We’re Not The Only Ones Who Fear a Recession…
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Best put the kettle on. Because after today’s edition, you’ll probably want a nice cup of tea…
Yes, today brings a veritable avalanche of economic gloom. But there is hope. If you’re an investor, there is definitely hope! I’ll tell you why in just a moment…
First, though, let’s brace ourselves for the Monday misery (has that kettle boiled yet?).
We kick off with the annual report of the Bank of International Settlements (BIS). The BIS may not be the most famous of financial institutions. But the Switzerland-based ‘central bankers’ bank’ is certainly among the most respected.
In its 2007 report, published last June, the BIS predicted the financial world was headed for a fall. It stated that “mortgage credit has become more available and on easier terms to borrowers almost everywhere. Only in recent months has the downside become more apparent”.
Well we know what happened next! The credit crunch — sparked off by dodgy mortgage-backed securities.
If anything, this year’s report is even more unnerving. Take a look at this extract:
“Historians would recall the long recession beginning in 1873, the global downturn that began in the late 1920s, and the Japanese and Asian crises of the early and late 1990s respectively.
“In each episode, a long period of strong credit growth coincided with an increasingly euphoric upturn in both the real economy and financial markets, followed by an unexpected crisis and extended downturn.
“In virtually every instance, some form of new economic discovery or new financial development provided a further ‘new era’ justification for rapid credit expansion, and predictably became a focus for blame in the downturn.”
The report goes on to predict a deep, long-lasting slowdown. I hope the BIS is wrong this time, but, sadly, I fear the worst. Because closer to home there is yet more ‘bad data’ to contend with.
Estate agents report prices falling in 83% of England and Wales, compared with 53% a month ago. Hometrack data show the number of properties changing hands last month hit a 30 year low.
And consumer confidence, according to GfK NOP, is at its lowest level since 1990 — right before the last UK recession. Back then the index was at minus 35. Today it’s at minus 34…
Of course, none of this comes as a huge surprise. Last week I asked Fleet Street Daily readers the following question:
Within the next two years, do you believe the British economy will have a recession?
We had hundreds of replies. And, you won’t be astonished to know, the result was an overwhelming and emphatic Yes!
In fact, many of you went further, saying the contraction had already begun.
“I have a small retail business,” wrote one respondent, “and believe me - we’re already in a recession, no doubt about it.”
Another reader had this to say:
“No enquiries for units on the industrial estate in the last 6 months, except from those recently unemployed who are thinking of importing pogo sticks or some such.”
Indeed, there was only one bit of positive business news — and it hardly bodes well for the economy:
“We rescue struggling businesses across the UK, we are growing fast and recruiting!”
There were many other replies from business owners, accountants and others on the ‘economic front line’. And they made for fascinating reading. I’m a firm believer that those on the ground have a much better idea of what’s going on than politicians and economists.
The latter have to wait a full six months to ‘confirm’ a recession. Those of us living in the real world don’t have the luxury of waiting half a year. If we’re going to protect our wealth, we need to act now.
The question is, of course, what action should you take? Here’s where being an investor could offer you a way out. Because there are good investments on the stock market. And the falls the stock market has seen this year offer you the chance to pick up some great bargains.
I asked the team at Fleet Street Research to identify the best investments available to private investors right now. Within the next two weeks, our sister publication the Fleet Street Letter will publish the team’s report.
I’m told I can’t give away too much at present. But I can tell you this — the team has more than risen to the challenge!
Rest assured, I’ll keep you posted on developments as and when they unfold…
Why I had a nice lie-in on Saturday morning…
Saturday’s email was earlier than usual. I usually send it out around 11am. But two days ago it went out at 9.
The reason was simple. I didn’t write it. Let me explain…
All last week our special situations guy Manraaj was on my case. He had a recommendation coming up, and he was keen for it to get top billing.
To be honest, I found his pestering a little annoying at first. But that’s because I thought it was just another, run-of-the-mill share recommendation.
“Why’s he so excited?” I thought. “What’s the big deal about this particular share?”
Well, on Friday his report came out. And as I read it, I began to see why Manraaj had been so worked-up…
The report is a tale of cannibals… the CIA… military coups… Che Guevara… a UN secretary general dying in a plane crash… never mind the money it can make you, this is worth reading for the story alone!
Add in the potential profit — 127% in the first year — and this report is a must. Of course, that figure is a forecast, and forecasts are not a reliable indicator of future results.
But one thing’s for sure — I’ve never seen Manraaj as excited by one company as he is by this one. It’s why I allowed him to write to you on Saturday — which he did, sending it out a full two hours ahead of schedule!
Of course, because it went out early, I realise you may have missed it. In which case you’ll be wondering what on earth I’m talking about!
Actually, even if you did read it, there weren’t too many details. Manraaj was in a race against time to get this out — so he had to keep it brief.
That’s why I’ve asked him to write about it today, and fill in a few of the blanks.
Until tomorrow
Ben Traynor
Source: We’re Not The Only Ones Who Fear a Recession…
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