Trouble lies ahead in the markets
There are many signals knocking around in the markets that should make you nervous, says Merryn Somerset Webb. There is almost definitely trouble ahead.
You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Twice daily
MoneyWeek
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Four times a week
Look After My Bills
Sign up to our free money-saving newsletter, filled with the latest news and expert advice to help you find the best tips and deals for managing your bills. Start saving today!
Do you know anyone who has borrowed to buy bitcoin? I asked this question on Twitter earlier this week, rather assuming that the answer would be no. Instead I got several replies from people who do, and another pointing out that IG Index often has bitcoin at "unlongable" meaning that they are at their capacity for people betting on margin. People are borrowing to bet, and the price of a bitcoin has gone parabolic (up 14 times in the last 12 months).
That should make you feel nervous. However you feel about cryptocurrencies and blockchain technology, there are few historical examples of assets that have risen that much in price in such a short time and not come back down again pretty fast too. But the mini-mania that is bitcoin is just one of many signals knocking around in the markets that should make you nervous. Valuations are high (or as the Bank of International Settlements says "frothy"); Donald Trump's tax plans could well be about to crash the greatest bond bubble in centuries; there is a high level of complacency about, despite very high political volatility; and the economic growth we need to keep earnings going looks as elusive as ever. You don't have to be naturally bearish to see that there is almost definitely trouble ahead.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Finally, there is one more thing you can do with any spare cash you might have (perhaps from selling that bitcoin). You can bid to have lunch with me in London (on the Financial Times) at private members' club George. I can't promise it will do miracles for your finances, but I can promise that it will be entertaining (we can argue about bitcoin and Brexit) and that it might help with a miracle or two for Alzheimer's suffers: all proceeds go to Alzheimer's Research.You can bid using this link. I look forward to meeting one of you at George.
-
Average UK house price reaches £300,000 for first time, Halifax saysWhile the average house price has topped £300k, regional disparities still remain, Halifax finds.
-
Barings Emerging Europe trust bounces back from Russia woesBarings Emerging Europe trust has added the Middle East and Africa to its mandate, delivering a strong recovery, says Max King
-
Inflation may be slipping but there is still plenty of misery aheadEditor's letter Inflation may be a little lower than last month as the prices of petrol and diesel fall back, but it remains structural and long-term, says Merryn Somerset Webb. And there are no painless solutions.
-
Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
-
How to tackle rising inflation and falling stockmarketsEditor's letter Inflation is rising around the world. Even though inflation is widely expected to return to around 3.5% next year, it is still wreaking havoc. Merryn Somerset-Webb explains what to do about it.
-
How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
-
Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
-
The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
-
The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
-
Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
