How much longer will this bear market go on for?

masonic

sevenhills said:

MiserlyMartin said:

One might say that the USA has a more credible central bank, it is raising quicker and faster. Though compared to the BoE that is not difficult.

Had they known what Kwartang was going to do, they would surely have increased rates by .75 +

The next meeting will be interesting.

t1redmonkey

sevenhills said:

MiserlyMartin said:

One might say that the USA has a more credible central bank, it is raising quicker and faster. Though compared to the BoE that is not difficult.

Had they known what Kwartang was going to do, they would surely have increased rates by .75 +

This is the thing...I'm pretty sure they DID know what he was going to do.  At least Bailey did, because he's having these regular meetings with Kwarteng now.  Yet Bailey was one of the gang that voted for the 0.5% rate rise.

Type_45

t1redmonkey said:

sevenhills said:

MiserlyMartin said:

One might say that the USA has a more credible central bank, it is raising quicker and faster. Though compared to the BoE that is not difficult.

Had they known what Kwartang was going to do, they would surely have increased rates by .75 +

This is the thing...I'm pretty sure they DID know what he was going to do.  At least Bailey did, because he's having these regular meetings with Kwarteng now.  Yet Bailey was one of the gang that voted for the 0.5% rate rise.

Exactly. What do they do in their meetings? Play Snap?

GSP

k6chris said:

I think the BoE may need to raise rates again very quickly, to try and stop a run on GBP.  This will give the government another baddie to blame everything on.  Still calling 3,200 on the SPX as the bottom.

Still no guarantees this will calm the run. It’s the Traders who call the shots, and in the past it’s their behaviour and view which has determined where a market should be.

GSP

Type_45 said:

We are facing the biggest crash in history. 2008 was a picnic by comparison. 1929 is the only thing which comes close.

After your prediction, when do you think things will improve, generally?

Prism

GSP said:

k6chris said:

I think the BoE may need to raise rates again very quickly, to try and stop a run on GBP.  This will give the government another baddie to blame everything on.  Still calling 3,200 on the SPX as the bottom.

Still no guarantees this will calm the run. It’s the Traders who call the shots, and in the past it’s their behaviour and view which has determined where a market should be.

Over the short term the traders have a big influence. Over the longer term they have almost no influence at all. Neither really do central banks nor governments, unless they cause a complete collapse. The only thing that drives performance is the companies themselves.

daz378

Tax  cuts for the wealthy....ostensibly  to promote growth...if doesn't work    lowers our credit rating from aa-    possibly cap in hand to  IMF....news is scary at the moment

Millyonare

Type_45 said:

How is that different to what the US is doing?

The US is tightening to the same extent as the UK whilst simultaneously throwing it around like confetti.

What is the difference between what the UK is doing and the US?

The difference is, the US has a confident culture of success.

The UK has a weird culture of wailing misery, hysteria, and self-loathing.

US is in recession (H1). UK is not.

US has around 130% gross debt to GDP. UK about 100%.

US inflation is growing relatively faster than UK.

US recently wasted $400-800b on tax freebies for voters. UK is set to waste $50-150b on tax freebies.

US had a failed coup just a few quarters ago. UK has not had a coup.

But the dollar is strong. The pound is weak.

The US talks itself up.
The UK talks itself down.

That's the real difference 

Altior

Some of the framing is astonishing really. I'm not a 45% marginal rate taxpayer. However, framing 'cutting' the additional punitive rate so that the treasury is 'only' taking 40% of your earnings in the top band, as a massive 'giveaway' to the nasty rich is absurd. Quite clearly, if you're earning >£150K you're winning in life in the income stakes, but you should not be punished for that in my view. 40% is more than enough to hand over to the treasury so they can flush it down the toilet.

It is not that expensive anyway, even if it led to zero increases in revenue at the 40% rate. I believe a similar amount to what we committed to handing over to Ukraine again, which the markets would not have blinked an eye at. 

In fact, the traders already knew about by far the biggest likely borrowing requirement policy, the energy price guarantees for consumers and business, before Friday.

The other tax 'cuts' are not cuts at all. CT is staying the same. NI is simply being returned to what it was at the end of the last tax year. Save for the increase in the lower threshold. The 40% threshold is still being left where it is, so with pay rises likely being decent due to inflation, many more people will be tipped into the upper threshold. Stamp Duty could easily be cost neutral as it should definitely motivate transactions in the market.

What we saw with the GBP currency on Friday wasn't a reaction based on tangibility, in my view it was the typical herd mentality, once the £ started to sell off, the contagion arrived. And that was the direction of travel anyway, with US$ viewed as a safer harbour.

Personally, I feel that GBP vs USD, and in fact EUR vs USD is far more dependant in the long run on what happens in the US rather than here. Our policy makers should just be patient as we can't control that. There will be a point that the market makers will have had enough of US$, as it is far from rosy in the garden over there, with massive reduction in paper asset values (inevitable, but the punters will still be angry), and inflation not going away. However, something needs to change at the BoE, as evidently the 50 basis point increase was ducking away from the tangible changes that needed to be made, based on actuality (the Fed policy). 

Nebulous2

Altior said:

Some of the framing is astonishing really. I'm not a 45% marginal rate taxpayer. However, framing 'cutting' the additional punitive rate so that the treasury is 'only' taking 40% of your earnings in the top band, as a massive 'giveaway' to the nasty rich is absurd. Quite clearly, if you're earning >£150K you're winning in life in the income stakes, but you should not be punished for that in my view. 40% is more than enough to hand over to the treasury so they can flush it down the toilet.

It is not that expensive anyway, even if it led to zero increases in revenue at the 40% rate. I believe a similar amount to what we committed to handing over to Ukraine again, which the markets would not have blinked an eye at. 

In fact, the traders already knew about by far the biggest likely borrowing requirement policy, the energy price guarantees for consumers and business, before Friday.

The other tax 'cuts' are not cuts at all. CT is staying the same. NI is simply being returned to what it was at the end of the last tax year. Save for the increase in the lower threshold. The 40% threshold is still being left where it is, so with pay rises likely being decent due to inflation, many more people will be tipped into the upper threshold. Stamp Duty could easily be cost neutral as it should definitely motivate transactions in the market.

What we saw with the GBP currency on Friday wasn't a reaction based on tangibility, in my view it was the typical herd mentality, once the £ started to sell off, the contagion arrived. And that was the direction of travel anyway, with US$ viewed as a safer harbour.

Personally, I feel that GBP vs USD, and in fact EUR vs USD is far more dependant in the long run on what happens in the US rather than here. Our policy makers should just be patient as we can't control that. There will be a point that the market makers will have had enough of US$, as it is far from rosy in the garden over there, with massive reduction in paper asset values (inevitable, but the punters will still be angry), and inflation not going away. However, something needs to change at the BoE, as evidently the 50 basis point increase was ducking away from the tangible changes that needed to be made, based on actuality (the Fed policy). 

We have people - literally millions of them who are struggling to get enough to eat. People who cannot afford to run their ovens. People who even with the energy intervention are staring down the barrel of their electric and gas costing twice as much this winter as it did last. 

Many of them are working - and are looking at a tightening of the rules and benefit regime for part-time workers. They had an additional £20 in Universal Credit during the pandemic, which was then taken away again. Poor people don't need to be told to 'shop local' they spend most of the money they get within walking distance of their homes. What do rich people do with their money? Will the extra be saved, put in pensions, put in overseas accounts, or used to fund foreign holidays and high end consumer goods? 

Looking at the UK objectively - there are many problems. I'm a fan in breaking big problems into little ones and dealing with them a bit at a time. Cutting them down to size. Did it really look as though the most pressing first step was 45% tax? 

The unions were already on the march. Energised by years of low pay rises and cuts in allowances and other payments. What message has this sent them? This was a deliberate shot in raising tensions and division within the country. A play to their own base and newspapers to say, stick with us we've got your back. We very much need unifying figures now - one nation Tories if you like. Truss and Kwarteng aren't that. 

Much of the rise in the dollar this year has been a flight to safety. It is still the worlds reserve currency. GBPs losses have been similar to those off the Euro. At the end of last week that decoupled. We are now dropping relative to other countries and currencies as well. I called the potential for crashing the pound a few days ago. 

Could we see a Sterling crisis? — MoneySavingExpert Forum 

I still think there is a good chance of seeing parity with the dollar by Christmas.