Daily Stock Market Report (Fri 8th August 2025) - BoE decision, PEN, VCP, AGR/PHP, PDL, SWC
Good morning- welcome to Friday's report!
That's it for now, have a great weekend.
BoE Decision
Some interesting developments at the Bank of England yesterday, where rates were cut (as expected) in a seemingly “hawkish” fashion, from 4.25% to 4%.
The majority in favour of a rate cut was only 5 against 4.
With inflation at an 18-month high of 3.6%, nearly double the 2% target, rate cuts are becoming harder to justify.
Unlike other central banks which have the so-called “dual mandate” to manage inflation and promote economic growth, the Bank of England is supposed to be primarily focused on keeping inflation low.
In their own words:
We set monetary policy to achieve low and stable inflation. This is our primary monetary policy objective.
In practice, this means keeping inflation at 2% over the medium term, which is the target set for us by the Government.
Subject to this primary objective, we also support the Government’s other economic aim, which is strong, sustainable and balanced growth.
If inflation is 3.6%, I would naively think that tackling this should be their priority.
Yesterday’s release pointed to external factors driving inflation, while also noting that the problem was getting worse:
The increase in headline inflation was explicable by factors such as supply issues in certain food items and changes in administered prices. However, increases in food and energy price inflation might prove salient for households’ formation of inflation expectations… Overall, the MPC judged that the upside risks around medium-term inflationary pressures had moved slightly higher since May.
But the economy was also a concern, with differing views on the committee:
UK economic activity had remained subdued. A margin of spare capacity was estimated to have opened up, which was expected to act against some continuing inflationary persistence. There was a range of views around the extent to which it had opened and would continue to build. The labour market was continuing to loosen gradually. For some members, weak employment growth pointed to further spare capacity building. For others, potential structural changes in the labour market meant that sufficient slack might not have emerged and might not build further to weigh on inflation.
In the end, the committee had to vote twice for the first time in its nearly 30-year history.
They no longer described monetary policy as “restrictive”, instead saying “the restrictiveness of monetary policy had fallen as Bank Rate had been reduced.”
These small changes in language are used as signals and clues in the financial markets around future decisions.
With bank rate now at 4%, markets are less confident that it will fall to 3.75% this year. There are only two small cuts, down to 3.5%, priced in by the end of 2026.
With the Bank of England more concerned about inflation than the markets had expected, the FTSE fell 0.7% yesterday (but it has been very strong recently). More dramatically, the pound soared by about half a US cent, jumping through 1.34 against the dollar:
(1-week chart from tradingeconomics.com)
And the pound reversed its recent losses against the euro:
(1-week chart from tradingeconomics.com)
Good news for holidaymakers, less good news for exporters!
I was extremely impressed by how the Bank of England (and other central banks) subdued the inflation genie in recent years. But perhaps they grew a little too accustomed to their success, and a little complacent. Perhaps rates should simply stay where they are for the time being?
The Agenda is complete.
Spreadsheet accompanying this report: link.
Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
|---|---|---|---|
GSK (LON:GSK) (£56.4bn) | $370m to GSK and GSK to receive 1% royalty on Pfizer US sales of flu/Covid mRNA vaccines. | ||
Flutter Entertainment (LON:FLTR) (£40.1bn) | Increased guidance. Revenue $17,260m (prev: $17,080m), adj. EBITDA $3,295m (prev: $3,180m). | ||
TBC Bank (LON:TBCG) (£2.9bn) | H1 net profit +6% (665m GEL), ROE 23.7%. Quarterly dividend 1.75 GEL, and 75m GEL buyback. | ||
Assura (LON:AGR) (£1.59bn) | KKR says attractiveness of the PHP offer for Assura has reduced, and their offer is 1.1% higher. | PINK (Graham) [no section below] Interesting tension here as KKR expresses disagreement with its rival suitor PHP over the cause of weakness in the PHP share price. PHP is attempting to buy Assura with a mix of cash and its own shares, and therefore the PHP share price - and its likely future trajectory - is a hot topic. PHP says the weakness is temporary, as it is caused by traders who are waiting for the PHP deal to complete. KKR suggests that these traders aren't hedged and will want to sell their PHP shares in the market after the takeover completes - with the implication that the PHP share price is not about to suddenly rebound. Of course nobody can say with any certainty what will happen. What is certain is that KKR's all-cash bid is currently worth more than PHP's bid, but it is PHP's bid that currently has the blessing of Assura's board. This story seems likely to run and run. | |
Smarter Web (OFEX:SWC) (£439m) | Purchases 50 BTC, now has 2,100 BTC, total amount purchased £171m, also has cash £19.5m. | RED (Graham) [no section below] The best that I can tell, this stock is equivalent to a pound coin trading for over £2 (or a £200m balance sheet valued at over £400m). Their aggressive fundraising activity should continue until they've closed the gap. | |
Stelrad (LON:SRAD) (£217m) | Rev -4.6%, adj. op profit +1.1% (£15.9m). Actual op profit £3.8m. Unchanged Board expectations. | ||
Victoria (LON:VCP) (£103m) | 97.3% of 2026 senior secured notes voted to extend maturity to 2029 on attractive terms. | RED (Graham) Hopefully its credit ratings can improve as a result of this refinancing, but I'm not convinced the equity has a positive value here. Credit ratings prior to the refinancing suggested a very grave risk of financial distress. | |
Petra Diamonds (LON:PDL) (£24m) | SP +39% Updated plan with $18-20m in savings against prior guidance. Refinancing: extension of bank debt and notes, $25m rights issue at premium price 16.5p. | RED (Graham) [no section below] | |
Pennant International (LON:PEN) (£12m) | SP -14% MoD contract award delayed, so 2025 turnover to be lower than market expectations. | BLACK (RED) (Graham) Much too dangerous for me considering the lack of tangible assets on the Dec 2024 balance sheet, the losses incurred in H1, and now a profit warning that highlights the lumpy nature of revenues. We were already AMBER/RED on this but I think fully RED is now justified. |
Graham's Section
Pennant International (LON:PEN)
Down 13% to 24p (£10m) - Trading Update - Graham - RED
I’m going to downgrade this all the way to RED seeing as Mark was already AMBER/RED in July.
Earlier in July, the company finished carrying out sale-and-leaseback transactions on its properties, in order to reduce its overdraft. They were “confident” they would meet market expectations.
Unfortunately, that confidence was misplaced, as a contract award has been delayed.
Before getting into that, here are some H1 figures in today’s update:
Revenues £4.5m (H1 last year: £7.4m)
Adjusted loss before tax £1.7m (H1 last year: loss £0.4m)
Net debt as of the end of June of £2m. I note that the update in early July said that £1.125m would be received for (the last two sale-and-leaseback deals.
GenFly (“Generic Flying Controls Trainer): contract negotiations with the Ministry of Defence are continuing, “but it has now become apparent that newly-introduced approval processes within the MOD are likely to push the August award date into Q4 2025 or later”.
This puts Genfly revenues into 2026 and later years. Genfly was supposed to provide 15% of full-year revenues for 2025.
CEO comment:
"While it is disappointing that the GenFly contract will start later than expected, we will push to secure the award as soon as possible, while keeping focus on implementing our Auxilium strategy to achieve long-term growth in our software and services segments. Indeed, it was pleasing to see the early fruits of these efforts in the achievement of record-level ARR during the first half and we look forward to materially growing this number in 2026 and later years."
Graham’s view
There are multiple reasons for caution here: a track record of losses, reliance on large contracts whose timing of award is unpredictable, and a net debt position which strikes me as likely unsuitable for a company of this size and status. The company has been addressing the problem with sale-and-leasebacks, but that’s a temporary and costly solution, which amounts to hollowing out the balance sheet to fund past losses.
Checking the accounts to Dec 2024, I see that net assets were £8.3m, but £6.7m were intangible. After making an adjusted loss of £1.7m, it seems to me that tangible net assets could be turning negative.
This is much too dangerous-looking for my taste and therefore I’m RED on this. Let’s hope they can turn it around.
Victoria (LON:VCP)
Down 4% to 86.5p (£99m) - 2026 SSNs vote in favour of extending maturity - Graham - RED
It’s remarkable to think of the heights this once achieved:
However, it turned out that financially engineering a bunch of flooring companies with massive leverage did not lead to a sustainable stream of riches for everyone involved. Quelle surprise!
The entire company is now trading at only twice the value of Geoff Wilding’s custom-built superyacht, which he apparently sold this year for $66m.
But it’s not all bad news: Victoria’s 2026 bondholders have overwhelmingly supported an agreement to extend the maturity of their notes. These notes, with a face value of €490m outstanding, will not be repayable until 2029.
CFO comment:
"The strong support received from our 2026 SSN noteholders demonstrates confidence in Victoria's credit and outlook. By delivering a comprehensive refinancing of our short-term maturities we have provided certainty for all of our stakeholders and established firm foundations from which to continue executing our cost-saving and strategic growth plans."
The old notes had an interest rate of 3.625%, and have been refinanced on “attractive terms”.
So what is the new interest rate? 9.875% per annum, with most of this interest being paid via “payment-in-kind”, i.e. paying the interest with more bonds rather than with cash. Only 1% will be paid in cash.
Payment-in-kind is typically used by companies that are light on cash but can convince lenders they will eventually be good for it.
Credit ratings: Victoria is rated CCC+ at Fitch, after a downgrade in May. From Fitch’s website, anything within the CCC region is considered to have “Substantial credit risk: Very low margin for safety. Default is a real possibility.”
Victoria is also rated CCC+ at S&P, with a similar meaning: “Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments”.
Graham’s view
This refinancing news will hopefully lead to upgrades to Victoria's credit ratings. But of course, paying off its debts successfully doesn’t mean that there will be anything left over for equity holders. The new, much higher interest rate will eventually increase the amounts owed to lenders. I’m not convinced there is any equity value here, so it’s a RED from me.
Disclaimer
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58 comments
Unfortunately this has to get political! The current government is incapable of keeping public spending under control and this must inevitably lead to higher interest rates. Nevertheless the govt wants interest rates to go down to minimise government interest payments and support economic growth. So what does the govt do? 1) Leave the primary mandate of the Bank of England to be to minimise inflation. This being the public face of the govt stance. 2) They privately tell the bank of England that they must reduce interest rates otherwise the current leadership of the B of E will be replaced. Outcome is B of E reduces interest rates and gives confusing messaging about what will happen to future interest rates. As a result UK 10 year bond yield increases because markets are not fooled by incompetent governments and unclear statements from B of E.
Sadly the current crisis is 20 years in the making and the Reform manifesto has £60BN of additional spending. Richie S was right, the British have no grasp of Maths and %,
I agree that the current crisis has been 20 years in the making. So it is also the fault of previous governments. In fact, I think that it is also due to an inherent problem with democracy. This being that in the run up to elections, all the potential governments have a big incentive to promise more than they can deliver, and they also tend to underestimate the cost of their polices. What happens is that the party that promises to deliver the most, at the lowest cost in taxes, is much more appealing to voters. Then, after the election, the government is unable to keep their promises because the promises were never realistic in the first place, and the books won't balance. If there has been a change of government, then the new government blames the previous one. If the incumbent party wins, then they will say that they had to change their policies because the situation has changed in some unpredictable way. Whatever happens, no party ever admits that they promised more than they could actually deliver. But this is what all the parties do.
No good answers/moves going forward as Snowdrop says 20 plus years in the making.
Starmer reminds me of one of those supply teachers that used to come into the class rooms when I was at secondary school in the mid 80's it was instant carnage they just couldn't keep control, visa vi his own party when he try's to make tiny spending cuts.
I was reading somewhere of the 20 bil odd borrowed in June 16 bil of that was spent on debt interest payments, fantastic strategy borrow more to pay your interest payments.
B of E can control the short end, but in current environment long end goes up, they could try and yield curve control the long end down but that would make inflation even worse.
The default current can kicking strategy seems to be to roll over all the maturing debt at the short end of the curve, the US and Japan are doing this.
The problem/risk is as you are constantly having to roll over trillions and if rates ever spiked up to 6% plus you are going to have a major issue/event on your hands in short order.
Liontrust Asset Management (LON:LIO) does anyone know why the price has moved so much today? Understand the Div has been paid out today but not seen any news behind share price move?
I've been looking at Liontrust Asset Management (LON:LIO) also today volume doesn't look hugely different to the norm and I note the top 10 share holders only have 25% ish of the company so would be a lot of ringing round if someone wanted to make a take over.
Other than that can't add much there were rumours 2 or 3 years back they were going to merge with Artemis who aren't listed but who are going gangbusters at the moment as a lot of their popular funds are on a tear unlike Liontrust.
Palace Capital (LON:PCA) Just been notified by AJ Bell that the tender is now open. Price is £2.40 per share for 30% though you can tender more. Having held for many years I have tendered my full holding. Closing date is August 20th.
@rmillaree I see it slightly differently. More disposable income now and you risk encouraging firms / price setters to attempt to recover more of the extra costs they have been saddled with over the last year, rather than accept a degree of margin pressure. There are many moving parts to this but I think the Bank's comments yesterday hinting that government policy has pushed against what looked like a reasonably stable downward trend in inflation, are entirely fair. It's unfortunate - given the fiscal position. Ideally you'd want to see fiscal consolidation offset by material easing in monetary policy. What we got was net fiscal easing....suggesting less monetary easing is appropriate. If the GBP50bn number is anywhere close to reality the picture will look very different in 12-months....with that sort of fiscal tightening facing the economy, Bank Rate sub 3 is entirely plausible at some point in 2026.
Hiscox (LON:HSX) gapped up 15% on interims Weds but there was no commentary.
Blatant attack on free speech. ;-)
?
TBC Bank (LON:TBCG) Anything in the report that justifies a 10% drop in price today?
Tell us please. DYOR and divulge your inspirations to the community.
I'm into the US not some ex-Russian principality with two investment plays which are interconnected and based on Russians pumping there cash out of their homeland as fast as possible.
If had some insider information then full focus of course. ?
Sorry not personal, just too much for us to follow. We have the most information at our fingertips than at anytime in history and AI is turbocharging that.
Volatile times so 'hold forever' good for the SIPP and kids JISAs but traders need to make money and not 'keeping up with inflation dividends if lucky'.
Fair comment Harry, I do have more time at weekends than weekdays to take a look.
With inflation at an 18-month high of 3.6%, nearly double the 2% target, rate cuts are becoming harder to justify.
am i the only one that is highly unconvinced that keeping rates high is always the key to avoiding high inflation.
I do get the basic point about money supply blah.
But in the real world i cant think of anything that is going to make people go straight to their bosses and "demand" a payrise more than their mortgage payments going up. So when we up rates - to me its very obvious that directly adds to wage inflation.
Inflation seems to be a worldwide thing at present and probably very much beyond our contol to a point (perhaps government stupidity excepted - that their spending never seems in control).
To me i simply see high interest rates as adding to the flames but forcing people to ask for higher wages - when they might tolerate less if they didnt have to find extra cash to to pay over in interst charges
I do know facts are for your average working person the interest they pay on their mortgage is perhaps the biggest large variable ref their budgets.
If its all pretty mechanical what they do should be not simply sack the lot - save the funds spent and get an AI to make up the decisions.
Just seen Norfolk's post - summed up by them way better than my woeful effort - great post Norfolk.
Also don't forget the effect of higher interest rates putting more money in the pockets of those with no mortgage - less than 30% of homeowners have a mortgage.
As I've said before, there is no mechanism that links the BoE interest rate with bringing down the global costs of energy, which has been the main driver of inflation in the last 3 years.
Plus lowering employer ni threshold and big increases in min wage for under 21's haven't helped services/food price inflation.
Or employment of young people. Somuch harder to get jobs whether part time, graduate or apprentice positions at present.
Absolutely my youngest is 16 we are trying to get him a part time job but most of the big retailers want minimum age of 18 as they can legally do more sell booze, run tills etc.
I'm really sorry, but I've no idea what point is being made. I think I need to lie down :-)
B.P. Marsh & Partners (LON:BPM) - Any chance of us finding out where the near 10% was sold this week ?
I can see a small prpn was bought by Brian Marsh to bring his holding just short of 40% and about 2% was bought in by the company but that still leaves a chunk out there somewhere..?
B.P. Marsh & Partners (LON:BPM)
I can see a small prpn was bought by Brian Marsh to bring his holding just short of 40%
I am not convinced that he has bought any shares - i think the fact that the company bought back a wad of the shares that were sold has simply increased his % holding - ie he has dones nothing.
Ref who has bough shares - well unless we get an RNS it may not be clear for some time if ever.
Eg if there were 10 buyers and none crossed a threshold that would require notification you wouldnt find out they had traded until some later date - and even then it may be that they bought shares elsewhere.
Other than that you would need to do your own detective work - you might be able to find out if they buyer releases the info publically - eg in their updates to the market if they are listed and update ref shares bought and sold.
A few thoughts on this week's defence news including today's £PEN. https://open.substack.com/pub/...
As it's a quiet day, where does everyone go for their financial/economic news these days? especially relating to UK stocks.
I had a FT subscription but found it didn't cover UK stocks as much as I expected it to.
I read Shares magazine free from AJ Bell and have a weekly subscription to MoneyWeek. Gives a pretty balanced view on markets, companies, politics etc.
Same here, you can often read MoneyWeek online through your local library via an app for free. In Dorset we use BorrowBox, but some use Libby or PressReader.
Yes I do that, it’s a great free resource.
Yes it is, just wished they had IC, but can’t grumble there’s plenty of cookery and car mags
As above I read Shares Magazine via AJ Bell and MoneyWeek via the library. I also took out a discounted Bloomberg media subscription last year which is good for market news on the day and I like some of the regular newsletters, eg Money Distilled by John Stepek. Still to decide if I will renew, though, at full price.
Investors chronicle online is good - A useful option - you can look up any UK stock and see the broker forecasts and lots of other useful tools
These days I tend to ignore normal media channels for financia daily l news as I found I ended up thinking about general noise. But still use it for researching ideas. If I do want to know what is happening I use Hargreaves Stock Market news reports
https://www.hl.co.uk/shares/stock-market-news
I've also started playing with AI for news. Try using something like "Provide a summary for today's financial and economic news relating to UK stocks, max 500 words" into your AI of.choice. (eg Gemini or Copilot). You can then ask it to focus on a specific area. I find it much more interactive and focused than normal sites
I've got subscribed for business news:
I follow a few sites on Feedly. The most controversial maybe is Zerohedge. But I think it's good to see some of the more radical viewpoints out there.
Then I have a list of 20-30 Substacks that I follow. Obviously not all of them publishing daily or weekly. There's some really good in depth research and commentary from other investors, that I enjoy reading. Just have to be aware you don't sign up only to writers with the same views as you, otherwise it becomes an echo chamber. I also write my own Substack.
On Spotify and Amazon Music, I sign up for a few podcasts. And if there's an interesting episode, I have something for the car.
I then flick through my Google Discover feed (on Android) once in a while. Get some articles sometimes that are of interest, from publications that I don't sign up to or follow.
ZeroHedge is usually quite an interesting read - makes you think out the box occasionally.
Nadeem Wyalat very good also on his substack has made some very good calls over the years, its just getting the time to read everything I find I'm frequently at information overload so trying to cull/resist looking at so many different sources.
Anyone else have issues with Hargreaves Lansdown this morning could not trade anything until just now.
Hi, I'm sorry but I edited your comment as the picture you posted was taking up more than the entire length of my screen! Graham
Whoops
Renewables Infrastructure (LON:TRIG) - interim results quite poor due to low wind and power price curves drifting ever lower. Anyone else surprised at how much power price curves keep reducing?
Surely at some point that should lead to a reduction in the price to the consumer as overcapacity should create downward pressure on price.
One thing I fail to understand with Renewables Infrastructure (LON:TRIG) interim results is the statement Generation in the period was 10% below budget driven by poor wind resource. According to the National Grid data https://grid.iamkate.com/ wind generated electricity in the UK for the last year has been in excess of 30%. Have they over budgeted or is the UK not representative of the wind generation for their total wind resource with low winds in other countries? The lack of wind seems to be a regular excuse for poor results which doesn't square with the National Grid information. On the plus side a 2025 yield of 6.6% on my initial investment is worth having - sadly the collapse in the share price means a big capital loss and consequently the current yield is 9.35%. However, this doesn't seem attractive to investors as the trust is still trading at a 25%+ discount to reported NAV. I assume the market view is that the current dividend may not be sustainable.
Not an expert on this, but I would assume that wind generation per turbine was down over last 6 months, but overall there is still new wind capacity coming onstream, which results in overall wind generation in the UK going up despite lower energy generation per wind turbine...
Re TRIG
In my view there are too many moving parts in renewables for a private investor to determine the investment case. It seems to be a case where everybody in the supply chain has some gripes about the level of return on their investment yet the end price to the UK consumer remains one of highest in Europe.
Specifically regarding wind, the cancellation of Hornsea 4 by Orsted was a little surprising and concerning. A brief list of reasons as to why Orsted took this decision is given in the Reuters news update. It's not an encouraging read...
https://www.reuters.com/sustai...
As I have mentioned before there is the additional problem of wind theft where the the number of turbines has reached a level where they are interfering with the ability of other turbines to generate. Perhaps not unsurprisingly, this has resulted in a number of legal cases which are currently being considered. Not great news for investors.
https://www.bbc.com/future/art...
Going forward I would suspect that the Government, which has too much invested in the concept of green energy will fold its hand and by some mechanism increasingly subsidise wind generation in the UK. For this (and many other reasons) I would expect that by the end of the current term of office, energy prices in the UK will be higher than current prices.
As a weak bet on Government support, I bottom fished on TRIG. I am up slightly but as a very cautious investor would sell quickly if the position deteriorated.
Interesting thoughts there Graham. I have a different view. Most of the inflation seen in the UK at present is as a direct result of the staggeringly incompetent Government we have (NI ENI Min Wage Rates rises etc) have all contributed to price increases then needed to recover increasing costs. High energy prices, in the main dictated by geo-political events but again contributed to by this Govt not allowing us to access our own resources (oil and gas) will also have contributed to rising costs and so rising prices.
Anyone who has studied economics will know that interest rates are one way of controlling an economy. In a rampant, runaway, overheating economy (demand pull inflation) interest rates can be raised to dampen down demand and so dampen inflation. Where, in my opinion, the Bank of England is going wrong is in thinking that they are effecting the economy of this country with there interest rate policy.
We have not got demand pull inflation, we have cost push inflation. We also have a rapidly weakening economy. I am not sure who came up with 2% as a figure for inflation but the obsession with it is very damaging to economic growth, in my opinion. Why don't we have a target range, for example 2-4% thereby allowing us to 'look through' short term issues - especially if they are either occurring on the world stage or are outside of our control.
What I can tell you is that as a businessman of 30 years the actual economic reality is that things out on the high street of UK PLC are in dire straights. Other than lock downs in Covid times I, and a lot of my business contacts, are saying things have NEVER been so grim. Interest rates need to be reduced further, look at what they are doing in Europe, interest rates cut to help the economy grow to create jobs and prosperity.
The way I read the Bank of England and their actions is very different to most. Re read their quotes above, are they really saying 'We wish inflation wasn't our only guiding principle, we would far rather have economic growth at the top of our agenda.'
Finally, for anyone thinking that the B of E reduced inflation over the past few years down from it's dangerously high levels, through it's own efforts with interest rates is very much mistaken. A basic course in economics will give you the tools to understand why inflation went up and why it came down again.
Seem to be firmly in a stagflation scenario. Its looking more and more like the 1970's. Need a Thatcher figure to jolt the economy and get animal spirits going again.
Personally everything feels 'sluggish' these days, no one can be bothered to do anything. Or maybe its just me?
From what I read the 2% target came about from a New Zealand central banker in the late 80s but why 2% I don't know but like sheep they all followed!!
Completely agree. You could also add a glut of cheap redirected goods/materials, that are no longer heading towards the US, and we could see inflation fall significantly next year. Some interesting patterns forming on gilts that indicate markets don’t see rates increasing again. But how fast might they fall?
So true, so what goes through the minds of people voting against interest rate cuts, if anything? Are they just technocrats, just focussed on the inflation?
Or are they simply out of touch with the ordinary man (or woman Reg) on the street?
Not everyone wants rates cut, the majority of people don't have a mortgage. If you have savings and no borrowings, then a rate cut is not a good thing, especially if inflation is going up.
I think it may be a bit more complicated than that Rusty and also is probably a lot more complicated than my simple explanation above, too.
Just because a person doesn't have a mortgage it doesn't mean they do have savings.
Just because a person does have a mortgage doesn't mean they don't have savings - I am in this bracket but I do want to see rates cut further and quicker.
A general increase in an economy's prosperity has got to be good for all? More employment means more taxes means less paid out in benefits means more money for public services etc etc
Also, although only roughly 25% of all homeowners have a mortgage in the UK the number of homes owned completely, outright and independently is less than 40% - go figure?!?!
We ran the economy in the interests of borrowers for the thick end of 15 years after the GFC. If that was the route to prosperity it would have worked at some point in the 2010s.
Borrowers have to get used to the idea that money has a price.
Borrowers have to get used to the idea that money has a price.
have the government not given billions of out to the banks since the start of covid on el cheapo terms - perhaps if the haves like the banks werent given preferential treatment it might not seem so bad.
moeny still has a price whether you are paying 2% or 3%.
You could be right that it is necessary - who knows we would need to give it a go with lower rates to find out the answer i guess,
Personally I think the West's long term plan is to crush rates back down to sub 1% , inflation is stopping them from doing it currently.
Given we are paying out 100 bil a year in interest payments and a lot of old debt is rolling off sub 2% and needs refinancing at 3.8%- 4.5% depending on duration I think they realise longer term its the only way to kick the can for another 5-20 years. Hence why Trump is strong arming the fed.
The takeover battle for Assura (LON:AGR) continues - hard to keep up with it as KKR intensify the pressure
Primary Health Properties (LON:PHP) (I hold) only need to tweak the cash element of their offer to inch ahead in a contest that looks like a snail race, where neither bidder has achieved even 5% acceptances.
A good summary Graham on interest rates and yesterdays close call. Thank you.
It looks to me like we may be getting a second inflation peak and so that's it on interest rate cuts in my view. 4% CPI is already forecast in September (5% inflation using the proper CPIH and/or RPI measures) and I would estimate that these estimates are optimistic and the numbers will be slightly higher. In the 1970s there was a second smaller wave of inflation. It looks like we will get a second wave this time despite tighter money supply for a few years.
The Bank of England seeem to be in a really tricky position: 1. the Government keep introducing inflationary policies to counter their interest rate policy, particularly on wage inflation; 2. CPI is used and the public has no confidence in it as it excludes household bills and tax that are the main cost increases to most households - even the Office of National Statistics use CPIH over CPI; 3. The BoE have been hopeless at forecasting and always seem to get it wrong (normally on the optimistic side); 4. Stagflation is not being admitted (i.e. no growth and high inflation) and 5. They seem to cut when others cut like the ECB, but Europe doesn't have the same problem as the UK.
Always love to hear your macro views topvest, it used to be good when R D Howarth used to chip in also as he was mustard on macro hopefully he's still here lurking and hasn't jumped ship.