month. The rate hold from the Bank of England is likely to be yet another short-term shot to the arm of a market already on steroids. Bubbles don't tend to deflate, they usually go pop. I wouldn't be surprised if the flash point came from Sydney or Melbourne this time round.

As for Carney and co. they have lost all credibility for me. Since 2012 they have been talking about a rate hike, didn't believe them then and still don't now. The Fed actually looks a lot more likely than the BoE.

[Ramarena]

Interesting article. Although, listened on the radio today that prices accelerated again this month. The rate hold from the Bank of England is likely to be yet another short-term shot to the arm of a market already on steroids. Bubbles don't tend to deflate, they usually go pop. I wouldn't be surprised if the flash point came from Sydney or Melbourne this time round.

As for Carney and co. they have lost all credibility for me. Since 2012 they have been talking about a rate hike, didn't believe them then and still don't now. The Fed actually looks a lot more likely than the BoE.

Indeed people seem to have forgotten the number of times over the last couple of years that he has set up a rate increase only to knock it back. The one that sticks in the mind is the 7% employment figure. 

On the house prices, that was the Halifax report that said 2.7% increase for April, yet earlier in the week Nationwide had the August increase at 0.8%.  Seems a big difference, I wonder where each get their data. 

 

[Tombo]

Can I just say I check this thread daily and never understand any of it? But I'm just waiting for someone who knows what they're talking about to finally just go "yep, board up your windows and wait it out, this is the end of days".

I mean, on a scale of 1-100, how ****** are we? Make it dead easy for me, just whack a number on it. 1 being "hunky dory" and 100 being "All is lost".