🏡 Good news for homeowners, bad news for homebuyers

Hi Reader, here's what you need to know for December 21st in 3:14 minutes.

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Today's big stories

The Bank of Japan just pulled the financial equivalent of an Uno reverse card
…And our analyst explored what Japan’s pivot means for markets – Read Now
The UK housing market could hold its own through a recession, according to a major building society

Inflation Enters Japan’s Vocab

What’s Going On Here?

The Bank of Japan (BoJ) stunned markets on Tuesday after switching up its deep-rooted deflation-fighting policies.

What Does This Mean?

“Inflation” could be most of the globe’s word of the year, but Japan’s been focusing on the exact opposite for decades now: deflation – yup, falling prices. That might sound like the dream these days, but – believe it or not – it’s actually a bigger problem than inflation. It’s such a problem that Japan brought in an interest rate control policy back in 2016, allowing the country’s government to load up on cheap debt and keep spending to stimulate the economy. The BoJ seemed to stick to those guns just last week, saying it would be premature to shake up those policies without evidence of inflation-fueling wage growth. So it was pretty shocking when the bank announced that it’s now lifting its interest rate cap, signaling that it could be more concerned about inflation than deflation. No wonder stunned financial markets sent the Japanese yen skyrocketing against the US dollar after the news.

Why Should I Care?

For markets: America’s watching.
The “carry trade” is a common tactic that involves borrowing in Japan at cheap rates, changing that borrowed yen into dollars, investing the dollars into US government bonds with higher rates, and pocketing the difference. That makes traders a quick buck, but it hurts the yen against the US dollar. Now the yen’s on the rise, though, carry traders might throw their strategy into reverse – giving Japan’s currency another leg up. Now, that could really tempt any US investors with wandering eyes…

Zooming out: We can’t afford this.
Japan’s built up a Mount Fuji-sized pile of debt over the years, and with IOUs totalling nearly 250% of the economy, it’s the most indebted country in the world (tweet this). So let’s be real, the BoJ’s unlikely to start jacking up rates at the same pace of its American central bank counterpart anytime soon.

You might also like: Buffett’s Berkshire Hathaway has a monstrous Japanese bet.

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Analyst Take

Investing In Japan Just Got A Lot More Interesting

By Russell Burns, Analyst

Japan sure is looking more and more interesting.

For two decades, it’s been doing the same thing: keeping interest rates at zero in its seemingly never-ending battle against deflation.

But, as the surprising move from the Bank of Japan on Tuesday morning very clearly demonstrates, the picture is beginning to change.

So hey, let’s take a look at how you might take advantage.

That’s today’s Insight: what the Bank of Japan’s latest move may mean for markets.

Read or listen to the Insight here

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We’ll even send you £10 (or equivalent) to your Revolut account to get you started.

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Disclaimer: This content is for US investors only, if you are not a US investor please ignore this content. This content is a paid advertisement for Upexi (NASDAQ: UPXI) from Interactive Offers and Finimize. This is not Finimize editorial content. Finimize received a fixed fee for producing, hosting and promoting this content on behalf of Upexi, totalling $23,000. Other than the compensation received for this service, Finimize and its principals are not affiliated with either Interactive Offers or Upexi. Finimize and its principals have no ownership in Upexi. The content on this page should not be taken as advice, an endorsement, or a recommendation from Finimize and its principals to buy or sell any security. Finimize and its principals have not evaluated the accuracy of any claims made on this page. Finimize and its principals recommend that investors do their own independent research and consult with a qualified investment professional before buying or selling any security. Investing is inherently risky and capital is at risk. Past performance is not indicative of future results.

Unlucky, Big Bad Wolf

What’s Going On Here?

A recession can huff and puff all it likes: Nationwide said on Tuesday that the UK housing market could be pretty stable next year.

What Does This Mean?

The saying “safe as houses” might be about to prove itself: British building society Nationwide believes the UK housing market could survive next year’s recession relatively unscathed. There are a few reasons for that, but let’s start with the biggie: around 85% of mortgage-laden Brits fixed their rates on longer-term deals before the biggest rate hikes, and that should shield them for a while. Layer on that wages are pretty solid right now, and that housing already looks a tad more affordable, and panicked price drops should be avoided. In fact, Nationwide predicts prices might dip just 5% next year.

Why Should I Care?

Zooming out: Get your wallet out.
The housing market’s like a single domino in a precarious lineup. Homes are usually the biggest asset that we own, after all, so changes in their prices can really affect how we feel about our finances. That has a knock-on effect for consumer spending, which just so happens to be the biggest driver of the economy. So if house prices do manage to hold up, Brits – bolstered with a spot of financial confidence – might be up to task of spending enough to stave off a more painful recession.

The bigger picture: It’s a London thing.
Plenty of economists will tell you the UK has a housing supply problem. That makes sense: the country hasn’t built fast enough to keep up with demand, especially in major cities. Case in point: research by Sky News shows that the population in certain London boroughs has grown at double the speed of homes built over the past decade. That squished supply has been sending prices to the heavens, and it could limit any potential falls – bad news for homebuyers hoping for a bargain, but a comforting fact for concerned homeowners.

You might also like: Where Finimize analysts are investing right now.

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💬 Quote of the day

“We are all here on Earth to help others, what on earth the others are here for I don’t know.”

– W. H. Auden (a British-American poet)

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Get the blankets ready. These films should see you through till Christmas.

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🏡 Good news for homeowners, bad news for homebuyers

Today's big stories

Inflation Enters Japan’s Vocab

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Investing In Japan Just Got A Lot More Interesting

Finally, a brand aggregator that you can invest in

Unlucky, Big Bad Wolf

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Our community wants to know your name

🥳 Coming Up This Week…

**👀 And Then – Gasp – Next Year..**

Older messages

🐦 Twitter told Elon Musk to step down

😔 Coal’s setting a worrying record

💲 Inditex went upmarket

✏️ Central banks are swapping notes

💪 Inflation’s losing momentum

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🏡 Good news for homeowners, bad news for homebuyers

Today's big stories

Inflation Enters Japan’s Vocab

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Investing In Japan Just Got A Lot More Interesting

Finally, a brand aggregator that you can invest in

Unlucky, Big Bad Wolf

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Our community wants to know your name

🥳 Coming Up This Week…

👀 And Then – *Gasp* – Next Year..

Older messages

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**👀 And Then – Gasp – Next Year..**