Posts Tagged ‘inflation’

Risky, Riskier, and the Riskiest

Is now the worst time to invest?  I would go further and argue there has never been a riskier juncture in the history of investment at which to put money to work.
 
Let’s take a quick look at some of the typical choices.
 
Corporate bonds. These, on an outright basis, have never offered such a low yield. Implied company-default rates are almost preternaturally low, thus almost certainly not reflecting reality.
 

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Skyhigh or Skyfall?

Skyfall, the 2012 James Bond blockbuster hit the $1 billion milestone recently making it the highest grossing 007 movie of all time. The ten top-grossing James Bond films are below (click on images for a closer view).

 

 
Clearly the headline jumps out at you that is Skyfall is top of the list, therefore it must be the most popular movie to date in the series. Of course, that would perhaps be more accurately measured by how many people actually went to see the screening? Even that idea is at fault as shouldn’t it be measured by the actual percentage of the population who viewed it? I believe that prize goes to Gone With the Wind, which apparently is also the highest grossing movie in inflation-adjusted terms as well.

 

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The Gradual Return to Fiscal Dominance

The UK government recently decided to transfer the coupon income from the Bank of England’s gilt buying program (Asset Purchase Facility (APF)) to the UK Treasury.  This is not only an interesting development in itself, but is yet another marker in the slowly evolving relationship between the central banks of the struggling developed market economies and their governments.
 

Looking at the UK’s recent action, there are two main effects. First, it will reduce UK’s debt/GDP ratio.  The transfer of £35bn initially and roughly £15bn each year after to the UK Treasury will have a material affect on the debt ratio, leaving it about 4% points lower in 2016 (all other things equal) than the IMF’s recent forecast (at 74%).

 

Source: Citigroup

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Inflation and hyperinflations: An overview

One of the primary goals of Hinde Capital is preserving and increasing investors’ purchasing power.  This is why Hinde Capital’s inaugural fund – Hinde Gold Fund – was one focused on gold.  When central banks are printing money and debasing currencies, hard assets and financial assets are generally preferable to holding cash.  Inflation is currently low.   When inflation takes off, financial assets will start to suffer, and hard assets will do best, eg commodities, gold, etc.

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