There are some people I know whose mortgage will double because their fixed rate was around 2.9% and their new offer will be around 6%. How did this happen? You thought the Bank of England set interest rates and banks then set mortgages based on those. No. The bond markets can determine what your bank offers you. And the bond market a vote on the confidence fund managers have in a Government. Actually, it’s a vote on what they think will make them money based on what they think others will do in the bond market.
Either way a lot of people will see mortgages double. Others in anticipation of that will already be cutting back unnecessary spending. I recommend you cut back on unnecessary spending.
How Bad Could The Stock Market Get?
The stock market started strong in October 2022, with all three major US indices opening up well over 2 percent.
I though I would share with the views of Michael Burry, the hedge fund manager who was made famous by the movie “The Big Short” as someone who saw and profited from the stock market crash of 2008.
In a recent tweet, Burry said that he’s feeling "greedy" about the market again, just like he did in 2000. And that's not a good sign.
The spikes noticed recently in the stock market might mislead investors into thinking that inflation has peaked. But, according to Burry, inflationary eras last a long time, while inflation cycles don't. A mild deflation might be a sign that the inflationary era is far from over.
As interest rates rise and the cost of capital for business rises, so expect profit margins and profits to drop. So the fast growth of recent years will take a hit. Does that mean all stocks suffer? No. Energy stocks are doing well. They do not suffer from profit problems in this environment.
Equally holding good companies like Microsoft for a longer time is a good way to go too. But those trying to trade in and out need to take care. That takes skill and time. I am buying GBPUSD but the way I do it is to look at what would happen is it fell from 1.11 to 0.9. Could I handle the loss? Because I do not want to have to exit due to margin calls just as it turns around. So I need to use less leverage and a cautious way of doing things. That’s my style. I do not want a one in a hundred year event to wipe me out. I don’t like gambling.
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