Update on markets

The purpose of this post is to show what is happening.

So, the US $ is to collapse, so say the inflationistas, the gold bugs, the Anderson shelter types etc.

USDYet the $ index, against a generally accepted basket of currencies, has failed to collapse for over 2 years and, indeed, is rising again, from multi year support.

This is the reason why the GB£ has recently been falling – not because of anything internal to the UK.

USD-GBP1.70/72 was 20 year resistance, apart from the extreme period of 2003-2007.  As I told clients, from 1.70/72 £ could rise further 20% or fall 20% to 1.35.  Falling so far. On verra.

The £ has fallen recently due to $ strength and has broken below rising support, since February.  It seems fair to suggest the break will hold.  Next support down at 1.63.

$ strength suggests risk off and we are seeing strength in PMs – which is no surprise at all.

Also, US Treasuries, which again the inflationistas said would collapse, are having a storming year…

tlt v SPYWe have been huge bulls.

Now, at relative level to S&P of last Autumn and a little push higher and the relative price will take us back to last Summer/Spring.  Inflation?   Yeah right. #turningjapanese as I have been wont to say for over a year now whenever anyone would ask me.

Western equity markets are looking fragile right now.

The FTSE is down on 15 MONTHS AGO!

The S&P has fallen a few % and sits right on multi month support before the US opens in a couple of hours.  MACD pointing down so I’ll suggest the downturn is not over.  That, in turn, suggests it could be part of a bigger move down this Summer.

spxLook at the DAX:

DAXI make that 8% down… and broken 2 year support.

Whereas Emerging Markets – as we have written of often, positively, positively (!) soars:

eem to spyLike USTs, relative price is back to Autumn last year and looking strong, relative to S&P.

By the way, US Small Caps looking awful.

So, stick with the plan.  Could be a sizeable shakeout, this Summer, of Western share prices. Treasuries to do well in that environment as will US$ and PMs.

 

 

Nothing in these articles can be taken as financial advice.  Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.

We recommend investors seek bespoke advice before acting.

© 2014 Copyright Jonathan Davis – All Rights Reserved

 

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Posted in Asset allocation, Investing | Tagged , , , , , ,

#Carneyge on UK house market

BANK OF ENGLAND FINANCIAL POLICY COMMITTEE TO CAP BULK OF HIGH LOAN-TO-INCOME MORTGAGES AND TOUGHENS UNDERWRITING STANDARDS

TO SET FROM OCTOBER LOAN TO INCOME RATIO AT 4.5 FOR 85 PCT OF NEW MORTGAGES

TOUGHENS AFFORDABILITY TESTS FOR NEW HOME LOANS FROM THURSDAY BY TAKING INTO ACCOUNT POTENTIALLY HIGHER INTEREST RATES

DOES NOT BELIEVE THAT HOUSEHOLD INDEBTEDNESS POSES AN IMMEDIATE THREAT TO STABILITY, MEASURES AIMED TO INSURE AGAINST THIS RISK

What a crock of shit.

What’s missed out?

Help to Buy (or Borrow or Sell) to continue.

Buy to Let lending to continue

4.5x income means 4.5 x Joint Income or 9 x income!…if each income is similar.  A generation ago it was 1 income and 3-4 x at that!

This is the reality of mortgage lending. And of our so-called economy.

And #Carneyge had the gall to repeatedly say The Bank of England is taking early action.  And the media – especially ‘PRAVBBC – laps it up.  FFS! 😦

Bank of England are Planned Economy Marxists and not free market capitalists.  They believe that all you have to do is regulate, tweak and pull X or Y lever and they can ‘manage’ the economy.

Wrong an all counts.  That is almost the definition of Marxism.  Name me one country in history that has served its people well with that regime.

‘We don’t care about house prices’.  Who said it?  Mark Carney, Bank of England Governor today at 10.58am.

Of course they don’t.  They want them to rise as much as possible to keep lending up to keep bankers rolling in bonuses.  It also keeps the costs of living and of running businesses sky high.  Thus, none of it is sustainable.

All they care about is keeping lending up and keeping spending up.  To Hell with the FACT that their lifestyles are only kept going by greedy ignoramuses borrowing beyond belief and putting themselves, eventually, into penury.  Look at the page on the image above.

Instead, oh I don’t know, how about #bringbackcapitalism and stop intervening in the market?  #banHTB and above all #banbankbailouts – let them fail when it all goes tits up.  Which it will.

The next time there is a global economic shock it will all go tits up.  But how many folk will have massive debts, having believed all will be well because the Bank of England is doing something about it?

This will not stop prices from eventually plummeting.  It will not happen due to anything going on internally. It will be the next global economic shock.

I refer you to this post.

 

Nothing in these articles can be taken as financial advice.  Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.

We recommend investors seek bespoke advice before acting.

© 2014 Copyright Jonathan Davis – All Rights Reserved

Posted in Depression, House prices, Uncategorized | Tagged , , , | 7 Comments

Precious metals investing

The above is Silver.  Silver broke up out of its 1st and 2nd hurdles this week. The 2nd is the lower falling trend line, shown.

It is a fair assumption it will close above this line tonight.  In other words, it will have a weekly close above Resistance.  This is important to the bullish case.

The target now for Silver is $26/26.5.  That equates to c $1500/1550 for Gold.  As recently as December Gold was sub $1200.

We bought, heavily, into Gold and Small Capitalisation Gold Mining shares in the Autumn of last year.

The leader (leading indicator) in the Precious Metals market – Small Cap Miners – has been moving like a rocket ship.  In just the last two weeks it has rocketed a massive 28% (in US$).

The technical indicators are very positive and confirming the trend is up.

The minimum target is $60/65 but I suspect it will be more like $90.

This year.

NB. In early 2011, the GDXJ Index peaked at $180.  Look where it is now, in comparison.

I hasten to say though we remain of the view, until something changes it, that precious metals are still in a long term bear market, which started in 2011.

We would have to see Silver rise above $28, with strength, before we would even contemplate that the long term trend has changed from down to up, for Gold and Silver and mining shares.

 

Nothing in these articles can be taken as financial advice.  Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.

We recommend investors seek bespoke advice before acting.

© 2014 Copyright Jonathan Davis – All Rights Reserved

Posted in Asset allocation, Investing, Retirement | Tagged , , , , | 13 Comments

Global and UK house prices

The charts below show global house prices in relation to local incomes and historic rents.  Some of the prices are shockingly high, relative to reasonable economic comparators.

This first one, shows prices to incomes. To explain the chart, Italian house prices are seen as about the same, historically, relative to current income levels.

Whereas UK house prices, for example, are seen as c 30% over the long term norm in relation to incomes. Japan’s real estate prices are significantly lower than you would normally expect given income levels.

In the next chart prices are compared to prevailing rent levels.  Almost the same countries have over or under priced conclusions attached to them.

Notably, according to the Organisation for Economic Cooperation and Development and the International Monetary Fund, the UK’s house prices are even higher, relative to rents, than to incomes.

Either, in their analyses, this is because rents will rise to compensate or house prices will fall, eventually, to compensate.

It appears that, according to them, Australia and Canada – broadly similar economies to that of the UK – are, like the UK, in great danger of entering economic depression, in due course.  I am in good company there as, when I suggest that, the Governor of the Bank of England has said as much in recent pronouncements.  France, too.  Of course, much of the EU is already in Depression.

Let us consider.

The next chart shows the number of mortgages at approval stage by the members of the British Bankers Asscociation.

As you can see the number is significantly below that of the peak in prices in 2007 and way below peak lending 5 years prior to that.  Evidently, prices can rise with lower volumes.  And that is how it normally is.  Stella McCartney sells 1 dress at £25,000.  John Lewis sells 5000 at £200 etc.  Of course, when even Ms McC has to reduce prices you can bet your bottom dollar so is everyone below her.

Of course, prices have risen as volumes have fallen.  That will not always be the case.  Eventually, buyers will disappear and prices will fall as they quite simply can go no higher, without new buyers.  We also see that, recently, approval numbers have fallen.  The shape of things to come?  On verra.

Next we see how gross borrowing has risen quite strongly – primarily due to Help to Buy (or as I call it now Help to Borrow).  However, NET borrowings (after taking into account mortgage redemptions and reductions) are practically still on the floor at no growth or very tiny growth.  This does not bode well for the housing market or prices.

And either does borrowing by non-financial companies (AKA the real economy), as shown in grey, below.  Businesses are not borrowing and there has been a fall in lending to businesses for each of the last 3 years – not a reduction in the growth of lending, actual reductions in lending, annually.  This is the REAL economy, not the financial/banking one.  This is where house prices of ordinary mortals are.  Not the multi million pound pads of the ultra rich.

Consider this too, households’ incomes have not been keeping pace with the rises in the costs of living for 6 years.  This, again, cannot bode well for house prices.  The next chart shows incomes compared to CPI.

I’ll finish with a thought – one that I have expounded many times.  The next time we have a global economic shock, which can be expected, the Bank of England cannot slash the Base Rate, as it has done every time it got us into difficulties in the past.  The most they can cut is 0.5%.  That will not make the blindest bit of difference to the real economy.

You conclude, based on the above, what is likely to happen to house prices.  Let me know what you think.

 

Nothing in these articles can be taken as financial advice.  Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.

We recommend investors seek bespoke advice before acting.

© 2014 Copyright Jonathan Davis – All Rights Reserved

Posted in Depression, House prices | Tagged , , | 29 Comments

ECB cuts Base Rate. So what?

I won’t bore you with the minutiae just a couple of details:

BBC website

The ECB has cut the Base Rate by the staggering amount of, er, 0.1% to 0.15%.

Also, banks depositing funds at their Central Bank (the ECB) will be charged 0.1% for the privilege.

There were other announcements, including an extra €160Bns of QE.  They’ll buy doubtful debts off banks.  Think about that.  The banks loaned to any wally with a business idea.  That the loan will go sour is of no issue because the Central Bank will buy from the bank at 100c on the €.  The bank loses nothing. yet it recklessly loaned.  The banksters got their fees and bonuses.  No-one loses, right?  Wrong.  Those who hold the Central Bank’s liabilities will pay.  Who?  The next generation.  Sickening.

 

Back to the interest rates.  Firstly, let me point out that I lave been saying for ages that rates will more likely fall than rise – to much merriment and laughing of 49 out of 50 commentators.  See, for example, here, from April.

So, what will these cuts do for us?

One word – nothing.

If you have a mortgage or a business loan and you are told the cost will fall by 0.1% p.a. will that improve your position?  Will it Hell.  Will you invest more, spend more etc etc?  Of course not.

It’s not about you.  It’s about the bankers – the paymasters to the politicians.  You see the banks have, collectively, hundreds of trillions !!! of $ of interest rate derivatives.  These are so finely priced that they need cuts in interest rates.  Otherwise the banks will go belly up.

And yes, it’s going to happen anyway.

What happens when we get to 0.01% Base Rate and the ECB can’t go any lower?

That’s when banking will be in the state of collapse it should have endured in 2009.  That would have been Capitalism.  But oh no.  The bankers persuaded the corrupt politicians to bail them out.

Base rates were slashed. In the case of the UK from 5.0% to 0.5% within 6 months.

And Marxism/Fascism took over.

To simplify Mussolini: Fascism is the merger of Corporation and State.  This is obviously what is increasing.  And no, there is no practical difference to you and me between Marxism and Fascism.

 

 

So, the cuts in rates will not help the real economy.  Only the one directly or indirectly related to the banksters.  So, what happens next?  As I’ve long said, the next time there is a global economic shock Base Rates will fall to effectively 0.0%, there will likely be Bail Ins (deposit confiscations*) and massive borrowing again – from our grandchildren this time – and handing over to banksters again.

*   There’s your negative rates that some of you were wondering about.

So the banking economy will again be bailed out.  But this time they will not bail out the real economy which is dependent on ever lower and lower borrowing rates.  They’re already near rock bottom.

#30YearDepression is coming.

#turningjapanese

The evidence continues to build that we are experiencing long term deflation and asset price collapse and massive reductions in those you call Middle Class.  See here. That’s probably you.

No-one will bail you out.  Your responsibility is to protect yourself.  We might be able to help there…

Nothing in these articles can be taken as financial advice.   Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.

We recommend investors seek bespoke advice before acting.

© 2014 Copyright Jonathan Davis – All Rights Reserved

 

 

 

 

 

Posted in Bail Ins, Depression, Investing, ZIRP | Tagged , , | 14 Comments

Wanted: p/t client service administrator E Herts

Unashamedly advertising a job with us

Link to Firm website

Part time Client Service Administrator, East Herts AVAILABLE NOW

Deadline for applications Friday 20 June 2014

15-20 hours per week (and term time only – if desired)

Working in Hoddesdon (plenty of free parking).
A support administrator to Client Service Manager, servicing wealthy clients’ financial arrangements.  Busy, quiet, small firm of wealth managers.  Growth in work precipitates need for extra administration support.

Would suit individual seeking part-time professional work and wanting flexibility around school hours and school holidays, who, ideally, has experience of financial services’ (ie IFA or insurance/investment company) administration.  Financial Services’ experience desirable but not essential as full training provided.

More important are aptitude and personal strengths such as detail oriented (crucial), logical thinking, task orientation, quickness to learn, adaptability.

Ideal candidate will be logical thinker, sincere, focussed, task-oriented and willing to muck-in as needed.

Package:
• £24,000 pa salary (full time 40 hour week including 20 days paid holiday plus public holidays).
• Plus Bonus of Min 10% – Max 30% pro rata paid after financial y/e (31 March).
• Term-time only if desired – School holidays may be taken as additional unpaid holiday.

Role:
• Development of knowledge of wide range of wealth management office tasks, such as investment account queries for spreadsheets, corresponding with financial institutions, packaging prepared reports, completion of forms, data entry, leading to production of timely, high quality and accurate administrative support to Client Service Manager and other colleagues.  As well as simple copying/pasting and shredding tasks.
• Quality support to Client Service Manager and other colleagues to help achieve Firm’s goals.
• Provision of high quality service to clients.
• Meeting and exceeding agreed personal development goals, as agreed with MD during reviews.

Any other matter to assist Client Service Manager and two other senior professional colleagues as needed, and agreed.

To apply, please email sdavis@jonathandaviswm.com, Director, with your CV and an accompanying letter describing your experience and your suitability for this role and why you are attracted to working at this firm in this role.

Posted in Uncategorized

Media reports costs of living rises as Good News!

Some quotes from the BBC article – which no doubt – were repeated throughout the country all day and night yesterday:

“Food sales during the late Easter holiday made a significant contribution to the overall figure, the ONS said.

They were 6.3% higher in April against a year earlier”

And from The Guardian “The ONS said there had been an across-the-board increase in sales last month, with food stores showing their strongest annual growth rates in 12 years. Supermarket price wars are believed to have been a factor in the 6.3% rise in sales in the year to April.”

On what planet do they expect us to believe that rising food sales is the result of discounting and that we’re buying more than 7% more food than last year.  (With ‘discounting’ we must be buying more than the 6.3% rise in sales.)  And yet most do believe it.  #brainwashing

Do you seriously believe we are buying so much more food?  No. No. No.

The price of food has gone up.  IT HAS NOT BEEN DISCOUNTED.  My wife and I are constantly amazed at the prices in Sainsbury and Morrisons, our local superstores.  Hence why we love #ALDI.  As I say – Tesco Premium goods at Tesco Value prices.

Anyway, the media has lied through its teeth that prices have fallen and we are eating several % more than last year.  Sure, there was the Bank Holiday extra purchases but over 6% difference?  NO WAY!

It’s not good news.  It shows the prices of Needs, not Nices, are rising faster than the official inflation rates.  Quelle surprise.  Perish the thought politicians and civil servants would ever tell us the truth.

Prices falling in goods we want eg clothes and electronics.  Prices rising in goods we need eg energy and food.

Word of the day: #Biflation

How does this affect your investing decisions and strategies?  Read my other pieces on what you can do.

 

Nothing in these articles can be taken as financial advice.   Neither Jonathan Davis nor Jonathan Davis Wealth Management will be held responsible for action taken or not taken from reading these articles.

We recommend investors seek bespoke advice before acting.

© 2014 Copyright Jonathan Davis – All Rights Reserved

Posted in Uncategorized | 8 Comments