Your questions answered Vol 2 - IM Private Clients

[2Btoo]

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

[Burwood]

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

[dingg]

JapanRed said:

Glad you are on the mend Julian.

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

Cheers. Rob

Nothing to get too excited about, yet.....

https://www.reuters.com/world/uk/uk-inflation-rise...

[Mr Whippy]

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Transitory or long term?

If salaries aren’t going up hard and fast with full employment, and interest rates rise, then debt servicing costs and new debt needed to drive consumption will be deflationary.

That is where Japan has been stuck for decades.

I thought economies overheated because of wage rises driven by high consumption and low unemployment?

Needless to say I wouldn’t invest based on inflation fears driven for now by a transitory economic anomaly.

[Burwood]

Mr Whippy said:

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Transitory or long term?

If salaries aren’t going up hard and fast with full employment, and interest rates rise, then debt servicing costs and new debt needed to drive consumption will be deflationary.

That is where Japan has been stuck for decades.

I thought economies overheated because of wage rises driven by high consumption and low unemployment?

Needless to say I wouldn’t invest based on inflation fears driven for now by a transitory economic anomaly.

One positive in this case is it's global inflation as opposed to 'UK' inflation relative to our trading partners. Shipping lines (scum bags) are taking the opportunity to shaft everyone.

[Simpo Two]

Burwood said:

Shipping lines (scum bags) are taking the opportunity to shaft everyone.

Invest in shipping lines? There's always somebody making money somewhere.

[Burwood]

Simpo Two said:

Burwood said:

Shipping lines (scum bags) are taking the opportunity to shaft everyone.

Invest in shipping lines? There's always somebody making money somewhere.

Hugely cyclical. But it's amusing reading several complete cretins on another thread laughing at importers, when it is them who will be paying a lot more for in the year or so ahead.

[JapanRed]

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Cheers Burwood. If they are going to go up so much how come I can get a 10 year fixed mortgage for <2%.

[Burwood]

JapanRed said:

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Cheers Burwood. If they are going to go up so much how come I can get a 10 year fixed mortgage for <2%.

The simple answer is that the banks are taking a view that longer dated maturities will be far less impacted (the spike being short term). And they take that view based on other banks (the ones who lend to your bank) willingness to fund the 10 year mortgage at a rate with allows your bank to offer 2%. say 1.6 or whatever it is to give them a margin. Have a look at the 2 and 3 year and it will be higher. Interest rates are impacted by a number of factors, inflation being just one.

PS. Sub 2% is a great 10 year.

Edited by Burwood on Monday 21st June 10:51

[Intelligent Money]

JapanRed said:

Glad you are on the mend Julian.

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

Cheers. Rob

Hi Rob,

It will take more than a penny!!

As has been said UP is the obvious answer, how far is the million dollar rather than 1 penny question. Difficult to tell at the moment, commodities seem to be driven by low supply, high demand and a slow response/ability/desire to fill that gap rather than a pure increase in supply cost. This supply gap will be filled so at that point we will get a better idea what the real additional cost of supply is, post Covid and Brexit.
Consumers appear to have a pent up purchase desire and have built up reserves during lock down so in the short term have the funds to meet the increased costs, this will also likely pass and we will then see the supply/demand/ability to pay balance return.
In addition we wont really have a clear picture on the employment stats until we see the restrictions and furlough filter out of the system.

In summary a lot of moving parts and until we some of the transient influences move through the system it is difficult to see the underlying picture.
I wouldn't expect to see any major reaction to short term rises but the banks will have a watchful eye and if required I feel they will take action to keep things under control and as mentioned it is likely to be a global rather than regional issue.

So up, maybe more sharply that we normally expect in the short term, the general market/economic cycle is likely to correct/control this in the medium term but the banks may also step in if needed in the longer/medium term.

Cheers

Nik

[JapanRed]

Burwood said:

JapanRed said:

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Cheers Burwood. If they are going to go up so much how come I can get a 10 year fixed mortgage for <2%.

The simple answer is that the banks are taking a view that longer dated maturities will be far less impacted (the spike being short term). And they take that view based on other banks (the ones who lend to your bank) willingness to fund the 10 year mortgage at a rate with allows your bank to offer 2%. say 1.6 or whatever it is to give them a margin. Have a look at the 2 and 3 year and it will be higher. Interest rates are impacted by a number of factors, inflation being just one.

PS. Sub 2% is a great 10 year.

Edited by Burwood on Monday 21st June 10:51

Thanks for this Burwood. Great knowledge.

[JapanRed]

Intelligent Money said:

JapanRed said:

Glad you are on the mend Julian.

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

Cheers. Rob

Hi Rob,

It will take more than a penny!!

As has been said UP is the obvious answer, how far is the million dollar rather than 1 penny question. Difficult to tell at the moment, commodities seem to be driven by low supply, high demand and a slow response/ability/desire to fill that gap rather than a pure increase in supply cost. This supply gap will be filled so at that point we will get a better idea what the real additional cost of supply is, post Covid and Brexit.
Consumers appear to have a pent up purchase desire and have built up reserves during lock down so in the short term have the funds to meet the increased costs, this will also likely pass and we will then see the supply/demand/ability to pay balance return.
In addition we wont really have a clear picture on the employment stats until we see the restrictions and furlough filter out of the system.

In summary a lot of moving parts and until we some of the transient influences move through the system it is difficult to see the underlying picture.
I wouldn't expect to see any major reaction to short term rises but the banks will have a watchful eye and if required I feel they will take action to keep things under control and as mentioned it is likely to be a global rather than regional issue.

So up, maybe more sharply that we normally expect in the short term, the general market/economic cycle is likely to correct/control this in the medium term but the banks may also step in if needed in the longer/medium term.

Cheers

Nik

Nik, as always, that’s a fantastic response. Thank you.

[Burwood]

JapanRed said:

Burwood said:

JapanRed said:

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Cheers Burwood. If they are going to go up so much how come I can get a 10 year fixed mortgage for <2%.

The simple answer is that the banks are taking a view that longer dated maturities will be far less impacted (the spike being short term). And they take that view based on other banks (the ones who lend to your bank) willingness to fund the 10 year mortgage at a rate with allows your bank to offer 2%. say 1.6 or whatever it is to give them a margin. Have a look at the 2 and 3 year and it will be higher. Interest rates are impacted by a number of factors, inflation being just one.

PS. Sub 2% is a great 10 year.

Edited by Burwood on Monday 21st June 10:51

Thanks for this Burwood. Great knowledge.

I know just enough to be dangerous

[Simpo Two]

Burwood said:

I know just enough to be dangerous

No, that's me. You must be either more or less dangerous. Or we could set up an investment company called 'The Dangerous Brothers'?

[JeremyH5]

Burwood said:

JapanRed said:

Burwood said:

JapanRed said:

Burwood said:

2Btoo said:

JapanRed said:

Julian, Nick, Coops et al: a penny for your thoughts on where inflation might be heading over the next couple of years?

I'm not Julian, Coops or Nick by my answer is UP.

It’s up in the medium term. Up a lot

Cheers Burwood. If they are going to go up so much how come I can get a 10 year fixed mortgage for <2%.

The simple answer is that the banks are taking a view that longer dated maturities will be far less impacted (the spike being short term). And they take that view based on other banks (the ones who lend to your bank) willingness to fund the 10 year mortgage at a rate with allows your bank to offer 2%. say 1.6 or whatever it is to give them a margin. Have a look at the 2 and 3 year and it will be higher. Interest rates are impacted by a number of factors, inflation being just one.

PS. Sub 2% is a great 10 year.

Edited by Burwood on Monday 21st June 10:51

Thanks for this Burwood. Great knowledge.

I know just enough to be dangerous

A splendid achievement, one to which all right thinking people can aspire.
That’s what I tell myself, anyway.

[SimonTheSailor]

PH Sustainable up 0.53% already in just a few days.......by my reckoning that will be...err......quite good in a year's time !!

[KTF]

Any update on when PHO will be launching?

[CoopsIM]

KTF said:

Any update on when PHO will be launching?

Not as yet, watch this space as it is imminent

[davey68]

Apologies but what is PHO?

[droopsnoot]

davey68 said:

Apologies but what is PHO?

PH Opportunities, launched in the email last week, probably a post a page or two back. As it's nothing to do with the Pet Shop Boys, it hasn't been named "PH Opportunities (Let's make lots of money)".