As all of you are aware, the new lockdown has just been put in place. The Netherlands has become the first EU country to re-enter a strict nationwide lockdown. I don’t think any of us could have asked for a better Christmas present! On to the news of the week;
The week of big decisions
High and prevalent inflation has put central banks in more of a tight grip. Just a couple of weeks ago the inflation increase was said to be “transitory”. Nearly all central banks have stepped away from this phrasing and looked towards a quicker decimation of the “crisis packages” administered in Corona times, with some central banks looking towards interest increases.
On Wednesday the FED announced that it would tear down the crisis support quicker than previously communicated.
The ECB announced on thursday that the corona crisis support, of 80 billion a month, would be torn down quicker and shut down in march of 2022. The regular bond buying programme will be increased from 20 to 40 billion in the second quarter of 2022 to circumvent any major shift in the financial markets. In the last two quarters of 2022 the programme will again fall to the regular 20 billion a month in two steps of drops of 10 billion.
in news of a country taking a violently different approach:
President Recep Tayyip Erdogan has had a different approach to the increase in inflation. The distaste the president has for high interest rates became more then clear when he started lowering borrowing costs in September in spite of a soaring inflation. This when he has been one of the forces behind the steady Turkish Lira in the last decades. In his first 5 years in office he railed the TL for 1.6 per dollar to 1.2 per dollar. Those days are long gone with the Lira now going at 17.5 against the dollar with a 50% loss in the last two months. The country’s finance minister Lutfi Elvan stepped down on the second of December over disagreements with the president about the economic policies. He was seen as the only person in the inner circle of the president who still believed in orthodox economics. There also seems to be no going back for the president as he takes a divergence from economic science. In a televised speech on Sunday night he uttered: “Don’t expect anything else from me ….. As a Muslim, I will continue to do whatever the religious decrees require”. The decree he was referring to is the prohibition in Islam on usury, which is the action or practise of lending money at unreasonably high rates of interest.
The Build Back Better bill of Joe Biden is in hot water because of the vow of another Joe, Joe Machin, not to support the 1,75 trillion dollar flagship plan of the white house. The centrist democratic senator from West Virginia did so in a fox news interview in which he vowed to vote no on the bill saying he had done all he can to make it happen but he just couldn’t vote for it saying in the interview: “If I can’t go back home and explain it, I can’t vote for it”. The legislation has been an extreme struggle to get through congress but with a 50:50 senate and the senator from West Virginia noted down as a no it seems dead in the water.
This week didn’t prove to be a great week for the investment groups. The returns weren't, to say the least; spectacular. There were only three groups that got more than one percent return in the last week. a couple of groups really dropped the ball but one group stands out under the rest shall we say. This is Bullseye International with a drop of 28 places and a weekly return of -12.08%. That is not something to go home and tell around the family table during Christmas dinner. There was some good news too, Heij Fidelity this week gained 7.15% and 12 places to grab the top position on our leaderboard! Only a couple of weeks left so pay attention and have fun!!