NOVEMBER 2015

TWITTER @USTEWART WWW.7IM.CO.UK

ALL IS FAIR IN LOVE & WAR

GOOD DEBT – Investing For The Future

BAD DEBT - All Washed Up!

DEBT •  Personal – individuals & family

•  Mortgages & Investment

•  Making Up Cashflow

•  Corporate – from SMEs to Leviathans •  Longer Term Equity & Bond Investment

•  Shorter Term Private Equity & Venture Capital

•  Government •  Investment -Infrastructure

•  Cashflow – trying to balance the books

SOMEONE CHANGED THE RULES •  Demographics

•  Working Population & Employment

•  Interest rates

•  Government Influence & Employment

•  Private & Company Employment

•  Pensions!

BUT NOBODY TOLD US!

Now Playing Catch-Up

A STORM WARNING?

A KEY MOMENT OF ECONOMIC CHANGE

8

UNPRECEDENTED STIMULI

•  Low Rates

•  Infrastructure Spending

•  Quantitative Easing

•  Commodity Price falls

AFTER THE STIMULANTS....

BIG IMBALANCES

•  Government debt and deficits

•  Consumer debt

•  Trade balances

•  Income distribution

AFTER THE “NOUGHTIES”-THE TINY TEENS

•  Low Growth

•  Low Inflation

•  Low Interest Rates

•  Low Returns

Now make some Money!

OIL PRICES Oil price move is still happening!

59% fall

22% fall

GDP GROWTH STILL POSITIVE

AVERAGE GLOBAL GROWTH CLOSE TO STATIC BUT CHANGES IN REGIONAL GROWTH RATES NOTABLE.

UNEMPLOYMENT IS FALLING

GREEN – EUROPEAN, RED - UNITED STATES, YELLOW - UNITED KINGDOM

CONSUMER CONFIDENCE & Savings

US, EUROZONE, UK AND JAPAN CONSUMER CONFIDENCE - 30 YEARS. GREY AREAS MARK RECESSIONS – EZ MEASUREMENT AGAINST GERMANY. GREEN – US AND UK HOUSEHOLD SAVINGS RATIO’S

INTEREST RATES START TO RISE

17

RATES – LOWER FOR LONGER

LHS – BASE RATES RHS 10 YEAR TREASURY YIELDS, US (RED) JAPAN (GREEN), UK ORANGE, GERMANY (PINK) CANADA (BLUE) GLOBAL YIELDS GRADUALLY INCREASING.

UK & US INTEREST RATE EXPECTATIONS

US BASE RATES (GREEN) EXPECETED TO BE AT 2% IN SEPTEMBER 2018 SOURCE BLOOMBERG

UK BASE RATES (ORANGE) EXPECTED TO BE AT 2% IN SEPTEMBER 2019

EFFECTS OF RISING RATES

•  MORTGAGES

•  Cost – not just a 0.25% effect

•  Qualification

•  Inability to Roll Over

•  Pension Values (Annuity Values)

•  Savings Values

THE WORLD BENEFITS Countries who export to the US

Country % of exports to US China 16.7% Japan 17.8% South Korea 10.7% Germany 7.9% France 6.9% UK 10.5%

THE SOUFFLE RISES – at last!

EU LEVEL PLAYING FIELD.....

SOURCE: TWITTER - @MARK_WILLEM5

WATCH IT SHORTY!

SOURCE: NEWEUROPE.EU/EPA

CHINA IN TRANSITION

SOURCE: MRB

29

Services matter more than manufacturing and construction ……and are growing far faster

THE AGONY & THE ECSTASY

“GREAT ECONOMY -PITY ABOUT THE POLITICIANS”

31

UK

Managing The Debt!

Fixing the banking system Tax reform?

2 Unions No Power or Transport strategy

World’s 5th - 8th -10th

?

KRANKIES – THE LOVECHILD?

SOURCE: NEWEUROPE.EU/EPA

Real wages ticking up

RHS - GREEN – WAGE INFLATION V RED UK CONSUMER PRICE INFLATION LIVING STANDARDS STARTING TO PICK UP AT LAST?

GOVERNMENT DEFICIT

SOURCE: ONS

UK Govt’ forecast to borrow £70bn in 2015/2016

SOURCE: BANK OF ENGLAND

THE LONG AND WINDING ROAD

INFLATION LIKELY TO STAY LOW IN THE MID-TERM

UK PMIs

SOURCE:

KEYS TO ECONOMIC CONFIDENCE

INEXPERIENCED POLITICIANS

INEXPERIENCED CIVIL SERVICE

CYNICAL MEDIA

HOBBLED BANKING

UK POSITIVE ISSUES •  “Re-shoring” – Noodles & Antler •  Record Car production •  Sheffield Steel – 40 year peak •  Non EU exports now higher than EU •  Rice Cookers to Asia! •  Financial/Professional trade exports £55bn •  Over half million business start ups 550,000 •  New Financing structures •  Record Employment

NOW - SOME RADICAL COMMON SENSE •  Tax Reform

• NI & SME • Stamp Duty – transactions & property • Sugar & Fat Tax

•  Finance Education •  For All!

•  Pension Reform • Auto E • Education

•  Investment Reform • New Funding schemes • Housing Free & Leasehold

•  Infrastructure

EDUCATION –What…..

•  MORTGAGES

•  Cost – not just a 0.25% effect

•  Qualification

•  Inability to Roll Over

•  Pension Values (Annuity Values)

•  Savings Values

•  Financial Planning

EDUCATION – Who….. •  Government

•  HMT

•  Politicians

•  Companies of all sizes

•  The Population •  Schools & Universities

•  Families

•  Employees

•  Pensioners

REBUILDING ECONOMIC CONFIDENCE

KEY WORD FOR ECONOMY - CONFIDENCE

YOUR OWN PLANNING

Accountants

Lawyers

Insurance

Mortgage Providers

Banks

Trustees

Investment

Client Your Clients

Your Planning

FORWARD FINANCIAL HEADLIGHTS

Cash flow – income and expenditure § Now §  Long term future

SO WHAT DO YOU DO? Think broader family assets and liabilities • Managing family assets

Improve Investment Discipline • Reducing Costs • Better than average Returns • Reducing Risks •  Lower Volatility • Regular financial planning

FAMILY BALANCE SHEET

House

Car Pension

Life assurance

ISAs

Shares & National Savings

Cash

Mortgage

Credit Cards Loans

ASSETS LIABILITIES

NET BALANCE £

EDUCATING US ABOUT OUR FINANCES

THE ALTERNATIVE?

HOW MUCH DO I NEED?

NOVEMBER 2015

TWITTER @USTEWART WWW.7IM.CO.UK

MONEY ADVICE LIAISON GROUP

TWITTER @USTEWART WWW.7IM.CO.UK

THANK YOU