Worldwide Financial Planning

A recession is classed as two quarters of negative growth. Negative growth? (I’ll leave that conversation for another time). But to use an analogy/metaphor, think of your waistline (inflation) where it’s just become a tad puffy. If it carries on at that rate there are issues like diabetes etc, so you have to retract it (economy) sustainably.

Equities and bonds have risen off the back of some pretty conventional comments by central bankers, as for some reason markets have decided this time they mean something slightly different. Given banks are committed to keeping rates high until inflation is low, analysing speeches for clues to what central banks might do seems fairly redundant when inflation is 10%.

There are many who will be going through extraordinary pain, stress and discomfort now, and, with the cost of living, and the issues that go with that, Christmas is their superb release, escape and excitement that makes it all worthwhile.

With economic data deteriorating, bond markets are now trying to time the moment when the Fed pauses, or even reverses, it’s rate hikes. The minutes from the latest Fed interest rate meeting show it moving towards a less aggressive path for rate rises, while indicators show economic activity slowing and unemployment beginning to rise.

There is a great study on our nine emotional needs by the ‘Human Givens’. You should read it. At the heart of it is the answer to many financial issues that affect our overall happiness and wellbeing, leading to control of debt and spending and an understanding of where we really are financially.

Political commentators have been keen to point out that delaying spending cuts sets a trap for the next government. However, Hunt is likely to have learned Kwasi Kwarteng’s painful lesson: borrowing a lot of money when interest rates are high is expensive and make you unpopular.