How much longer will this bear market go on for?

Type_45

hallmark said:

And now BOE officials have "privately signalled" they'll extend the bond purchasing scheme beyond Friday.

Absolute clown show.  That they need to intervene is bad enough.  That they're doing so in literally the worst way possible is indefensible.  Genuinely comes across like they WANT to destroy the pound.

Which I've been saying they are trying to do for many months now. 

The GBP is being intentionally crushed. 

MK62

Personally I don't believe it's intentional, but I think the BoE are stuck between a rock and a hard place at the moment......to protect the pound and fight inflation, they want to be raising interest rates, but heading into a recession (which we probably all know is coming), that's probably the last thing they want to be doing......then along comes the new administration to pour petrol on the fire.....I'm no big fan of the current BoE governer, but I don't think the blame for the current mess lies solely at his door.......a significant portion of that lies at the doors of nos 10 & 11 Downing St.....all IMHO of course.....

arnoldy

It feels like we need sharp shock therapy, a significant increase in interest rates, a big cut in Government spending and a period of dramatic belt tightening and austerity.  You can't help getting the feeling that we are a country living beyond its productive means, but unable to make the tough decisions. A bit like treating an alcoholic by only allowing half a bottle of scotch a day.

Every time there is a challenge, we seem to throw money (that we haven't got) around. Time to stop all this and take the pain for getting out of this living death.

t1redmonkey

MK62 said:

Personally I don't believe it's intentional, but I think the BoE are stuck between a rock and a hard place at the moment......to protect the pound and fight inflation, they want to be raising interest rates, but heading into a recession (which we probably all know is coming), that's probably the last thing they want to be doing......then along comes the new administration to pour petrol on the fire.....I'm no big fan of the current BoE governer, but I don't think the blame for the current mess lies solely at his door.......a significant portion of that lies at the doors of nos 10 & 11 Downing St.....all IMHO of course.....

Yep I agree, not really BOE's fault.  Government is sending out the wrong messages, this is what's spooking the markets and forcing the BOE into these awkward positions.  Truss and Kwarteng are too stubborn to realise they are the root cause of all the turmoil, markets are trying to tell them now is not the right time for their tax cuts and extra borrowing but they're not listening.

GazzaBloom

Raoul Pal is suggesting that his "indicators" such as Purchasing Managers Index are showing that this inflation bubble is pretty much already over on the ground, demand has already fallen significantly, commodity prices are coming down as are logistics costs. Hi thesis is that the crunch will happen in the coming weeks with further dramatic falls in markets, followed next year by rising employment and a fast drop in inflation so Fed will have to stop QT and interest rates will stop rising and may even fall. Then the money piles back in to risk including Crypto within 18 months, his view is buy now.

United States ISM Purchasing Managers Index (PMI) - September 2022 Data (tradingeconomics.com)

The ISM Manufacturing PMI unexpectedly fell to 50.9 in September of 2022, pointing to the slowest growth in factory activity since the contractions in 2020. It compares with 52.8 in August and market forecasts of 52.2. New orders (47.1 vs 51.3 in August) and employment (48.7 vs 54.2) contracted and production increased only slightly (48.7 vs 54.2). Meanwhile, price pressures continued to ease (51.7, the lowest since June 2020 vs 52.5). "Following four straight months of panelists’ companies reporting softening new orders rates, the September index reading reflects companies adjusting to potential future lower demand. Many Business Survey Committee panelists’ companies are now managing head counts through hiring freezes and attrition to lower levels, with medium- and long-term demand more uncertain", Timothy R. Fiore, Chair of the ISM said. source: Institute for Supply Management

I don't know a lot about Raoul Pal, apart the fact that is ex Goldman Sachs and a Crypto advocate, or whether his views are valid but I carry on buying in month in month our regardless and will be putting a largish chunk into a Tech index fund when the new ISA year starts regardless of where the market is at the time.

Type_45

"Buy now". Quelle surprise.

Millyonare

t1redmonkey said:

MK62 said:

Personally I don't believe it's intentional, but I think the BoE are stuck between a rock and a hard place at the moment......to protect the pound and fight inflation, they want to be raising interest rates, but heading into a recession (which we probably all know is coming), that's probably the last thing they want to be doing......then along comes the new administration to pour petrol on the fire.....I'm no big fan of the current BoE governer, but I don't think the blame for the current mess lies solely at his door.......a significant portion of that lies at the doors of nos 10 & 11 Downing St.....all IMHO of course.....

Yep I agree, not really BOE's fault.  Government is sending out the wrong messages, this is what's spooking the markets and forcing the BOE into these awkward positions.  Truss and Kwarteng are too stubborn to realise they are the root cause of all the turmoil, markets are trying to tell them now is not the right time for their tax cuts and extra borrowing but they're not listening.

It is almost entirely the BoE's fault.

1. BoE was (very) slow to spot inflation in 2021
2. BoE was (very) slow to start raising interest rates in H1 2022
3. BoE was utterly reckless to cut interest rates to expectation in Sep 2022
4. BoE under-regulated gilt gambling, bringing the UK pension industry to the brink of collapse in Oct 2022

The BoE is making one serious calamity after another, every few weeks.

The Tories tax budget barely added 1-3% to total UK state debt (perhaps less). It was tiny. Not an issue.

What's more, we need to stop parroting the "recession is inevitable" hysteria. It is NOT inevitable. The UK does not need to talk itself down. The IMF said, just this week, that the UK is the fastest-growing economy among the entire G7 group -- for the second year in a row. Unemployment sits at a record low. Everyone who wants a job has one. We don't need to talk ourselves into a recession. It's not a certainty, at all.

Nebulous2

The BoE and the treasury pulling in opposite directions doesn't help. 

For point 3, I don't believe the Bank knew what was coming for tax cuts in the mini-budget when they made their interest rate decision. I think they were blindsided by it as much as the markets were. 

This is a straightforward plain language analysis of the issues, that chimes with me. 

What on earth is happening in UK markets and why is the Bank of England struggling to address it? | Business News | Sky News

In particular:- 

"But to understand what a tricky position it's in, you need to zoom out even further. For while it's tempting to blame everything on the government and its mini-budget, it's fairer to see this as the straw that broke the market's back."

It was entirely tone-deaf for an unknown and untrusted pairing in 10 and 11 to sack the senior civil servant in the treasury, refuse an OBR analysis, and throw in unexpected tax cuts to inflate the economy, at a time the Bank was trying to let the air out of it. Rightly or wrongly, they have both been found wanting, and I can't see any way back for either of them. 

hallmark

And now the BOE has u-turned again and said they WON'T extend bond buying beyond this Friday.  You really couldn't make it up at this point.

Type_45

Catherine Austin Fitz has a different theory. Her's being that in August 2019 the central banks decided they would crush their currencies by printing them into oblivion. That's when the money printing started, in 2019. Not when the pandemic hit. The pandemic merely gave them perfect cover for what they wanted to do anyway.