Is it Just Me...?

wotsthat

Generali wrote: »

TBH, I think the fears are around managing the recovery. We're seeing increasing strength in the UK and US recoveries. At some point interest rates will rise and/or QE will be withdrawn. At the very least, no more QE will happen.

I don't think that's a major problem but markets clearly aren't happy about something.

Yes they want an improving economy as that will lead to increased profitability. They also want stimulus to continue. There's a dawning realisation that having your cake and eating it isn't going to be possible long term.

michaels

I am thinking that this may be the moment to take one of those super cheap 5 (or even 10) year fixed rate mortgages

Generali

michaels wrote: »

I am thinking that this may be the moment to take one of those super cheap 5 (or even 10) year fixed rate mortgages

Prolly a good idea. What sort of rate can you get?

Remember, the minimum sustainable rate is probably 1.5-2% plus inflation (1.5-2% covers the bank's costs, profit margin and defaults). If you can get a fix for that long at about 4% you're doing well.

I don't pretend to know what's going to happen to rates. It could well be that reversing QE sends us back to 2009. It could be that inflation in the US starts to pick up substantially at the back end of the year and the Fed wants to slam on the brakes.

ILW

Generali wrote: »

Who'd be a Central Banker?

I would given the chance.

£800k pa for 5 years to just wheel out a load of excuses as to why you have failed seems a pretty good deal to me.

Doesn't seem to take a genius to do it either.

michaels

Didn't the US central bank make a commitment to keep the short rate low until some fixed date?

We may be in an interestin gsituation in 12 months time where the fed is tightening with banks that can take it whilst Europe remains in recession with weak banks - what sort of dislocations would that cause?

Can fix for 5 years at 2.5% which is what I pay now on a tracker or 3.95% for 10 years, the former is more tempting as I hope to be fully offset within 5 years so would be able to repay if I were no longer able to profit on the spread.

Generali

michaels wrote: »

Didn't the US central bank make a commitment to keep the short rate low until some fixed date?

Yeah but that's just about inflation expectations. The Bernank needs inflation expectations to be positive in order for QE to work.

Never, ever believe what a Central Banker says. If he tells you it's raining, reach for your sunnies.

michaels wrote: »

We may be in an interestin gsituation in 12 months time where the fed is tightening with banks that can take it whilst Europe remains in recession with weak banks - what sort of dislocations would that cause?

Think of the flows. If short dated Treasuries are paying 3% in a couple of years, who the hell is going to keep money in Euros in a Eurozone bank? Even Yankob from Woop Woop is going to be getting a dollar money market account from Citibank online to keep the rainy day money in rather than getting 1% from 1st Insolvent Bank of Porto.

michaels wrote: »

Can fix for 5 years at 2.5% which is what I pay now on a tracker or 3.95% for 10 years, the former is more tempting as I hope to be fully offset within 5 years so would be able to repay if I were no longer able to profit on the spread.

If you can/plan to pay off in 5 years, I'd be biting the hand off for a 5 year fix. It's gotta be hugely tempting to hold on to the capital for the 5 years and put it into regulated utilities and miners to get a yield and pocket the balance. That's what I'd do but I am a bit of a gambler.

wotsthat

michaels wrote: »

Can fix for 5 years at 2.5% which is what I pay now on a tracker or 3.95% for 10 years, the former is more tempting as I hope to be fully offset within 5 years so would be able to repay if I were no longer able to profit on the spread.

I'm on the same current rate (NW BMR) and can easily change to 2.99% for 5 years with no fee. I'm not particularly bothered if rates stay the same for 5 years and would consider the 0.5% to be a cost of security. However pre-2009 Nationwide mortgages are offset accounts in all but name only so these benefits and potential future benefits would be lost.

I'm giving more and more thought to rate changes and might just make the change as a mind decluttering exercise.

Thrugelmir

chucknorris wrote: »

Sorry it's my fault I moved 10k from cash to shares yesterday morning, and shortly afterwards the ftse fell. I am doing the same again this morning so expect another large fall sometime around noon (just after I invest).

Could you give us more advance warning next time.

Thrugelmir

MacMickster wrote: »

I think that the stock markets in particular got quite a bit ahead of fairly weak signs of a recovery in the economy.

Certainly a disconnect between Corporate profitability which overall is falling, and retail investors chasing yield. Selective stock picking is the name of the game rather than buying indexes.

Thrugelmir

Generali wrote: »

The amount of money that has been introduced into the banking system is phenomenal and unprecedented. We have no experience of dealing with this so are largely 'flying blind'. If that money comes out of the banking system into markets for goods and services then inflation will soar. Take all the money back out and the banks are insolvent again (especially the European ones).

Who'd be a Central Banker?

Has anyone estimated the reduction in money in circulation once Basle 3 is fully implemented?