Friday, September 15, 2017

U.K. Cost of living 

It is clear to everyone that the cost of living has increased and will increase further since Brexit. 

The fall in the pound being the main cause and the driver behind this increase in inflation and the man in the street feeling the household costs are increasing.

The Bank of England has changed its tone recently and has now become more hawkish , which means in simple terms that they will look to increase the bank lending rate . Why? Simply put the Bank of England has seen inflation increase in the last six money he to levels not seen for many years . 

Inflation 

Inflation in the U.K. Is running at 2.9% and the Bank of England's tolerance is being pushed . Rising inflation above the BOE target of 2% puts pressure on the BOE to curb inflation and bring it back down to the target range .

Inflation has moved upwards and will move further due to the weakness of the pound . The UK has become heavily dependant on imports from food, vegetables, technology , chemicals etc that the cost of those goods in pound terms has risen .

Pricing 

What the pound could buy 18 months ago has gone up now by about 27%. The importers and retailers have tried to absorb much of this cost but are simply unable to continue absorbing this extra costs and so , are passing this onto the consumer . This means thatvroices are rinsing , which means the costs of goods is rising and so inflation Rises.

What about the pound £

Well here is the funny thing .

The pound will surely rise and become stronger on the sniff or smell that interest rates may rise in the U.K. . This is due to the pound becoming more attractive as a currency to invest in and the banks will benefit further from a high deposit environment .

As the pound gets stronger then the cost of imports per se flies down and then inflation should weaken. 

This is the theory . 

Let's see.

Tuesday, September 12, 2017

Hurricane season and September 11.

Is the hurricane season a season or is it becoming more of a regular event . Well, if you were to judge by the stock markets reaction they posted big gains once it hit landfall .

Or

9/11 response 

Is this the case or is it the States demonstration of strength for 9/11 as it was on Monday this week and the markets jumped . The Dow and the other US markets being global leaders and trend setters always want to waive the flag in piece terms and resilience when they have been under attack . 

The horrific events of September 2001 caught everyone by surprise and the sheer horror of that day still rings in my head. The sight of evil in carnage driving death and destruction into the innocent people will never leave me .

Stock markets are highly emotional places and prices are often driven in emotions . The anniversary of September 2001 is a day when the US flag flies high and the USA wants to show all how strong it is and the willingness to fight for life .