Some interesting currency moves today

[JR8]

Opening line: 'You've made some waves with this report...' -> of course, that was it's intention.

- The BOE is acutely aware of the risk to the property market, which is one of the reasons it is signalling so loudly and so often that rates will be rising 'soon'. [The Fed likewise, though strangely enough since they started such signalling, it's increasingly looking like their economy is going backwards - hmmm!].
- Limiting mortgage customers ability to over-leverage has been stringently reined in since the last slump.
- For the UK home-ownership, of a desirable place is errr... like a life's mission for many. It's a deeply personal issue for most, hence a popular line to spin that 'housing will crash any day' - it gets attention, even when baseless and caused by blatant attention seekers.
- Nice street view @ 1.55mins, could be Notting Hill or Primrose Hill! [1860/70s Victorian stucco terraced housing).
- 2.05mins, with the church in the background, is Arundel Gardens, W11 [Notting Hill]. In fact that church (St. Peters?) is considered the geographic heart of NH itself.
- 2.10mins is Eaton Square, Belgravia. Probably the 2nd most expensive address in London after Ken Palace Gardens. ... Jose Mourinho and Sven-Goran Eriksson, Roman Abramovich (owner of Chelsea), George Soros, and even the ex UK royal ex-Princess Sarah Ferguson, now plain old Duchess of York live there + similar.
- 3.20m Not only SG etc have differentiated treatment for varying kinds of buyers (in recent years), I think the UK has equally, and today more so than ever.
- Buy-To-Let is not a 'new thing' as suggested [3.25/+] it's been around as a mainstream channel for almost 20yrs. It weathered the previous storm. Recent restricted lending criteria make is harder to F-U than previously.
- 4.10m He'd appear more credible, to me at least, if he didn't look quite so smug and pleased with himself throughout. Does he know he's prognosticating over the financial futures of many, and take that as seriously as his job-title suggests ...? Hmmm, no I don't feel that.

From the article below the vid:
>>'London house prices have surged 40 percent since the beginning of 2013'
I wonder in what part/s - I'm unaware of such.
Also the new much more onerous and recent transactional costs (stamp duty levels for all and CGT for foreign investors etc) mean selling up entails realising much larger expenses than before.

>>'The Bank of England has asked for more powers to regulate lending to so-called buy-to-let investors, who are attracted by rental yields of more than 5 percent compared with 1.8 percent for benchmark U.K. government bonds.'
I suspect that 5%/+ figure quotes is gross, before any landlords expenses and risks. 1.8% on UK-govt bonds is risk free, as 'risk-free a rate' as you can get; it's a false comparison on both counts.

>>'"House prices have decoupled most from local incomes in Hong Kong, London, Paris, Singapore, New York and Tokyo," Matthias Holzhey, an economist at UBS’s chief investment office and wealth management unit, said. “Buying a 60-square-meter apartment exceeds the budget of most people who work even in the highly-skilled service sector.”
Local incomes matter less when it's not just people on 'local incomes' competing in the market-places. London, perhaps increasingly and more than ever, is seen as akin to a safe-haven for money from around the world.
Remember also, in London (and England as a whole!) only one century ago something like 80-90% of all households rented their homes. Does that make the virtual flip-side say 75% owner-occupation a birth-right somehow, and if so how?

I've heard this kind of headline-grabbing opinion-piece so many times over the years... and many way way more rabid, and here we still all are conservative investors in it for the long run, doing ok... Actually I'm not even a 'property investor' any more, all I've left is my home that I rent out in my absence, same as any expat that keeps his home and rents it in his temporary absence away.

PH, what's your take?

[Primrose Hill]

JR8, I feel screwed. typical middle class being squeezed from left right and centred by the politicians.
I mean seriously, over 5% rental yield. Why is the BOE getting involved? What's this idea of govt intervention in everything? Why the assumption that BTL landlords are rich? Is it wrong of me to plan for the future and safeguard my family's future?
Am I a property investor then? I like to be, but I am not, to be honest. Banks in UK aren't lending and banks that serve expats aren't lending either. Banks keep speeing the lines "assets vs income ratio". OMG.

[JR8]

The government are always trailing a few steps behind where the thinking investor puts his pot of coins. And when a new taxable investment channel becomes established the govt rush in like John Wayne and the cavalry 'heading them off at the pass'

That's what we're seeing with B2L. The 'established pensions industry' largely went tits-up in the early 90s + any state pension provision of use started disappearing => people started looking for an alternative channel. + The govt wound down their provision of housing via councils. Some were handed to housing associations, but a lot was sold off under 'right-to-buy'. Thatcher's enforcer Norman Tebbit preached 'on your bike' job mobility, so the need for quality provision of rental housing grew, and it was private mom+pop investors who filled that gap.

The first investment mortgage I took out was, in retrospect, hideous. It was a commercial/business loan, 8.99% fixed for 5 years, and the fees/exit penalties were equally hideous ... and yet overall it still stacked up with a 20-25 year view. The gross yield was (IIRC) c12.5 %, and that was on desirable zone-2 Victorian conversions rather than say the 'HMO'/bedsit end of the scale where 20% was the target. The opportunity was there since it was a hard/$ niche to enter. I only originally learned of it as my '*sharp as a box of razors*' bro-in-laws [Indian lol] mother had been investing in it for some years. And if she was into something you just knew it merited close attention

In c95-98 the govt deregulated the protected nature of new rental tenancies, giving LLs a right to evict, that took out a big chunk of risk. But it was when a group of IIRC 5 lenders teamed up and gave birth to what they christened the 'Buy-To-Let' mortgage that that channel hit the high street, until today when it's almost a mainstream investment, a DIY pension for many. So now the govt want their slice of the pie. Higher-end investors used offshore purchase vehicles (Ltd Cos) and avoided many taxes. It's cat + mouse, and easy to tax as a tangible immobile asset. Hence why the govt are now exploiting the Stamp Duty route on purchases, and CGT on sales, making solicitors their unpaid tax-collectors. They make it more palatable to domestic investors (and more so domestic first-time-buyers) by whacking 'profiteering foreign investors' the hardest. Those taxes are progressively being ratcheted up; it's easy money and a populist route for the govt. Win-win for the govt, same as 'sin taxes'.
[Side-note: SGn/HK/PRC etc investors who've had an easy ride buying off-plan UK property, sold to them by local agents setting up stalls in their high streets and shopping centres should be aware that their golden goose has to some rather unknown extent just been been shot... those late to the 'easy money/sure-win' often end up getting royally plucked. And you can be sure the agents won't be telling them].

But we seem to have come a long way around the circle, from 'get on your bike [rent your home out, and don't worry it won't be taxed as an investment asset]', to a point where I don't even know what tax liability I might have on my sole UK property, my former home that I rent out in my absence. I'm pretty sure when I return to the UK that I have to terminate the tenancy, and move back in there, to re-establish residency (6/+ months?). If I don't AFAIUI I'm going to get whacked if I return to another new location and sell the London one... As it happens returning to that home is probably best anyway, since I can't buy a home in another place that's relatively unknown, from thousands of miles away. But after years away I fear I might have out-grown the neighbourhood; I don't really need any 'edgy vibe' any more

So, periods of absence abroad, and CGT liability on your home is the one biiig unknown for me. IIRC IR283 (Tebbit's 'on your bike, and we won't tax you' tax-code clause) used to clearly cover that matter, but IIRC that's now been modified. Unknown unknowns = discomfort for me

[JR8]

Here's an interesting article from The Motley Fool last week re: the UK economy, stock-market, (and hence longer-term knock-on into the housing market). It refers to Neil Woodford, a UK fund manager, who's correct identification and timing of the longer-term 'macro' economic cycle, has elevated his thinking to that of a guru - well worth paying attention to for UK investors.

In summary he's currently buying. It's striking to me as it reminds me how easy it is to lose perspective, and be distracted by short-term data (example this week: Chinese economic performance casting gloom far a wide). Here are a few edited excepts:
--------------------

'When star fund manager and long-time Fool hero Neil Woodford shouts “Fire!”, it is time to check out where the exits are. This is the man who saw how highly flammable the dotcom and banking booms were, years before they burst into flames.

Similarly, if you spot Woodford running towards a burning building, it is time to stop panicking and check out what he’s up to. That is pretty much what he has been doing in recent months, rushing into the market while others are running away. In an interview with the Daily Mail, he said concern over falling stock markets has triggered huge swings in share prices, and that is when he likes to buy.
...
This broadly reflects our philosophy at The Motley Fool: we actually like it when stock markets fall, as it gives us an opportunity to load up on our favourite companies at bargain prices.
...
Everybody loves a bargain, with the exception of private investors. They feel safer buying when markets are riding high and shares are overpriced, because it helps them make the leap of faith that every share trade involves.
...
It is a hard philosophy to put into practice. People have learned to flee trouble for sound evolutionary reasons...
...
Whole article here -> http://www.fool.co.uk/investing/2015/10 ... 002&lidx=1

[JR8]

With reference to earlier chat of dividend-investing/LTBH/'Time-in and not timing'/etc.... this article covers and encapsulates many useful and common themes. In a '101 lessons' kind of way...

http://dividendreference.com/guides/div ... ting-tips/

[JR8]

There is a sense this autumn of a growing fault-line opening up between east and west. The Chinese economy is slowing, whilst the EU is pretty stagnant, and the US is growing and on the cusp of needing to raise interest rates from their historic lows.

Since many companies these days have some element of global exposure the markets continue their 'seismic juddering' about.
Example: I own a stock that is a UK house-builder; and it's pre-occupation, or that of it's shareholders, apparently is dwindling future sales to PRCs. It's interesting quite how inter-connected everything can be these days.

Anyway, all eyes on the next Fed meeting ['FOMC'] and their now almost certain rate hike. Dec 15/16; with the latter the date for their decision. I wonder how many Xmas's that is going to spoil. Expect convulsions and paroxysms what ever the outcome

I found this economic recap from today a succinct global overview of what I allude to in paragraph 1^.
http://www.ig.com/uk/market-update/2015 ... ower-28911

[Strong Eagle]

Once again, where's the bubble that requires a rise in interest rates? I can't see it. It's the bankers an bond holders pushing for the rise... no one else benefits, not the USA, not business, and not the common man.

[JR8]

Once again, where's the bubble that requires a rise in interest rates? I can't see it. It's the bankers an bond holders pushing for the rise... no one else benefits, not the USA, not business, and not the common man.

I see two elements and I'm sure there are more:
i) The Fed want to avoid being 'behind the curve', hence a perception that current inaction or delay might itself be a trigger for a future sharp correction.
ii) Given raising rates from a historical low, esp. one as long embedded as this, is inevitably going to cause some causalities ['Honey, I wasn't expecting rising rates, our home is going to get repo'd' etc], I'm sure the Fed are broadcasting that 'rates will rise soon!' very very clearly so people are as prepared as possible. A parallel risk though is it unnecessarily spooks the markets, esp. when the monthly hard evidence warranting a rise is thin at best. Meanwhile we have this month to month uncertainty, and paradoxically uncertainty is the no.1 enemy of the markets.

I don't see it quite like you, the common man will benefit if he is veeery clear now of the risks of taking out say a mortgage on terms he might struggle to meet in future.

It's a really tricky call... I don't see the genuine evidence meriting a rise yet. If they raise to early, they risk killing the nascent recovery. I don't know what Yellen gets paid, but I wouldn't have her job what ever the sum... invidious...

[JR8]

The below article from this week might be of interest, as one starting point, for anyone considering investing in Indian stocks.

------------------------
A Guide to Investing in Indian Stock Markets
http://www.stockopedia.com/content/a-gu ... ts-111417/
'In his excellent book, The Growth Map, Lord O’Neill, formerly chief economist of Goldman Sachs, wrote that ‘India could overtake Japan in the next 20-30 years to become the third largest economy in the world’. Some commentators even compare India to China. They question whether India will grow faster than China and in the coming decades become the largest economy on Earth. It may be hard to imagine a former ‘third world’ country becoming a major economic powerhouse, but many historians will tell you that until the industrial revolution India together with China may have accounted for over 50% of global GDP. So perhaps it is merely be a case of history repeating itself (or back to the future, depending on which way you look at it).

In any event, if economic forecasts are accurate India may well offer many exciting opportunities for investors, particularly those hunting for dynamic growth stocks.'
[continues, from the above macro level, to micro, some resources for analysis, sector and stock-tips etc]

[Wd40]

My entire stock portfolio(worth $200k SGD) is India based, so I am betting big time that India doesn't screw up.

[Primrose Hill]

Mine is pretty much UK/US centric but it is a SIPP so long term views. Money Week this weekend advocated dumping of US stocks.

Question: - Will Yellen raise rates in Dec? Or is she playing more games of words?

[JR8]

Question: - Will Yellen raise rates in Dec? Or is she playing more games of words?

This Reuters article from Friday sums up the current outlook in US/UK/Japan
http://www.businessinsider.com/r-any-do ... ay-2015-11

[Primrose Hill]

and Paris upturns everything?

[Barnsley]

and Paris upturns everything?

I would imagine so ....

Depends if these loonies shoot up another city I expect.

http://www.telegraph.co.uk/finance/econ ... blitz.html

Nice boost for the economy!!

[JR8]

Last night: http://www.ig.com/uk/market-update/2015 ... kets-29050
‘Investors have been attempting to work out what the aftermath of the events in Paris will be. Concerns are rife that tightened border controls will lead to lower economic growth, thus prompting the European Central Bank to boost and/or lengthen its stimulus programme. Expectations of more easing have kept the euro around the key $1.07 mark, with today’s inflation data doing little to hinder the view that the ECB will have to do more to boost the region’s economy.

22hrs ago: http://www.ig.com/uk/indices-news/2015/ ... ]dow-29035
‘So far [Dow index] futures are holding up well, with a move above the 100-day SMA (17,171) putting a more bullish aspect on the index after a weak period. It will require a move back through 17,295 to be sure that buyers are coming back in force, but if this happens we can contemplate a move back to 17,600. A move through 17,100 would confirm that more downside is on its way, with a further target around 16,800. [/i]
[Note: the Dow rallied 1.38% > after the above was published, to close at 17,483.]

Apparently last night US futures were still pointing to a 70% of a December Fed rate hike. But the next FOMC meeting/decision isn’t until 16/17-Dec so a lot could happen before now and then.

re: Barnsley's link ending: 'France-swats-aside-EU-budget-rules-in-rearmament-blitz'

Amusing how Germany/France can treat EU rules as optional as and when it suits them. But woe betide any other countries (Greece, Portugal etc) who behave in such a cavalier fashion.

Add, from the news-wires at the London market open:
'French Prime Minister Manuel Valls echoed on Tuesday morning remarks by his President on the previous day that the emphasis will now be on meeting the country's new security challenges and not on meeting Brussel's fiscal rules.
How easily core EU laws get swatted-aside - but only when it's done by and in the self-interests of Germany and France...
http://www.digitallook.com/news/market- ... 31991.html