The Bank of England was the main event on Thursday after a series of inflation data points for the UK economy earlier in the week. On Tuesday, we received the latest inflation report for August. The year on year rate unexpectedly rose to 2.9%. Oil price and clothing responsible for the bulk of the higher than anticipated reading. Despite the unemployment rate falling to 4.3%, average earnings continue to lag the rate of inflation. Incomes grew just 2.1% year on year for the month of August, and continue to fall in real terms. This could well add to concerns that further pressure will be put on consumer spending.
The Bank did leave interest rates where they are but signalled that they may look to raise rates in the coming months. Possibly November. Gilts fell, sterling rose against the pound as well as the euro, and in reaction to the stronger pounds, big cap equities fell. The Bank is still having to deal with the knee jerk reaction to last year’s decision to lower rates after the Brexit vote. One can’t help but feel if they not cut last August they would not be looking to raise rates currently.
We wrote a couple of weeks ago comparing Donald Trump to an investment, and if he were a share would it be time to buy? In the short term, it looks like that might have been the case. By siding with the democrats, he managed to avoid any problems over the debt ceiling, at least for now. His dealing with the post hurricane impacts has seen his approval rating climb from the mid-thirties to the mid-forties according to a recent Rasmussen poll. Donald Trump has also reignited the tax reform debate. He still has some way to go as over 50% of those polled disapprove of him, however, there does seem to be something of a relief rally.
The Bitcoin, apparently the most over crowded trade according to a recent Merrill Lynch survey. After the rise this year one bit coin is now worth, in theory, almost 3000 pounds. The price has gone from 600 dollars to almost 4000 dollars since October last year. Cryptocurrencies are the future some believe others point to the view that they are just a means for those who do not want to see how they pay for illegal activities. Ransomware criminals apparently ask to be paid in Bitcoins, to not publish personal data. There is a theory that part of the price rise is due to the North Koreans using Bitcoin’s to pay for their weapons programme. Who knows, but below is a CNBC link on Mr Dimon’s, JP Morgan chief executive’s, views on the subject, and one would not be surprised if he ultimately was not proved right.