Fed Hike

Generali

michaels wrote: »

Although with MMR presumably you would be assessed for affordability based on a base rate of 20% if rates were 15% - don't suppose many would be able to buy even without the slight problem of how much deposit banks would demand in a sharply falling market....plus of course with prices down that much the banks would all be insolvent as their assets (mortgages) would be worth much less than their liabilities (deposits) and despite the fiction that is the fscs compensation scheme actually depositors would lose most of their money - ie their house purchase deposits....

If house prices fell in isolation of wider economic problems, something that is hard to see I admit, it's possible to see mortgages maintaining basically all of their value while house prices fell.

Don't forget, banks hold much more capital against losses than they used to as well so falling asset price hold less fears for banks than previously and one of the advantages of keeping investment and retail banks together in the same company is that the investment banking arm can prop up the retail banking arm when times are tough.

Thrugelmir

Generali wrote: »

Don't forget, banks hold much more capital against losses than they used to as well so falling asset price hold less fears for banks than previously and one of the advantages of keeping investment and retail banks together in the same company is that the investment banking arm can prop up the retail banking arm when times are tough.

Retail arm provides funding for the investment arm. That's the link that's being broken. Banks speculating with other peoples money.

DiggerUK

Things left as is..._

http://www.federalreserve.gov/newsevents/press/monetary/20160127a.htm

worldtraveller

I'm awaiting the U.S. Q4 2015 GDP figures due later today with interest.

vivatifosi

vivatifosi wrote: »

We took out a new three year fix at 2.09% recently. It's about the only time we've timed it right.

I think I should start a thread called... oh I dunno, maybe something along the lines of my Interest Rate Gamble Finally Pays Off.

If ever you are wondering about the next impending financial crisis, you only need ask if I've just taken out a new fixed rate mortgage. Every bloomin time....

Graham_Devon

Well Bank of Japan has just "shocked the markets" by announcing negative interest rates. Stockmarkets are rallying (apparently) on the hope of further stimulus in Japan.

The move, which sees interest rates move from 0.1% to -0.1% comes after last weeks announcement from the BOJ that they were not even considering negative interest rates!

wotsthat

Graham_Devon wrote: »

Well Bank of Japan has just "shocked the markets" by announcing negative interest rates. Stockmarkets are rallying (apparently) on the hope of further stimulus in Japan.

The move, which sees interest rates move from 0.1% to -0.1% comes after last weeks announcement from the BOJ that they were not even considering negative interest rates!

Funny on Bloomberg though.

Not a single analyst they surveyed forecast this change. With blissful unawareness they continue to gauge the performance of markets and companies against analyst expectations or 'people familiar'.

I do love watching it. Company A doesn't meet analyst expectations - what did Company A do wrong? Company B exceeds analyst expectations smiley faces all round.

Never ever is it ever suggested that the analysts might just be wrong or they're asking people to predict stuff which is essentially random.

Generali

wotsthat wrote: »

Funny on Bloomberg though.

Not a single analyst they surveyed forecast this change. With blissful unawareness they continue to gauge the performance of markets and companies against analyst expectations or 'people familiar'.

I do love watching it. Company A doesn't meet analyst expectations - what did Company A do wrong? Company B exceeds analyst expectations smiley faces all round.

Never ever is it ever suggested that the analysts might just be wrong or they're asking people to predict stuff which is essentially random.

The reason is that (supposedly) professional investors set the price of a stock. Therefore analyst expectations drive the value of the stock thus a result relative to expectation should drive changes in share price.

We run about AU$50bn of equity investments at work on that principle: if we can see a company is likely to exceed or fall short of market expectations we can buy or sell the stock based on that belief.

I do believe that short term changes in share price are essentially random however in the longer term, companies with a good competitive advantage that are well run tend to outperform their peers.

purch

The Bank of Japan Banks governor Kuroda-San only said a week or so ago that the BOJ would not be adding anymore stimulus.

I guess everyone should really have expected this then :eek:

worldtraveller

The US economy slowed sharply in the final quarter of 2015 to achieve annualised growth of just 0.7% after spending by consumers and businesses eased.

The figure - announced by the US Commerce Department - was weaker than had been expected.

It meant GDP for 2015 as a whole came in at 2.4% for the second-year running.

The figure will be a concern for the Federal Reserve, which took the decision to raise interest rates from their financial crisis low back in December - arguing it was satisfied the domestic economy was strong enough to take it.

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