Financial Crisis Ten Years On

Ten years ago, queues quietly began forming outside branches of Northern Rock. Unsettled by press reports that the bank was asking for help from the Bank of England, anxious customers wanted out. The first run on a UK bank for over a century was underway, and Northern Rock would be nationalised within a year. In … Continue reading “Financial Crisis Ten Years On”

Bitcoin – instant riches?

Bitcoin is in the news. If you had bought some of this crypto currency at outset you could now cash in a very large profit. Some think that if you bought it at today’s elevated level you could still be in time to make a large profit going forward. It is not something Charles Stanley … Continue reading “Bitcoin – instant riches?”

North Korea is a problem for China – if only the US would realise

North Korea now has nuclear warheads that it can attach to missiles, that can travel great distances – to Guam, almost certainly, the nearest offshore US territory, and, with a bit of practice perhaps heavily populated parts of the US mainland. It sounds scary, but then Russia, China and others have had this capability for … Continue reading “North Korea is a problem for China – if only the US would realise”

Currency wars

It’s been a strange world for currencies as well as for bonds and interest rates since the western crash. Countries and central banks that used to worry about their currencies falling too much have all seemed to welcome weakness in their counters, hoping that will stimulate exports and allow a bit more inflation. Four of … Continue reading “Currency wars”

Draghi stalls for time on QE details

The European Central Bank’s (ECB) Governing Council decided to keep interest rates unchanged at their meeting on 7th September.  Importantly, it did not provide any details on the future of its quantitative easing (QE) programme, which is due to end in December. The ECB has typically announced changes in its QE programme three months ahead … Continue reading “Draghi stalls for time on QE details”

Economic effects of Hurricane Harvey

Hurricane Harvey was a tragedy. It also has the potential to have a considerable economic impact on both the economy of Texas and on the broader US economy. There are also material implications for both commodities and insurance markets. Economic Impact Early estimates put property damage at between $30bn and $100bn (0.2%-0.5% of GDP). For … Continue reading “Economic effects of Hurricane Harvey”

Mr Draghi worries about growth

ECB President Mario Draghi brought a surfeit of pessimism to the Jackson Hole meeting of central bankers. He argued that the 2% trend rate of growth for the Organisation for Economic Co-operation and Development (OECD) rich countries prior to the banking crash of 2008 has now halved to a trend rate of around just 1%. … Continue reading “Mr Draghi worries about growth”

Brexit, North Korea and Hurricane Harvey

August is the holiday month and with many key decision makers, in particular, the politicians, away from their desks, it’s normal for things to be a little quieter. Theresa May, for example, took a three-week break for some walking in the Swiss Alps, presumably with the ‘Sound of Music’ on her iPod and ‘Climb Every … Continue reading “Brexit, North Korea and Hurricane Harvey”

The US Fed must learn from mistakes of the crisis

A decade is a long time in central banking. Ten years ago Ben Bernanke used his speech at the Jackson Hole symposium for central bankers to explain the tumult that was rippling through financial markets at the time. He explained that while there were problems in the US housing market, the global financial system was … Continue reading “The US Fed must learn from mistakes of the crisis”

Why some shares disappoint

The world economy is growing at a sustainable moderate pace, with all the main economies contributing. More people are getting jobs and better paid jobs worldwide, thanks to the faster development rates of some of the leading emerging economies and to substantial migration to richer countries generating more employment. This is a favourable background for … Continue reading “Why some shares disappoint”

Broken-hearted again …

Having raised interest rates by 0.25 percentage points in June, the Federal Open Market Committee has indicated that it expected to hike rates once more this year and that it plans to begin its balance-sheet normalisation program (its plan to sell off the assets that it purchased under quantitative easing) “relatively soon”. In the UK, … Continue reading “Broken-hearted again …”

QE: The Beginning of the End

To limit the damage from the financial crisis, central bankers were forced into Quantitative Easing (QE) on a massive scale, in possibly the largest ever monetary policy experiment. The policy worked and confidence returned to financial markets. Nearly a decade on from those events, are we now looking at the end to QE and the … Continue reading “QE: The Beginning of the End”

What’s wrong with low interest rates?

Interest rates are low, but is this a problem?  After all, in times gone by the worry was that rising interest rates killed off economic expansions. You know the story: inflation picks up as economic slack diminishes; central banks slam on the brakes; and recession follows. Since the global financial crisis, however, interest rates (and … Continue reading “What’s wrong with low interest rates?”

How will central bank tightening affect emerging market bonds?

Investors are worried; they’re hearing noises from the US Federal Reserve and the European Central Bank about reducing balance sheets and hiking rates. They are wondering whether that will have an impact on emerging markets and on Asian bonds. In the past, they’ve been right to worry. Generally, when central banks start tightening, it does … Continue reading “How will central bank tightening affect emerging market bonds?”

Brazil and Venezuela struggle with their economies

Since 2014 the output of the Brazilian economy has fallen by 9%, before starting a small recovery this year. Meanwhile in its smaller northern neighbour, Venezuela, the government has stopped producing official economic figures because the performance of the economy is so poor. The IMF thinks the Venezuelan economy contracted by 8% in 2016 alone, … Continue reading “Brazil and Venezuela struggle with their economies”