Freedom!
It’s taken us almost half the year, but we’re finally free! Free from the shackles of state oppression!
No, I haven’t turned into a student communist. If you’re wondering what I’m talking about, today is Tax Freedom Day — the day when the average worker in Britain has earned enough to pay their tax bill.
Apparently it’s fallen one day earlier than in 2007. However, it’s a full seven days later than it was when New Labour first came to power. We now spend, on average, one week more than we did simply working for the Government.
That’s why I admire Robin Tracey. Because for Robin, EVERY day is Tax Freedom Day!
I’ll explain what I mean by that below. First, though, let’s dive into today’s Big News...
Bradford and Bingley shares suspended
Bradford and Bingley (B&B) had its shares suspended by the FSA this morning, following a 30% fall. The mortgage lender, which is heavily exposed to the Buy-To-Let market, is expected to miss forecast profits by £100 million. Chief executive Steven Crawshaw has stepped down. B&B is expected to do a rights issue.
But amidst all the hullabaloo, Texas Pacific Group is buying what, to our eyes, looks like an eye-wateringly expensive 20% stake.
Do they know something the rest of us don’t? Theo Casey takes a closer look, and also makes the case for looking beyond simple value investing...
Has the tide turned for interest rates?
"Nobody can convince me that we’re able to boost economic growth with a lax monetary policy."
The words of Klaus Liebscher there, one of the European Central Bank’s (ECB) monetary policy gurus.
Hear hear!
Liebscher went on to say that eurozone inflation is "very high" and that the ECB’s price stability mandate is "more than urgent" (what "more than urgent" means I’m not sure — perhaps this is a mistranslation...)
The bond market has the scent of a rate rise in its nostrils. Not that long ago, the market was pricing in a rate cut by the end of the year. Now the opposite position holds sway. Bond fans expect rates will rise.
Does this mean policy makers are finally taking inflation seriously? Well, the ECB has been hawkish for some time now. But what about closer to home? What’s happening on Threadneedle Street? Let’s take a look...
My oh my! We have a bit of a tussle on our hands, folks! A bone of contention has arisen between the Bank of England and the Treasury. Mervyn King, the Bank’s Governor, wants to promote Professor Charles Bean to the post of Deputy Governor when Rachel Lomax steps down.
But the Treasury is unhappy with the proposal. The other Deputy Governor is Sir John Gieve, whom the Treasury has criticised for not being ‘City-savvy’ enough.
It fears promoting an academic to be the other Deputy will unbalance the Monetary Policy Committee. Cynics have suggested that the Treasury wants a City-friendly face simply because that’s more likely to lead to a policy the Government finds agreeable.
Though no-one’s said so (yet), I suspect they’re also uncomfortable with the idea of someone called Mr Bean wielding so much power over economic affairs...
Tension between a central bank and a government is a good thing. We neither want nor need monetary policy makers who kow-tow to politicians. King seems so far to be putting up a fight — perhaps he’s stung that I said he’s not as hard as ECB boss Jean-Claude Trichet...
It’s too early to say whether we’re now on a hawkish path. There’s a strong case to be made that rates should indeed go up — but whether that case has been heeded is another matter.
China on the cheap
Manraaj Singh had a quiet one last week. He was here, but spent most of his time holed up in his emerging markets den.
Today, we’re beginning to see the fruits of Manraaj’s labour. Two stocks which he believes typify why right now is a great time to be getting into China.
These aren’t formal recommendations, just interesting case-studies. But they make very interesting reading.
Make every day Tax Freedom Day
OK, now I’ll satisfy your curiosity. Robin Tracey has a hobby which makes him hundreds of thousands of pounds a year. And he doesn’t pay a penny of tax on that money.
How? Because Robin makes his money from spread betting. And spread betting is tax free!
Spread betting is, of course, also risky. But Robin takes it all in his stride — because he’s been using his strategy for over a decade now, and knows that it works.
Recently he’s begun sharing his strategy with others, and the results have been phenomenal. One member of the public who’s copied Robin’s moves calls it a "near guaranteed income strategy".
So if you’ve a bit of money to play with, and fancy putting it to work without the Government taking a bite out of the profits, why not check out Robin’s strategy?
Until tomorrow
Ben Traynor
