So we have been greeted with an ‘unexpected’ 3.6% inflation and unemployment rising at the same time that vacancies are diminishing (the lowest since Covid). Anyone reading these eshots and realising the increases in costs on employers would not have seen these two things as ‘unexpected’ at all.
Indeed, perhaps the Government should subscribe to our eshots… of course, inflation is a tax in many ways – your cash on deposit has deteriorated by 3.6% over the last year in effect. Higher inflation tends to encourage central banks to keep interest rates higher for longer though it also means the ‘real value’ of the colossal government debt has also dropped by 3.6% (though when overall debt is rising so quickly by government over-spend, that can’t hold the increases back at all).
However, as the economy’s shrinkage through this ‘Stagflation’ is more concerning, the Bank of England is likely to cut rates another 0.25% at its next meeting.
Nvidia has regained its speculative fervour, broaching its previous highpoint to become the first $4trillion company. At the same time, its own executives, including Jensen Huang, the CEO, have encashed more than $1billion of stock in the last year – half this June alone.
And some good news? The price of cocoa is finally coming-down, so that should feed-thorough to chocolate prices in the end. Coffee is also off its lows, but commodities like cotton and wheat are still remarkably and bizarrely cheap, as are nickel and aluminium. However, China’s announcement of the biggest ever dam, in Tibet, has seen miners jump today on expected demand increases. They were good value anyway.
Selling fresh air
So I am thinking of bottling fresh air and selling it as a really exclusive investment opportunity. There’s going to be a limited number of bottles to protect values (well before I start bottling ‘Fresh Air 2’ as another great and exclusive investment opportunity).
Yes, we are back there again and new record prices for Bitcoin. However, as renowned bear Mr Jeremy Grantham reminded investors in his interview with Wilf Frost, it’s not something you can use, or eat, or… just what is its purpose, aside from endeavours of under the radar criminality and fraud attempts on naïve but unsuspecting ‘investors’..? Even central banks have decided of late that gold (and rumoured to include silver by the Chinese now) are better reserve currency options (again). Invented and non-existent crypto is now ‘worth’ more than the whole of the UK Stockmarket at $4trillion…
Indeed, when I read ‘London-based microcap businesses pile into bitcoin to turbocharge valuations’ I know that no lessons from history have been learnt – even by regulators (Financial Times 30 June). In this regard, firms buy Bitcoin and then their shares become popular as a result of their policy and so it goes on. Nine tiny, mostly loss-making companies (from speculative miners to an AI servicing firm) announced that alone, in the week before the article. I suppose whilst the ducks are quacking, you should feed them… However, it is all Emperor’s new clothes and an industry created out of their making.
Meanwhile, after a speculative frenzy in dollar-backed ‘stable coins’, Korea has allowed domestic financial institutions to again buy ‘kimchi bonds’ (foreign debts issued onshore and intended for conversion into South Korean Won) to try to offset the currency flows created. They were banned in 2011 to stop local issuers being exposed to currency mismatches. ‘Stable’ coins… hmm, reminding me of gambling on the horses (and losing one’s shirt) or other unpleasant smells emanating from them… perhaps apt after all… Indeed, the Staff outing to Newton Abbot Races last weekend reminded aptly how gambling is different to investing… though no shirts lost I am pleased to say as no big bets made on the GGs!
Good news/bad news
We are told the bounce in the prices of the average REIT (Real Estate Investment Trust) as discounts have contracted and several with corporate action has not been enjoyed by most investors because their managers won’t have any, including discretionary investment managers who propose to their clients that they can buy and hold ‘anything’. Well clearly, they can’t and don’t. I am pleased to report our clients will have enjoyed the reduction in discounts as we have quite a few of these beasts!
I have shared some of the reasoning for their inability to do so before – that doesn’t bind us! However, our clients are fine – if anything we have ‘too much’ of this good theme and are very pleased about that indeed!
I have spoken about smaller companies before too and expressed the multi-decade low prices of these compared to their bigger brethren. Yes, they are higher risk but you can spread that by using collectives like Investment Trusts. They should be more expensive and particularly because they can multiply their turnover and their profits exponentially whereas large companies cannot really do that so easily at all. Again, we have quite a few but have also been increasing exposures, partly from reducing some of the bigger stocks from which we have done very well – like banks.
When good news is boring, Amigos!
We have been very pleased to once again offer our support to the Amigos Worldwide charity (which is based in North Devon) by match funding half the £15,000 cost for three new fresh water boreholes in Uganda.
This means we’re on the hunt for three generous businesses, organisations or perhaps individual philanthropists who are willing to match us for ‘half a borehole’ and donate £2,500 each. Even if you run a charitable community group, perhaps you could make this your cause’ in the coming weeks and raise the total that way?
This is a very worthy cause and currently many poorer people in rural Uganda – mostly women and children – have to walk miles daily just to collect water, which is often full of bacteria and can make them very sick, or even kill them. More importantly, if they are doing that task for basic survival, they have even less time to work and improve their lot, while the children miss out on going to school.
If you would like to help, know someone who may be interested, or find out more, please follow this link and read the full story: – Life or death – North Devon asked to step up for vital water borehole appeal
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers
