Raven Prop P Discussion Threads

[kenny] 15/10/2020 00:42

According to this recent article, the FED no longer has the ability to create inflation. Indeed, since the FED has been printing money “…Flexible Core CPI has dipped below zero on nine occasions since the start of the data in 1967. Interestingly, eight of those periods of price deflation have occurred since 2000 when monetary policy in the U.S. has been its loosest in history.”

The FED's situation seems to match the current experience of other central banks, like the EU and Japan. I guess it would be bizarre, if one central bank had a different outcome in their economy to others, when using the same policies.

[holts] 14/10/2020 12:55

One could hope -:)

[kenny] 14/10/2020 02:37

It is worth noting that the EU have had negative interest rates for about 6 years and have still not managed to create any inflation. In that time, they have also printed loads of money - more than $2.85 trillion since 2015 and they are still printing with a further $818 billion scheduled over a few years due to Covid19.

Interest rates were first negative in the EU in June 2014, at minus 0.1%, and over the subsequent six years have gradually moved down to minus 0.5% (since September 2019).

[kenny] 13/10/2020 22:44

I believe that the view is that negative rates work until they reach about minus 2 percent. Apparently, anything further becomes counterproductive. That's the view from Europe - Lagarde - who have been at minus half a percent for some months. On the other hand, I understand Switzerland, from their actual experience, has stated that they feel that anything beyond minus half a percent is counterproductive. I believe Japan has the same view as Switzerland.

[cc2014] 13/10/2020 22:02

I believe it's the view on this thread that after rates falling from 14% to 0.1% they just continue on until they hit -14% in about 25 years time.

So, he's going to be paying you plenty.

[holts] 13/10/2020 20:39

I want to know , if we arrive at Negative rates , is the Chancellor going to pay me for having taking his bounce back loan ?Only took it because I could , it's going back after 364 days so I suspect we will not have got to neg rates by then .

[kenny] 13/10/2020 17:10

Low interest rates have proved not to lead to more spending. In fact, they lead to more saving. Here’s an extract from an article published earlier today:

“Furthermore, she said it had a corrosive psychological effect – known as the Alice in Wonderland syndrome, when you walk through the mirror into a world that has become unhinged. It sets off a scramble for cash and safe deposit boxes. It leads to higher inert savings. In other words, it can be contractionary.̶1;

Clearly investment BB’s like this are for posting unsupported opinions based solely on blogs, below articles, by unknown people, - with no link to those blog posts. Obviously, these blog posters are financial experts hiding out as blog posters – which sounds familiar!

We should base our investment strategy and decisions on blog posts and ignore the content of the articles!

More seriously, I do deduce that in current circumstances, one of the main reasons that low interest rates are being pursued by/forced on governments is in order that their currency depreciates and/or does not appreciate against other governments who are pursing negative interest rates. Governments will never publicly admit that, so some people miss this nuance.

The financial landscape has changed. Given the new circumstance we live in, I do not believe spending will be people’s priority. The massive increase in the UK saving ratio shows that; as well as the material paydown of UK credit card balances.

In any event, spending will not create inflation because unemployment is going to hold back economic growth and demand. Latest projections are for UK unemployment to hit 7.5% by year-end and that circumstance cannot support demand or inflation.

Most people I know are concerned a) that they may be made redundant in the near future and b) even if they retain their job, they worry how they are going to afford to retire in a low/negative interest rate environment. Therefore, they are cutting back on their spending rather than planning their next expenditure.

It was hilarious reading recent posts but I am going to resist the temptation to respond further to “pogue” because that only encourages more amusing posts.

[igbertsponk] 13/10/2020 13:57

Somoene starting squabbles again on the other thread I see. Conflicting views will not be tolerated there!
Such fun

[pogue] 13/10/2020 13:44

Kenny
Where did I say the BoE were not considering negative interest rates? Strawman again Kenny either that or you cannot read a whole post of mine and understand the obvious point I was making.

In answer to the second part of your question.
I read widely on the topic not just those that reflect my own views so understand the bull and bear case my feeling is inflation will happen as that is the objective of every country that is reducing interest rates at this point, and to boost exports. As for if inflation will happen just because it did not work there does not mean it wont work here, circumstances and people are different. In the UK saving money is not what people want to do they are more spenders than savers so lower interest rates on their borrowing thus providing them with more money and they will spend it more than likely. Read some of the blogs below news articles on negatieve interest rates and people there say they will take it out and spend as saving is pointless. So spending more money in an economy where a lot of competition has gone bankrupt and the surviving businesses need to make up for the missing revenues of the past, and possibly future, months and you have a recipe for rising prices. Nothing like Japan really.

[kenny] 13/10/2020 13:28

pogue- In reply to your post 715, I would reply with your own words:
“pogue29 Aug '20 - 20:21 - 654 of 716
Why? My views are my own, you feel the need to post other people's views in reply then at least post ones that are relevant.”

If you did not know the BoE is considering negative interest rates, I suggest you do some research. You might also find out that the common view is that negative rates will not create inflation. The experience of negative rates in Europe and Japan are factual, whereas your views are meaningless, if based upon no research and no more than a gut feeling.

[rahosi] 13/10/2020 11:13

Negative interest rates helps with the HUGE amount of money the Gov is spending on Covid

[igbertsponk] 13/10/2020 10:51

Buying opportunity will last for months until Invesco finally sorted.

[gfrae] 13/10/2020 10:44

There is almost certainly some arbitrage going on between the Ords and Prefs.

[zangdook] 13/10/2020 09:51

narrow spread atm 113 - 113.6

[pogue] 13/10/2020 09:46

Bit of a lurch down today.

[pogue] 13/10/2020 07:30

Kenny
the whole point of negative interest rates is to promote spending to increase inflation so inflation is not expected to stay low by the BoE its being positively encouraged! Why do you think they are considering negative interest rates?

[zangdook] 13/10/2020 06:12

Whatever happened to Neil Woodford? Is he still riding his horses around saying it's everyone's fault but his?

[kenny] 12/10/2020 12:07

In response to post 708 above. It looks like there is a big overhang thanks to Invesco, so it is impossible to predict the bottom.

[igbertsponk] 08/10/2020 15:33

Interesting to see big change in Ords with Quilter going from 5.12% to 16.69%.
No doubt something to do with the Convertibles and Invesco.
Good to see such confidence whatever. Hopefully signals the end of some of the downward pressure.

[gfrae] 08/10/2020 09:57

I would have thought a return of 10% on a relatively safe investment is pretty amazing.
Arguably Russia is more stable than the UK. There are less warehouses there than here, therefore should keep high occupancy. Russia has very little external debt (Thanks to sanctions). Russians have very low personal debt, therefore can still borrow. Move to internet shopping has been exacerbated by Covid . Warehouses in demand. Compare to WARE which sits at a premium to NAV.
The ordinaries and Prefs are cheap because of the overhang of shares caused by the redistribution of RAVC and also the Invesco overhang.

[ryszy] 08/10/2020 06:30

Hello, send me a DM if interested in a serious way to make passive income

[meathed] 08/10/2020 03:35

You're forgetting your prognosis is pretty short. Spend it on gin and rentboys.