The &#39January Effect&#39 – a boost for high yield?

The ‘January Effect‘ is a relatively well known stock market anomaly, whereby equities have historically performed better in January than in any other month of the year. Most explanations for the January effect focus on how tax-conscious investors sell stocks in December that are down for the calendar year, in order to write off losses against their capital gains. This behaviour pushes the pric…

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Fed Monetary Policy game – "Fed Guru Reappointed"

Have a go at the Fed’s online monetary policy game (click here), where you take the role of Chairman Bernanke in setting rates in the face of a number of economic scenarios. I’ve just been reappointed as Fed Chairman thanks to my “solid” policies. The game seems to reward mimmicking the Fed’s past actions – success will come by marching interest rates to the top of the hill, then marching them …

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The Bond Vigilantes Christmas Quiz – the answers and the winners

Thank you for all your entries. The winner is Nick Tudball of BNP Paribas, with 19 out of 20. There was a tie for second and third, with James Mitchell of UBS and Sara Swinden (who I suspect sits near to Nick Tudball) of BNP Paribas, both on 17 out of 20. We had a draw for second place, and James won. The average score was 13.6. The highest M&G entry came from Sophie Gray in our marketing team….

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Last chance to enter the Bond Vigilantes Christmas Quiz!

The closing date for entries is tomorrow – Friday 21st December – at 5 pm. Winners will be announced next week sometime, depending on how quickly we can get the entries marked – think of us as you tuck in to your Christmas lunch, we shall be in the office wading through sacks of quiz entries by candlelight. Bah.

You can find the quiz here. It is deliberately tricky, so the winning score won’t b…

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Stable conditions

‘Tis the season to be jolly, and is the time of year when I have the delights of seeing my children in the traditional nativity play. The story is familiar to all of us. At this time of year our thoughts also focus on the potential for giving, or in my children’s case, receiving gifts.

Quite appropriately in the financial world, the central banks want stable conditions (unlike Mary and Joseph, …

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De-coupling – China and India to come to the rescue of the global economy? Nope

The people I speak to about the growing probability of a US consumer recession seem to have a widely held hope that the Asian and emerging market economies have matured enough to take up the slack. This is the so-called "de-coupling" scenario. I think it’s nonsense, and some research sent out today from Morgan Stanley’s Stephen Roach shows why. American consumers spent $9.5 trillion over the la…

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The Bond Vigilantes Christmas Quiz

To take your mind off the misery in the following markets – banking, commercial property, risky credit, emerging markets, housing – we invite you to take part in our Christmas Quiz. There are 20 questions in total, and the closing date for entries is Friday 21 December by 5pm. No purchase of M&G bond funds necessary (although if you haven’t done your ISA this year yet…). Entry is open to anybod…

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Unfit for human consumption

I enjoyed this letter which was printed in the Times last Saturday.

Sir, The selling and buying of Northern Rock mortgages between banks reminds me of a wartime story. It involved the busy exchange of corned-beef between black-marketeers.

One purchaser complained that the beef he had just bought was unfit for human consumption. He was told that the beef was not intended for human consumption, …

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Over the edge

In this comment early last month, I posed the question as to whether the UK housing market was on the brink. Well, today’s data leads me to the conclusion that it has gone over the edge and we are entering a bear market for homeowners. This view is based on one of my favourite indicators of the future direction of the housing market – the level of mortgage approvals. Mortgage approvals are akin…

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The knock on effect of falling house prices – crystal ball breaking

US house prices fell by 5.5% in the year to the end of September, according to the S&P Case-Shiller Composite-10 Index (see opposite chart). The pace of decline is quickening – prices fell by the most in at least 20 years during the third quarter, a very painfull event for the US home owner.

Prices will need to continue falling until the huge excess supply on the market is cleared. This chart s…

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