Have the markets priced in the next 18 months of hardship?

[haroldshand]

OK

We now have double digit inflation that has probably peaked but will remain for a while, it is pretty much read that the UK is now in recession and IMO will last 18 months(ish), I think BOE rates will reach between 5-6 % and that house prices will fall, I am guessing between 15-50%(in other words I do not know).

My question is have the markets priced all this in?

FTSE right now is roughly 7500

[Frank Hovis]

The FTSE 100 is only loosely associated with the British economy and a lot of the stocks will be barely touched by recession in the UK.

Look at the constituents, loads of overseas miners, financial services like HL who make a steady return, utility and oil companies which people are going to buy anywhere.

If the UK does fall hard and sterling slides then the value of those overseas miners with non-sterling assets and earnings will shoot up.

The only obvious fallers are the non-food retailers like Burberry and the housebuilders.

https://en.m.wikipedia.org/wiki/FTSE_100_Index

The FTSE 250 (101-350) is far more tied to the UK.

 

And as I've noted in some areas recession actually benefits some companies as people turn to value.

Wetherspoons undercuts other pubs and as they close it benefits, and chain restaurants tend to undercut independent and the same applies.

Similarly Primark will gain trade as smaller more expensive clothes shops fold.

[Xtal]

I can't imagine BOE rate will go up a whole load more , let alone double from here into a recession.

I could easily see houses back where I live 10-15% but varying at different ends of the market. 

The rest? No idea really! I expect some stocks will go up and some will go down.

 

[Democorruptcy]

2 hours ago, haroldshand said:

OK

We now have double digit inflation that has probably peaked but will remain for a while, it is pretty much read that the UK is now in recession and IMO will last 18 months(ish), I think BOE rates will reach between 5-6 % and that house prices will fall, I am guessing between 15-50%(in other words I do not know).

My question is have the markets priced all this in?

FTSE right now is roughly 7500

Good luck with that. At the moment the 2yr Gilt Yield is 3.223%. The Fed and BoE base rates target their 2 yr yield.

[haroldshand]

1 hour ago, Xtal said:

I can't imagine BOE rate will go up a whole load more , let alone double from here into a recession.

I could easily see houses back where I live 10-15% but varying at different ends of the market. 

The rest? No idea really! I expect some stocks will go up and some will go down.

 

To be fair 6% for me was an outside number, but 5% yes or close to it, could well be close to 4% next week

[nirvana]

3 hours ago, haroldshand said:

My question is have the markets priced all this in?

FTSE right now is roughly 7500

the markets live on 'money printing', they're just like cocaine and other drug/alocohol/food addicts........sooooo the big question is surely how long can the Central Wanker Bankers keep the money printing up before it's no longer sustainable? and what could cause a u-turn? bond market vigilantes?

[Boon]

47 minutes ago, Democorruptcy said:

Good luck with that. At the moment the 2yr Gilt Yield is 3.223%. The Fed and BoE base rates target their 2 yr yield.

TBH I think several on here - ie DB were saying that interest rates would rise quite a bit last year and before that. And the 2yr yield at points during the pandemic was negative.

So the BoE going for that is much akin to them putting out their forward guidance, and as a forecast that was mostly wrong.

As we saw with Kwarteng the yields can be volatile if the markets don't like it. And I do believe there may be a repeat of that in some form. I wouldn't be surprised if at some point the government throws in the towel and decides that more borrowing is less harmful than more hardship, even though it fuels inflation and interest rates.

It'll be Labours mess to sort out, anyway.

 

[Democorruptcy]

5 minutes ago, Boon said:

TBH I think several on here - ie DB were saying that interest rates would rise quite a bit last year and before that. And the 2yr yield at points during the pandemic was negative.

So the BoE going for that is much akin to them putting out their forward guidance, and as a forecast that was mostly wrong.

As we saw with Kwarteng the yields can be volatile if the markets don't like it. And I do believe there may be a repeat of that in some form. I wouldn't be surprised if at some point the government throws in the towel and decides that more borrowing is less harmful than more hardship, even though it fuels inflation and interest rates.

It'll be Labours mess to sort out, anyway.

 

The base rate was 0.1% during the pandemic, it's risen since chasing the 2yr Gilt Yield. Like The Fed has with theirs.

The markets didn't like Kwarteng having the Treasury look into not paying interest on commercial bank deposits at the BoE. Then expected to be £200bn over the next 5 years. A coup then took place led by the BoE to oust him and Truss. Kwarteng tried to grovel the day before he was sacked, saying he had ruled out stopping the interest payments but it was too late.

[Calcutta]

This all reminds me of 2007, even the NPCs know the system is coming down but it'll limp on for a while before it collapses.

We're just waiting on the straw to break the camel's back. 

[wherebee]

1 minute ago, Calcutta said:

This all reminds me of 2007, even the NPCs know the system is coming down but it'll limp on for a while before it collapses.

We're just waiting on the straw to break the camel's back. 

I was completely blind in 2007.  Seriously.  Had no idea at all.  Wasn't really affected by the crash as I was in Australia by then and they rolled through it.

It wasn't until 2010-11ish I started to see the world realistically.  I'd say 80% of the UK population are as I was.

[King Penda]

2 minutes ago, wherebee said:

I was completely blind in 2007.  Seriously.  Had no idea at all.  Wasn't really affected by the crash as I was in Australia by then and they rolled through it.

It wasn't until 2010-11ish I started to see the world realistically.  I'd say 80% of the UK population are as I was.

In Australia ? Good job it’s a big place

[Frank Hovis]

17 minutes ago, Calcutta said:

This all reminds me of 2007, even the NPCs know the system is coming down but it'll limp on for a while before it collapses.

We're just waiting on the straw to break the camel's back. 

 

But if the response of governments is the same - slash interest rates to the floor and the devil take the hindmost - then surely the main effect will be the same:

Asset price inflation - house prices will start going up as will share prices.

[Calcutta]

1 hour ago, Frank Hovis said:

 

But if the response of governments is the same - slash interest rates to the floor and the devil take the hindmost - then surely the main effect will be the same:

Asset price inflation - house prices will start going up as will share prices.

Probably, best pick up some bargains in the Black Monday sales then 

[Frank Hovis]

1 hour ago, Calcutta said:

Probably, best pick up some bargains in the Black Monday sales then 

 

Well I would but the only physical asset really worth holding IMHO is gold and the security aspect puts me off doing that.

[Stuey]

Interest rates are going to fall, not rise.

Meanwhile the pound will target $1.40. 

US Fed rates will also be cut in 2023. We will lag their cutting. 

The housing market will regain health. Buy the dip. 

[macca]

21 hours ago, haroldshand said:

OK

We now have double digit inflation that has probably peaked but will remain for a while, it is pretty much read that the UK is now in recession and IMO will last 18 months(ish), I think BOE rates will reach between 5-6 % and that house prices will fall, I am guessing between 15-50%(in other words I do not know).

My question is have the markets priced all this in?

FTSE right now is roughly 7500

The top UK 350 companies increased they're profits by 75% over the last year, Over 60% of inflation is increases in profits!

Its another Corrupt Tory theft exercise..

[Sugarlips]

Quite a few pundits/experts have said the Fed pivot is still coming in the next 3 months.

What people are not factoring is the CB’s have failed to slay inflation (likely on purpose to inflate away their debts) so if they start cutting they will have to reverse and send rates significantly higher still in a year which would trigger a major collapse.

if this comes to pass, spring might be the last chance to sell expensive assets to greater fools..

[wherebee]

1 minute ago, Sugarlips said:

Quite a few pundits/experts have said the Fed pivot is still coming in the next 3 months.

What people are not factoring is the CB’s have failed to slay inflation (likely on purpose to inflate away their debts) so if they start cutting they will have to reverse and send rates significantly higher still in a year which would trigger a major collapse.

if this comes to pass, spring might be the last chance to sell expensive assets to greater fools..

Isn't the only tactic now diversify?  Because it's not about logic or business sense, it's about politicians, geo politics, and random shit by coke snorting officials?

 

[Sugarlips]

Just now, wherebee said:

Isn't the only tactic now diversify?  Because it's not about logic or business sense, it's about politicians, geo politics, and random shit by coke snorting officials?

 

Oh absolutely but at my level the main way to protect myself is to ensure I’m not the bag holder when the music stops.

A lot of people are very complacent about debt of all types. They won’t be soon but it’ll be a bit late then..

[Virgil Caine]

22 hours ago, Calcutta said:

This all reminds me of 2007, even the NPCs know the system is coming down but it'll limp on for a while before it collapses.

We're just waiting on the straw to break the camel's back. 

It depends how much leverage is out there and how it unwinds. The banking authorities seem quite happy to see cryptocurrencies etc implode. They will respond to systemic risk but they are not going to bail out all bag holders.

[reformed nice guy]

6 hours ago, macca said:

The top UK 350 companies increased they're profits by 75% over the last year, Over 60% of inflation is increases in profits!

Its another Corrupt Tory theft exercise..

So they also increased their corporation tax payments by 75% then since its ~20% of profit

[Guest]

On 08/12/2022 at 10:42, Boon said:

It'll be Labours mess to sort out, anyway.

It's amusing that the story of the 2020s is likely to be the mirror image of the late 1970s/1980s i.e. the Tories trashing the economy with too much public spending and lax monetary policy leading to out of control inflation while high taxes and excessive regulation choke off economic growth, then Labour have to come in after a general election and sort it out.

[spunko]

53 minutes ago, Darude said:

It's amusing that the story of the 2020s is likely to be the mirror image of the late 1970s/1980s i.e. the Tories trashing the economy with too much public spending and lax monetary policy leading to out of control inflation while high taxes and excessive regulation choke off economic growth, then Labour have to come in after a general election and sort it out.

How do you think Labour will sort it out - genuinely interested. Should I be looking at emigrating overseas to avoid a repeat of 75% income tax rates?

(Apparently the highest was 83%!)

[Wight Flight]

32 minutes ago, spunko said:

How do you think Labour will sort it out - genuinely interested. Should I be looking at emigrating overseas to avoid a repeat of 75% income tax rates?

(Apparently the highest was 83%!)

I believe there was a 98% super tax rate at one point.

 

[belfastchild]

1 hour ago, spunko said:

How do you think Labour will sort it out

Re-release of 'Things can only get better'?