Friday Thought!

 

Posted by Simon Constable on Wednesday, October 14, 2020

Forbes: Investors Watch Out: Bank Of England Preps For Policy Shift That Would Likely Hurt The Economy

By SIMON CONSTABLE

It’s time for British savers and investors to watch out. 

The Bank of England, the U.K.’s central bank, is now testing the waters for possible negative interest rates. 

If that happens, it would be a financial war on hardworking savers in Britain and at the same time likely hurt the economy. Read more here.

Bank of England

Elisa.rolle, CC BY-SA 3.0, via Wikimedia Commons

WABC Radio: Scotland restricts the pubs and cafes again-- What is to be done?

 By SIMON CONSTABLE

WABC Radio: Constable Talks Economics With Frank Morano

 By SIMON CONSTABLE

Listen here.

Photo by Harry Cunningham on Unsplash

Darden: Cooperation Vs. Competition -- What Do You Want In Your Mutual Fund?

 By SIMON CONSTABLE

Veteran investor Charlie Munger once quipped, “Show me the incentive, and I'll show you the outcome.” Put simply, what metrics an employer uses to determine performance pay will likely have a profound effect on the way employees behave. In turn, that impacts how companies perform. Read more here.

Photo by krakenimages on Unsplash

WSJ: Five Reasons Why Investors Might Buy Negative-Yielding Debt

 By SIMON CONSTABLE

Why would anyone want to buy a bond with a negative yield?

It’s a good question especially given that experts estimate that there are almost $16 trillion of bonds in the world that have negative yields. That’s a lot of securities that investors have purchased knowing that they’ll get back less money than they invested. It means that a one-year bond with a face value of $1,000 that yields minus 1% will leave the investor with $990 when the bond matures. Read more here.

WSJ: What Is the Output Gap?

 By SIMON CONSTABLE

Investors might start hearing a lot more about the output gap, an obscure metric Wall Street professionals historically have used to predict changes in Federal Reserve monetary policy and the potential for an increase in inflation. 

Using it, however, can be more art than science. Read more here.