Category — Finance
Plenty of amusing stories are making the rounds today. Like the bond salesman who fooled Royal Bank of Scotland into thinking he had access to wealthy clients. After touring their trading floors and meeting clients and executives, it turned out the oddly named KK Ho wasn’t a bond salesman after all. Just an employee facing an imminent layoff.
A false flashy business card and name dropping is all it takes to fool a bank these days. It’s not much of a surprise though. The bankers do work for the government, with RBS 81% government owned.
The funniest part is that Ho’s story only emerged because of a court case brought by a former RBS trader. He alleges he was wrongfully dismissed for manipulating internal pricing systems. (Bankers are only supposed to manipulate external prices.)
With people like these in the finance industry, what can go wrong? The latest addition to our editorial team, Vern Gowdie, has more on that tomorrow. He also has a solution to evading the Australian financial industry’s fee rort. And Vern would know, having steered his clients through the bog when he was one of Australia’s most successful financial advisers himself. Now he’s gone rogue.
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Last week I gave a clear warning that Japan was at the epicentre of market moves world-wide. I gave that warning before the large fall in their stock market.
Of course I had no idea that on the very day I wrote my article we would see huge gyrations in their stock market. But I have followed the immense moves occurring in Japanese government bonds (JGB’s) and knew we weren’t far away from some fireworks.
And it seems to me the worst is far from over…
The falling bond market is a completely sensible reaction by investors to the Bank of Japan’s (BoJ) threat of seeking 2% inflation. Most are of course sceptical that the BoJ can achieve a 2% inflation rate. But it’s hard to see anyone buying bonds at a 0.5% yield when the central bank is doing all in its power to ensure investors ultimately receive a negative real yield.
Kuroda, the BoJ governor, has even met with large holders of JGB’s begging them not to sell out. That course of action won’t work. The first man out the door is better off. Who wants to be left holding the bag if Japanese government bond’s collapse further?
Even though the Bank of Japan is soaking up 70% of all new issuance, Japanese government bonds are still selling off. I’m sure they still have tricks up their sleeves (they always do), but I think we are still in the early stages of a large exodus out of Japanese bonds. [Read more →]
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Can you feel that?
Sure you can, right between the shoulder blades.
That’s the Reserve Bank of Australia (RBA) lowering interest rates to a record low. And if the banks cut savings rates by the same amount as the RBA rate cut, it could mean a big cut to your savings income.
A word of warning: don’t relax yet. The odds are the RBA will keep hold of that knife and give it a twist within the next couple of months as it sends interest rates even lower.
So, this is bad news right? It is. But it’s also an opportunity. I’ll explain more below…
Central bank interest rates don’t just impact savings rates. It impacts mortgage rates and dividend yields too.
In fact for many people the impact on mortgage rates is more important than the impact on savings rates.
Even though Australia supposedly has a positive private savings rate (I don’t entirely trust the official numbers; even the RBA says the savings rate isn’t accurate), about a third of the population has a mortgage and many more have investment property loans. [Read more →]
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