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NOVEMBER 2015
TWITTER @USTEWART WWW.7IM.CO.UK
ALL IS FAIR IN LOVE & WAR
GOOD DEBT – Investing For The Future
BAD DEBT - All Washed Up!
DEBT • Personal – individuals & family
• Mortgages & Investment
• Making Up Cashflow
• Corporate – from SMEs to Leviathans • Longer Term Equity & Bond Investment
• Shorter Term Private Equity & Venture Capital
• Government • Investment -Infrastructure
• Cashflow – trying to balance the books
SOMEONE CHANGED THE RULES • Demographics
• Working Population & Employment
• Interest rates
• Government Influence & Employment
• Private & Company Employment
• Pensions!
BUT NOBODY TOLD US!
Now Playing Catch-Up
A STORM WARNING?
A KEY MOMENT OF ECONOMIC CHANGE
8
UNPRECEDENTED STIMULI
• Low Rates
• Infrastructure Spending
• Quantitative Easing
• Commodity Price falls
AFTER THE STIMULANTS....
BIG IMBALANCES
• Government debt and deficits
• Consumer debt
• Trade balances
• Income distribution
AFTER THE “NOUGHTIES”-THE TINY TEENS
• Low Growth
• Low Inflation
• Low Interest Rates
• Low Returns
Now make some Money!
OIL PRICES Oil price move is still happening!
59% fall
22% fall
GDP GROWTH STILL POSITIVE
AVERAGE GLOBAL GROWTH CLOSE TO STATIC BUT CHANGES IN REGIONAL GROWTH RATES NOTABLE.
UNEMPLOYMENT IS FALLING
GREEN – EUROPEAN, RED - UNITED STATES, YELLOW - UNITED KINGDOM
CONSUMER CONFIDENCE & Savings
US, EUROZONE, UK AND JAPAN CONSUMER CONFIDENCE - 30 YEARS. GREY AREAS MARK RECESSIONS – EZ MEASUREMENT AGAINST GERMANY. GREEN – US AND UK HOUSEHOLD SAVINGS RATIO’S
INTEREST RATES START TO RISE
17
RATES – LOWER FOR LONGER
LHS – BASE RATES RHS 10 YEAR TREASURY YIELDS, US (RED) JAPAN (GREEN), UK ORANGE, GERMANY (PINK) CANADA (BLUE) GLOBAL YIELDS GRADUALLY INCREASING.
UK & US INTEREST RATE EXPECTATIONS
US BASE RATES (GREEN) EXPECETED TO BE AT 2% IN SEPTEMBER 2018 SOURCE BLOOMBERG
UK BASE RATES (ORANGE) EXPECTED TO BE AT 2% IN SEPTEMBER 2019
EFFECTS OF RISING RATES
• MORTGAGES
• Cost – not just a 0.25% effect
• Qualification
• Inability to Roll Over
• Pension Values (Annuity Values)
• Savings Values
THE WORLD BENEFITS Countries who export to the US
Country % of exports to US China 16.7% Japan 17.8% South Korea 10.7% Germany 7.9% France 6.9% UK 10.5%
THE SOUFFLE RISES – at last!
EU LEVEL PLAYING FIELD.....
SOURCE: TWITTER - @MARK_WILLEM5
WATCH IT SHORTY!
SOURCE: NEWEUROPE.EU/EPA
CHINA IN TRANSITION
SOURCE: MRB
29
Services matter more than manufacturing and construction ……and are growing far faster
THE AGONY & THE ECSTASY
“GREAT ECONOMY -PITY ABOUT THE POLITICIANS”
31
UK
Managing The Debt!
Fixing the banking system Tax reform?
2 Unions No Power or Transport strategy
World’s 5th - 8th -10th
?
KRANKIES – THE LOVECHILD?
SOURCE: NEWEUROPE.EU/EPA
Real wages ticking up
RHS - GREEN – WAGE INFLATION V RED UK CONSUMER PRICE INFLATION LIVING STANDARDS STARTING TO PICK UP AT LAST?
GOVERNMENT DEFICIT
SOURCE: ONS
UK Govt’ forecast to borrow £70bn in 2015/2016
SOURCE: BANK OF ENGLAND
THE LONG AND WINDING ROAD
INFLATION LIKELY TO STAY LOW IN THE MID-TERM
UK PMIs
SOURCE:
KEYS TO ECONOMIC CONFIDENCE
INEXPERIENCED POLITICIANS
INEXPERIENCED CIVIL SERVICE
CYNICAL MEDIA
HOBBLED BANKING
UK POSITIVE ISSUES • “Re-shoring” – Noodles & Antler • Record Car production • Sheffield Steel – 40 year peak • Non EU exports now higher than EU • Rice Cookers to Asia! • Financial/Professional trade exports £55bn • Over half million business start ups 550,000 • New Financing structures • Record Employment
NOW - SOME RADICAL COMMON SENSE • Tax Reform
• NI & SME • Stamp Duty – transactions & property • Sugar & Fat Tax
• Finance Education • For All!
• Pension Reform • Auto E • Education
• Investment Reform • New Funding schemes • Housing Free & Leasehold
• Infrastructure
EDUCATION –What…..
• MORTGAGES
• Cost – not just a 0.25% effect
• Qualification
• Inability to Roll Over
• Pension Values (Annuity Values)
• Savings Values
• Financial Planning
EDUCATION – Who….. • Government
• HMT
• Politicians
• Companies of all sizes
• The Population • Schools & Universities
• Families
• Employees
• Pensioners
REBUILDING ECONOMIC CONFIDENCE
KEY WORD FOR ECONOMY - CONFIDENCE
YOUR OWN PLANNING
Accountants
Lawyers
Insurance
Mortgage Providers
Banks
Trustees
Investment
Client Your Clients
Your Planning
FORWARD FINANCIAL HEADLIGHTS
Cash flow – income and expenditure § Now § Long term future
SO WHAT DO YOU DO? Think broader family assets and liabilities • Managing family assets
Improve Investment Discipline • Reducing Costs • Better than average Returns • Reducing Risks • Lower Volatility • Regular financial planning
FAMILY BALANCE SHEET
House
Car Pension
Life assurance
ISAs
Shares & National Savings
Cash
Mortgage
Credit Cards Loans
ASSETS LIABILITIES
NET BALANCE £
EDUCATING US ABOUT OUR FINANCES
THE ALTERNATIVE?
HOW MUCH DO I NEED?
NOVEMBER 2015
TWITTER @USTEWART WWW.7IM.CO.UK
MONEY ADVICE LIAISON GROUP
TWITTER @USTEWART WWW.7IM.CO.UK
THANK YOU