GCIThe biggest worry now should be Deflation not Inflation
Taking Stock Wednesday 9th October 2023
Taking Stock: Is a look at today's top business news & investment views plus we cover the winners, losers, the most read company news & the most followed. Today this includes:
The biggest worry now should be Deflation not Inflation
What Is Deflation?
Deflation is the general decline of the price level of goods and services.
Deflation is usually associated with a contraction in the supply of money and credit, but prices can also fall due to increased productivity and technological improvements.
Money Supply
The money supply is the total amount of cash and cash equivalents such as savings accounts that is circulating in an economy at a given point in time.
Variations of the money supply number take into account non-cash items like credit and loans.
Central Banks influences the money supply, through actions that increase or decrease the amount of cash in the system.
Monetarists, who view the money supply as the main driver of demand in an economy, believe that increasing the money supply leads to inflation.
Companies discussed on “Taking Stock” today:
05:50 CleanTech Lithium #CTL
06:00 Atlantic Lithium #ALL
07:15 Marks & Spencer #MKS
13:10 Destiny Pharma #DEST
15:35 Silver Bullet Data Services #SBDS
16:24 Naked Wines #WINE
16:57 Versarien #VRS
23:08 eEnergy #EAAS
25:40 i3 Energy #I3E
27:17 Harland & Wolff #HARL
29:00 Frontier Developments #FDEV
31:50 Seeing Machines #SEE
33:53 Union Jack Oil #UJO
35:49 Tern Plc #TERN
37:50 Oxford Biodynamics #OBD
38:40 Merit Group #MRIT
40:25 Silver Bullet Data Services #SBDS
40:45 MGC Pharmaceuticals #MXC
TOP BUSINESS STORIES
Bank of England governor: 'too early' to talk about rate cuts
Andrew Bailey also said that it’s “too early” to talk about interest rate cuts.
Speaking at a conference hosted by the Central Bank of Ireland in Dublin, the Bank of England governor said:
It’s really too early to be talking about cutting rates… We are very clear, we are not talking about that.
Bailey said he is “optimistic” that inflation will come back to the 2% target within two years, but that rates will likely need to stay high for longer to make that happen.
Last Thursday, the Bank of England held interest rates at 5.25% for a second meeting, at a 15-year high of 5.25%, and signalled borrowing costs would stay high for an extended period as it tackles stubborn inflationary pressures.
However on Monday, the Bank’s chief economist Huw Pill said financial market expectations of a rate cut in August 2024 “doesn’t seem totally unreasonable, at least to me”.
UK housing market is past its ‘peak pain’, declares Savills
Upmarket estate agent says prices will start to bottom out in 2024 as interest rates fall and will return to growth in 2025
Britain’s housing market is past “peak pain” and prices look likely to bottom out by next summer, according to the estate agency Savills.
The average UK house price is projected to fall by 3% in 2024, after a 4% drop this year, the upmarket estate agent and property advisory firm said in its five-year outlook.
Savills expects the Bank of England to start cutting interest rates in the second half of 2024, reducing its base rate to 4.75% by the end of that year, from 5.25% now. The property company forecasts rates will fall to 1.75% in 2027.
UK think tank urges Hunt to invest in economy, not tax cuts
Britain's finance minister Jeremy Hunt must resist the temptation of pre-election tax cuts and instead boost investment in areas such as infrastructure and skills to snap the economy out of another decade in the doldrums, a think tank said.
On current trends, the bottom 50% of earners in the country will not see their inflation-adjusted incomes return to pre-COVID levels until the end of 2026, the National Institute of Economic and Social Research said on Wednesday.
The best way speed up the weak economy would be to increase public investment to 3% of gross domestic product every year and offer incentives for companies to invest more too, it said.
British public investment is set be about 3% of GDP this year but will fall to roughly 2% in coming years, a difference of around 30 billion pounds ($37 billion) annually.
"Certainly if the government has the fiscal space to do that, that is what they should be doing. What we do not want to see is a pre-election tax giveaway," Stephen Millard, a NIESR deputy director, said.
Marks & Spencer has reported much better-than-expected profits for the first half of the year, as the retailer continues to revamp its brand.
Profit before tax rose 56% to £326m in the six months to 30 September, driven by higher food and clothing sales.
M&S has been focussing on upgrading its shops, clothing lines and digital offer as part of a big turnaround plan.
Food sales were up nearly 15% in the period, after stripping out the effect of new shops opening.
Despite the recent boost, its boss warned that the retail giant remains cautious about the year ahead.
Its chief executive Stuart Machin said that high interest rates, slowing price rises, global conflict and erratic weather could hit trading.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.