News, Views & Truths (13/09/21)

Published on: September 13, 2021

Hello everyone; I hope you have all had a wonderfully refreshing weekend and are ready to take this week’s bull by the horns.  Yes?  Fantastic! 

Let’s get straight into it with this week’s News, Views and Truths.

First off, can we start by acknowledging the absolutely huge achievement of Emma Radacanu at the weekend, winning the Women’s US Open title?  The first tournament qualifier, either male or female, ever to win the title, the 18-year-old became the first British woman to win a Grand Slam title in 44 years.  

Completely unexpected.  A bit like the actions by the European Central Bank last week.

Come on, you didn’t think I would be deviating from my usual content, did you?

And when I say unexpected, I mean in part.  

Last week, the ECB announced tapering, although Christine Lagarde, President of the Central Bank wanted to avoid that perception by saying, “The lady isn’t tapering”, preferring the term “recalibration”, a clear homage to Margaret Thatcher’s famous declaration of “the lady’s not for turning”.

Lagarde went on to say, “what we have done today… unanimously, is to calibrate the pace of our purchases in order to deliver on our goal of favourable financing conditions. We have not discussed what comes next.”

What was announced?  Frankly, tapering of asset purchases, by slowing the pace of its Pandemic Emergency Purchase Programme (PEPP), which has allowed EU governments to keep borrowing costs as low as possible in the face of the pandemic.  Although there was no quantitative guidance given to the size of this reduction, estimates are that the current €80bn per month will be reduced to between €60bn and €70bn.

Back to the original statement; why was the announcement so unexpected?  To be honest, it wasn’t.  What was unexpected is the fact that the ECB announced tapering before the US and if you had made that prediction one month ago, you would have been derided.  The ECB has long been viewed as the central bank that would only ever react at the last minute, but under Lagarde’s tenure, it seems as if cover drives are more attractive than hooks or pulls.

What is of most interest is that, in these early days, the outcome seems to have been received positively by the market and, as such, could provide a blueprint for other Central Banks on how to taper without the anticipated and predicted market tantrum.  It seems that a clearly delivered blueprint as to how any cessation or purchases are to be achieved is the clear path to success and, if this is the case, we could all be looking at a smoother landing than history has shown when the rest of the central banks announce their tapering.

Or just not call it tapering?

If you haven’t watched this week’s videos on our YouTube channel, why the devil not?  

First off, I discuss the opportunities with European equities and how a more refined approach to Environment investing can generate greater investor return.

Then, Corryn Wild explains Emergency funds; what they are and what consideration needs to be given to the amount needed, especially in the face of near-zero interest rates.

And that, ladies and gentlemen is it for another week.  Oh, aside from the playlist, which this week has a theme of “Europe”.  Have a great week and I look forward to catching up with you all in seven days, if not before.

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