Monday, Nov 16, 2009

Star fund manager warns on consequences of Weimar Republic wheelbarrow money

FT: Jupiter issues gilts warnings

Fund managers are warning of an "almighty shake-out" on the gilt market amid mounting fears the Bank of England will lose control of inflation and send interest rates rocketing. Jupiter income star Tony Nutt said: "There is an unprecedented amount of Weimar Republic wheelbarrow money being thrown at the system.
"The Bank of England will think 'I'm in control, I'm in control - oh, whoops, no I'm not'. We will wake up one morning and find interest rates are already higher than we were anticipating the day before."

Posted by jack c @ 09:25 PM (2059 views)
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20 Comments

1. mander said...

Tactics to scare people with inflation so they invest thier savings in property.

Monday, November 16, 2009 10:34PM Report Comment
 

2. Skeptical_fisrt_time_buyer said...

Well we can make money out of gold mining stock as it rises on these inflation fears, and then switch to something else to ride out that bubble burst, and finally by houses in 2012, when there is a new government a less will (or ability to) re-inflate the housing bubble.

Monday, November 16, 2009 10:47PM Report Comment
 

3. alan said...

@ Mander,
Surely this is the wrong tactic to make people invest in property. If interest rates jump up by (even) 2%, people on bank rate trackers (currently about 2% will have their interest bills doubled!

SVRs of (say) 3.85%, jumping to 5.85% will likewise take about a 50% increase too. Both will push the cost of mortgaging up, and the prices of houses down.

Also interest rates jumping up might give savers a decent rate on their savings for a change. I'm just wondering how the current government will claim the glory for "helping it to happen".

Monday, November 16, 2009 11:04PM Report Comment
 

4. stillthinking said...

I don't think its property related, but I do think there are a lot more fund managers trying to preempt a crisis for personal advantage. All they have to do is collapse confidence because they want to trigger a reinforcing spiral. Can the UK handle current and incoming debt servicing costs, if they can't then their debt servicing costs increase as debt becomes more expensive, which worsens their ability to service, which increases their debt costs, and so on. Fiscal disaster.

They were never going to wait until the problem was apparent to all and are bound by the nature of their business to get in a bit early. The big problem is that they are right, or even just close enough to right as makes no difference.

Monday, November 16, 2009 11:09PM Report Comment
 

5. mander said...

Alan,

Makes sense what you are saying but policy makers do not think about people. They go by a plan and they need either to inflate their way out of debt or simply get people back on the "property ladder" which didn't work so far.

Monday, November 16, 2009 11:15PM Report Comment
 

6. Cheekie Charlie said...

I don't care if inflation reaches 100% as long as I get 101% on my savings!

Monday, November 16, 2009 11:37PM Report Comment
 

7. fallingbuzzard said...

Stillthinking might be right. Tony Nutt runs one of the biggest dog funds out there, I think the worst performing fund in its class having more or less missed out on all the stock market growth in the past 6 months. Egg on face. His fund is invested in defensive stocks so a collapse would suit him nicely.

Monday, November 16, 2009 11:45PM Report Comment
 

8. drewster said...

In defence of Nutt, his fund is labelled an 'income' fund not a 'growth' fund. Buying shares in e.g. Apple gives great growth but they haven't paid a dividend since 1995. If you're a widow or orphan, you need steady income rather than yo-yo growth; even if it means missing out on some rallies.

Tuesday, November 17, 2009 12:34AM Report Comment
 

9. fallingbuzzard said...

He's bottom ranked on income!

Tuesday, November 17, 2009 01:23AM Report Comment
 

10. techieman said...

"having more or less missed out on all the stock market growth in the past 6 months." yes - i think the reason for that is mostly because there has been virtually no pullback on which to buy the market, although i am not surprised in the least about this move in general i am surprised about the speed of it. Only now am i surprised about the extent of it.

The bull move has taken out many of the resistance areas, but there are still a couple on the S&Ps to come. We have imo had most of the correction to the first leg of the bear. Another 5 - 10% perhaps but being long is getting popular again... a bit too popular!

As for the Gilts i agree but not for the reason he says, its the funding thats the issue.

Tuesday, November 17, 2009 05:51AM Report Comment
 

11. doomwatch said...

Sounds like a Nutter to me. Never ask a barber how his hair cut looks.

Tuesday, November 17, 2009 09:58AM Report Comment
 

12. str 2007 said...

Just Specced up a new Golf on the VW website - Ouch

£39,995

That's about 25% - 30% more than the last model.

I've also had cause to price up some Oak timber recently.

American White Oak is about £1700 m3

European Oak is now about £2700m3

European has always been a bit more than American despite the extra distance in shipping from the US, but not 60% more.

I think you might find this inflation animal is closer and going to hit harder than most imagine.

Tuesday, November 17, 2009 10:30AM Report Comment
 

13. Neilb said...

This is great news! Rising intersest rates will lower house prices, encourage people to save and allow all the poor pensioners that have had their pensions stolen from them by this bunch of Brown's clowns to earn an income from their savings.

Tuesday, November 17, 2009 11:00AM Report Comment
 

14. str 2007 said...

Hi techieman

Everyone seems to be bullish and long now.

With regard to resistance levels, drawing a line across the peaks of the FTSE100 at roughly 22/10/07, 2/1/08, 20/05/08 and then extending that line towards today, the level comes across at roughly 5470.
Is that a line of resistance you see as having any relevance or are all yours on the S&P & working on the basis we will follow its lead?

Tuesday, November 17, 2009 11:19AM Report Comment
 

15. stillthinking said...

Its strange because as I understand it, there is no half-way house for debt deflation, you either deflate or inflate, either write-off the debt or print(QE) the money. So given that restriction the government is presumably trying to inflate some areas and deflate others to reach a socially acceptable medium. In which case, for us to avoid a strong inflationary burst, whenever it comes, there must be deflation somewhere else, or to avoid a deflationary burst/bust there must be inflation somewhere.
But it is the nature of gilts that they are kind of inflation neutral, because as their price rises the yield falls. For the UK to get the potential inflation tsunami, there can't be deflation elsewhere. But there is deflation elsewhere, across asset classes and wages.
So I don't really see inflation in the near future, although there are certainly some rising prices which stand out.

Tuesday, November 17, 2009 12:01PM Report Comment
 

16. techieman said...

hi Str 2007

http://finance.yahoo.com/tech-ticker/article/367381/Wall-Street-Is-Setting-Investors-Up-for-Another-Hurting-Robert-Prechter-Warns?tickers=%5EDJI,%5EGSPC,%5EIXIC,SPY,DIA,QQQQ,GLD

as for the high - S&Ps look for 1120 see:

http://danericselliottwaves.blogspot.com/

and particularly http://2.bp.blogspot.com/_TwUS3GyHKsQ/SwH1Wq0o-KI/AAAAAAAACqQ/-OfORXKhv3k/s1600/spx1.png

and his latest update.

For me i need some downside confirmation, a fall and then a rally which fails to take out the prior high and then another fall to get short on.

You will see from his analysis that the top may be in and if not there will be one more move up. I favour the latter, but will be willing to go short if that doesnt pan out.

Tuesday, November 17, 2009 02:14PM Report Comment
 

17. techieman said...

And probably best for an overall summary chart:

http://2.bp.blogspot.com/_TwUS3GyHKsQ/SwA-DsB194I/AAAAAAAACoo/Dc8rFYw-ejU/s1600-h/spxdaily.png

you will note his comment re the mom and pop suck in. [echoed in the questions from the pretcher interviewer above]. This could cause it to go to the level after 1120.

Tuesday, November 17, 2009 02:20PM Report Comment
 

18. str 2007 said...

Cheers techieman I'll have a look through that.

Tuesday, November 17, 2009 03:47PM Report Comment
 

19. str 2007 said...

Thanks techieman

That 1st graph was a bit confusing for my tiny mind, but the second was the one I was thinking of and comparing to the FTSE100.

So we're just about there then. And Mr. Pretcher (that's not you is it ?) is talking about new lows below 667 S&P. wow. But so long to get there 2014-2016 ??

I'd of thought that if it was going we'd get a similar velocity to last time, but what do I know.

Cheers

Tuesday, November 17, 2009 04:53PM Report Comment
 

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