More on British inflation

April 17, 2024 Leave a comment

I am posturing for higher #inflation rates, again.

My expectations (found in my historical posts) for ‘lower’ inflation has occurred and is as good as being completed.

Following up my note dated April 11, 2024, suggesting the irrelevance of the U.K. March inflation report,

U.K. inflation to see 5%, not 2%

While inflation has abated, now it doesn’t matter so much whether this month’s #UnitedKingdom inflation rate of 3.2% is lower than last months (year on year) figure of 3.4%.

Keep in mind, that prices are still rising and I think that is mostly a cause of capacity and supply constraints rather than notable demand.

My thinking is that #UK inflation will move to 5% rather than 2%.

Slowing demand means companies will increases prices for goods and services, in order to maintain their shrinking margins.

April 17, 2024

by Rob Zdravevski

rob@karriasset.com.au

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U.K. inflation to see 5%, not 2%

April 11, 2024 Leave a comment

It doesn’t matter if the March 2024 #UnitedKingdom inflation rate falls from 3.4% down to 3% or 2.6%……

This is small beans.

It is nearer the lower end of its travels.

The big call to make is when the #inflation rate is trading at ‘extremes’ to my illustrated moving average, appearing in the chart below.

Much like my American inflation note published yesterday, I think there is greater probability that #UK inflation rate should travel towards 5% rather than 1.8%……

and all that comes with it for interest rates and the equity prices of high growth (unprofitable) companies.

Incidentally, the U.K. inflation rate for March 2024 is due to be released on April 17th.

April 11, 2024

by Rob Zdravevski

rob@karriasset.com.au

Karri Asset Advisors

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FTSE 100 needs to prove itself, otherwise lower

December 5, 2023 Leave a comment

My previous post summarised my early 2023 reasoning to avoid the FTSE 100. Whilst that index is only 5% lower since then, the way I look at it, is there was little purpose to being actually exposed to the risk.

Today, the price action tells me that the #ftse100 needs to make a higher high’ to break it out of a consolidation funk.

Should it trade below 7,215, then probability of a move to the 7,030 area increases.

That is a further 5% below today’s level.

December 5, 2023

by Rob Zdravevski

rob@karriasset.com.au

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Don’t believe the spin, corporate taxes are rising

December 5, 2023 Leave a comment

Don’t be surprised reading the headline of this Bloomberg article.

Of course, corporate taxes were going to rise.

The British government made sure of it when they increased the corporate tax rate from 19% to 25% in April 2023.

In this article from February 2023, I wrote that “Corporate taxes were as good as they were going to get”.

FTSE-100 is full

In addition, I cited that the FTSE 100 is “full”.

it was trading at 7,915 at the time of writing that note compared to today’s price of 7,513

Furthermore, in other notes, I alluded to a pragmatic case when the “I” in company’s EBIT rises and when the expected increases in the “T” occurs, we will see earnings (net profits) come under pressure.

It also contains a link to very good paper concluding that much of the attributed earnings for S&P 500 companies over the previous 18 years, came with the assistance of low (subsidised) interest rates and corporate taxes.

A case for a 30% decline in the S&P 500
The numbers won’t lie

And people wonder why investors and corporations are always looking for low taxation domiciles.

December 5, 2023

by Rob Zdravevski

rob@karriasset.com.au

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British inflation should mean revert

June 21, 2023 Leave a comment

What if British inflation reverted to a mean which is equally converging.

Maybe somewhere near that flag, perhaps 6% by Jan-April 2024?

June 21, 2023
by Rob Zdravevski
rob@karriasset.com.au

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For now, Gilt yields are stretched

June 21, 2023 Leave a comment

British 10 year government bond yields are seldom this distance above its 200 week moving average while simultaneously registering a weekly overbought reading.

Forgetting Bank of England policy rate setting, I can see these 10’s back down around 2.40% over the coming 9-15 months.

Demand destruction commensurate with decline in GDP will aide this thesis.

June 21, 2023

by Rob Zdravevski

rob@karriasset.com.au

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Anticipating a Country Rotation

October 7, 2020 Leave a comment

Last week I wrote about my two best Equity Index ideas.

Buy the U.K.’s FTSE 100 and Spain’s IBEX 35.

I wanted to attach some better charts showing the monumental extremes of an index being oversold, not on a daily or weekly terms, but on a Monthly basis.

Because we’re looking at them on a Monthly view, we’re not about to trade out this position next month.

When you’re a buyer of securities at such extremes, you’ve got to give yourself 10% of price movement. After all, in the case of the IBEX, I’m looking for a 45% rise over the next 2-3 years as the index means revert towards its 200 day moving average, which is currently 10,000.

October 7, 2020
by Rob Zdravevski
rob@karriasset.com.au

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