What caught my eye this week.
I kept coming across inflation articles this week, and tried to be judicious about what was earmarked for Weekend Reading. Yet I still ended up with all those below and more on my shortlist:
- Rising fuel and food costs push US inflation to 7.9% – BBC
- Analysts predict year of 7% inflation for UK – FT Adviser
- Petrol hits new record above 160p per litre – BBC
- Higher inflation is increasing the cost of servicing Britain’s public debt – Economist
- An energy shock and high inflation: are the 1970s reborn? [Search result] – FT
- UK farmers warn rocketing gas costs could cut food production – Guardian
- Hedging future energy costs with shares in a Ripple wind farm – DIY Investor UK
- Energy bills are forecast to double, but switching is pointless – ThisIsMoney
- Netflix hikes prices for the second time in 18 months… – Guardian
- ..and other subscription fees are rising too. Here’s how to save – Which
- Typical payments on cheapest fixed mortgage deals rise by £840 a year – ThisIsMoney
- Are we heading for recession? – A Wealth of Common Sense
This list could have been five times as long. It could be the same next week.
We are facing a hyper-inflationary environment for articles about inflation.
Of course it’s a trivial concern compared to actually suffering an invasion from a waxwork germophobe gangster armed with nuclear weapons, but it’s the war in Ukraine that has turned our inflation expectations up to eleven.
And it could get even worse.
Only a few weeks ago I was expecting inflation to start to roll over about now. Investors would have to be ready for quantitative tightening, sure. But interest rates would probably be rising against moderating inflation, as supply chains righted themselves.
Weaponising the energy market has changed all that. Higher oil prices could continue to juice – both directly and indirectly – the inflation statistics. A few pundits see oil doubling to $240 a barrel. Russia is warning of $300.
Saner voices anticipate demand destruction well before we hit those levels. Yet that means using less energy – just when the global economy was meant to be rebooting after Covid.
Dear oh dear
Could Europe see fuel rationing, no-drive days, and other throwbacks from the energy shocks of yore? It’s not impossible. Indeed it’d be a righteous thing to do, compared to spending hundreds of millions of dollars a day on Russian energy that further funds its war effort.
However in the short-term choking off energy use could hurry along a recession, even as rising prices force central banks to raise interest rates.
I raised the dread prospect of stagflation before Russia invaded Ukraine earlier this year, though I mostly waved it away as an outlier. That was because I didn’t think inflation would become embedded.
But war has changed the odds. All kinds of commodities – from oil to wheat to nickel – are being disrupted by the war. We may yet see something of a wage spiral. (I still believe recovering trade and technology and productivity gains can take the edge off.)
The end of super-low interest rates has meant tweaking our investing expectations. It now looks like everyday earning and spending will be worth reviewing, too.
Have a great weekend!
Our updated guide to finding you the best broker – Monevator
The social care thresholds and allowances – Monevator
From the archive-ator: Financial goals: sticking to the plan when the funk comes to visit – Monevator
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Pension transfer costs soar after 60% of advisers quit [Search result] – FT
London Mayor Sadiq Khan repeats call for private rent controls – Guardian
850,000 families missing out on £1.7bn in pension credit – Which
Covid infections rising again across the UK, says ONS – BBC
At 18 million, global Covid death toll three times the previous estimate – The Lancet
Some alternative approaches to often-overlooked sequence of return risk – Wade Pfau
Products and services
How to make charitable support for Ukraine go as far as possible – Which
The popular Marcus savings account has raised rates, but its not a table-topper – ThisIsMoney
Open a SIPP with Interactive Investor and pay no SIPP fee for six months. Terms apply – Interactive Investor
Index providers react to Russian turmoil [US but relevant] – Morningstar
How will new ‘no fault’ divorces affect couples splitting their finances? – ThisIsMoney
Homes for sale that qualify for Help to Buy, in pictures – Guardian
Comment and opinion
Great racer, great runner – Fortunes & Frictions
Big financial commitments? Step away from the spreadsheet – Morningstar
I won’t be selling – Humble Dollar
Honorarium – Indeedably
Why can’t we stop making short-term market forecasts? – Behavioural Investment
Four big lessons for getting the most out of a career change [Search result] – FT
Listening to perma-bears is bad for your wealth – The Reformed Broker
Retail investors still pay too higher fees for their ETFs – Klement on Investing
Crypt o’ crypto
Should you generate income via stablecoin lending? – Think Advisor
Naughty corner: Active antics
Autocracy is a bad investment – Morningstar
Why is the UK stock market so cheap? [Search result] – FT
The new Credit Suisse 2022 Yearbook summary edition is here – Credit Suisse
Lessons from the rise and fall of ARK – Validea
The contrarian magazine cover indicator is ruled by hindsight bias – Ritholtz
Zeikel’s rules – The Reformed Broker
The hunt for Russian crypto is on – Protocol
How much Russian money is there in the UK? – BBC
How UK consumers can help phase out Russian oil and gas – Guardian
Ukraine food giant warns its collapse will hit troops – BBC
Will the war in Ukraine finally unite the EU? – Uncharted Territories
Ukraine’s top trading partners and products [Infographic] – Visual Capitalist
Are arms shipments from the West making a difference? – BBC
The Russians using emojis to evade censors – BBC
Kindle book bargains
Hacking Growth: How Today’s Fastest-Growing Companies Drive Breakout Success by Sean Ellis and Morgan Brown – £0.99 on Kindle
The Almighty Dollar: Follow the Incredible Journey of a Single Dollar to See How the Global Economy Really Works by Dharshini David – £1.89 on Kindle
Invisible Women: Exposing Data Bias in a World Designed For Men by Caroline Criado Perez – £1.99 on Kindle
Posh Boys: How English Public Schools Ruin Britain by Robert Verkaik – £0.99 on Kindle
Greenwashing fashion firms to be named and shamed – Guardian
Amazon rainforest reaching tipping point, say researchers – BBC
Visualising the global landfill crisis – Visual Capitalist
Critics brand plans for octopus farming as unethical – Guardian
Off our beat
Of course we’re living in a simulation – Wired
Low expectations – Morgan Housel
The office is fine but the commute is still atrocious [Search result] – FT
How IKEA tricks you into buying more stuff – The Hustle
Why novelists have been starting Substack newsletters – Esquire
Quality time – Get Rich Slowly
“Look at your cash everyday if you wish, your bonds every couple of years and your equities every ten years! Really, do not look at your performance more than once a year.”
– Tim Hale, Smarter Investing
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