Whoops - BOE downgrades forecast and backs up labours concerns

Generali

Thrugelmir wrote: »

General sentiment is that underlying Corporate profitability does not support current share valuations.

Generali sentiment is that high yield stocks will be worth less when US interest rates rise.

The single biggest driver of markets at present is the Fed.

chucknorris

Thrugelmir wrote: »

Similar problems. Similar outcomes.

A low base rate certainly isn't a problem to me, although I appreciate that such a low base rate is a reflection on the health of the economy.

chucknorris

Generali wrote: »

Generali sentiment is that high yield stocks will be worth less when US interest rates rise.

The single biggest driver of markets at present is the Fed.

I am beginning to doubt that there will be a significant sustained meaningful correction, I do think that there will be a knee jerk reaction when USA rates start to move, but I think any downturn may be short lived. I might be wrong of course, but I am hoping to put my money where my mouth is, I see it as a forthcoming buying opportunity. I say hoping because that depends on having cash available outside the market when it falls, I never feel comfortable with my strategy over that. As far as I can see convention is to have something in bonds, but I think bonds will be hit hard when rates go up, so I am avoiding bonds. At the moment I am doing what you are not supposed to do, I am dipping in and out (only partially, not completely) when the market looks high, and buying back in on small dips. I do realise the dangers of this, i.e. that I can miss out if the market surges whilst I am partially out. But I am comforted by the fact that I am locking in some profit, and also giving myself the chance to be out of the market if there is a correction.

wymondham

I presume we'll now get all the bad news that was 'avoided' before the election?

kabayiri

My question would be ....where are these new jobs going?

The global demand for skilled jobs; particularly new technology; has not really shown signs of diminishing.

Consumer demand for modern technology product is still strong. Additionally, there is a lot of research in medical technology expected to break through into new products, with demand from places like Africa and Asia driving change through.

Are we producing the right sort of graduates? Over a decade ago Gordon Brown recognised the need to create a knowledge-based economy. Did this translate into further education?

wymondham

kabayiri wrote: »

Are we producing the right sort of graduates? Over a decade ago Gordon Brown recognised the need to create a knowledge-based economy. Did this translate into further education?

not sure, but most of my sons friends are in Uni doing media studies, History and fabric design, so possibly not?!!

Generali

Graham_Devon wrote: »

So now we have Mark Carney himself stating that the new jobs in the economy are disproportinately lower skilled and less productive.

They have cut the growth forecast from 2.9% to 2.5%.

Wage growth was also downgraded from 3.5% to 2.5%.

http://www.bbc.co.uk/news/business-32720772

Wage growth falling is probably a result of inflation falling: long term, the BoE assumes that inflation will be about 2-2.5%. That inflation is 0% actually most likely means that the BoE is predicting the potential for real wage growth has risen.

As for the GDP target growth? That's a finger in the air really. Oil prices falling are a big plus to the English economy and a big minus to the Scottish economy. What's going to happen to the economies of Ireland, Holland and the US, the UK's biggest trading partners?

Let us not forget that the UK economy has beaten most forecasts over the past five years and I suspect will continue to do so.

Rinoa

Growth estimates will always fluctuate. Shows how far we've come though when an estimated fall from 2.9% to 2.5% is flagged up as cause for concern.

We can all remember the OP gleefully extolling the possibility of a triple dip recession.

Ah, those were the days Graham.

danothy

wymondham wrote: »

not sure, but most of my sons friends are in Uni doing media studies, History and fabric design, so possibly not?!!

This says more about your son than the overall state of higher education really.

wotsthat

Generali wrote: »

Generali sentiment is that high yield stocks will be worth less when US interest rates rise.

The single biggest driver of markets at present is the Fed.

Wouldn't this be priced in to share prices?

It's something I think about quite a lot because I've invested heavily in high yield stocks over the last 6 years and can't work out if an income seeker would sell shares just to get an extra 1% (say) on cash savings.

If they do then the same argument might apply to BTL too as people sell up to get an increased yield on cash.

High yield shares have been so reliable I've not looked elsewhere - might need to alter the mindset as interest rate rises come through.