Bank of England hikes rates and acknowledges recession | US and allies try to outstrip Chinese tech |

Hi Josh, here's what you need to know for September 23rd in 3:08 minutes.

👻 Think of stagflation as a horror film’s slasher, and your portfolio as the comically naïve character who looks a little bit doomed. Now join us for Your Guide To Investing During Stagflation on Wednesday, and find out how to transform into the cunning lead that outsmarts the baddie. Grab your free ticket

Today's big stories

  1. US and allies look to form semiconductor alliances to outpace China
  2. Ray Dalio doesn’t like the look of stocks – Read Now
  3. Bank of England lifts rates to 14-year high and admits UK's in a recession

US And Allies Chip In To Outpace China

US And Allies Chip In To Outpace China

What’s Going On Here?

The US, Japan, South Korea, and Taiwan are forming chip-making alliances in a bid to stay one step ahead of China.

What Does This Mean?

Chip shortages don’t refer to empty bags of Doritos – they’re what happens when clogged supply chains slow the distribution of oh-so-precious semiconductors or “chips”. The resulting scarcity has been a headache for loads of industries that need chips for their products. On top of that, tensions with China have raised the stakes. See, Taiwan is home to TSMC, the world's largest and most advanced chipmaker, and the US and its allies are terrified that China could wrest control of the firm through an invasion. So it’s no surprise that China’s rivals are discussing their options. On Thursday details emerged of a US-proposed alliance that would bring together four semiconductor powerhouse partners, strengthening the hand of China’s rivals (tweet this).

Why Should I Care?

Zooming out: Pockets of power.
The problem with the chip industry is that there’s too much power in too few hands. TSMC dominates the manufacturing market, Dutch firm ASML is the reigning champ in advanced machinery, and Cadence Design and Synopsys have carved up the market for chip-design software between them. It’s A-OK for a few big players to rule the supply chain when all’s well in the world. But when geopolitical tensions start rumbling, semiconductor foundations start to look very shaky.

For you personally: Lessons for investors.
Every couple of years, a better chip hits the market – and if it happens to be yours, you’re onto a winner. Your market-leading chips will sell like hotcakes, netting you a tidy profit that you can re-invest, ensuring that the next chip’s even better. This pattern’s common in fast-moving industries, and explains the success of tech mega-corporations. But, although backing tech winners is usually a profitable strategy, canny investors know that innovative rivals and geopolitical upheavals are always lurking, ready to dethrone complacent reigning champs.

Copy to share story: https://www.finimize.com/wp/news/us-and-allies-chip-in-to-outpace-china/

🙋 Ask a question

Analyst Take

Why Dalio And Bridgewater See Stocks Falling A Lot More

Why Dalio And Bridgewater See Stocks Falling A Lot More
Photo of Stéphane Renevier

Stéphane Renevier, Analyst

If you’ve been wondering how quickly stocks might return to their most recent peak, Ray Dalio and his Bridgewater research team have a message for you: slow down

Stocks aren’t even done falling yet.

See, stocks tend to fall in two stages when interest rates rise. And the first stage might still be playing out

That’s today’s Insight: why Ray Dalio sees stocks falling a whole lot more.

Read or listen to the Insight here

SPONSORED BY ARRIVED

As safe as houses

It’s hard to replicate the sense of security that a property investment can bring.

There’s something special about bricks and mortar, after all – something solid, enduring, and – ahem – concrete.

Now you can enjoy all the security of property investment with Arrived, without putting hundreds of thousands in capital on the line.

With shares in vacation rentals and single-family homes starting at just $100, Arrived’s fractional-ownership approach turns property into an easy-entry, zero-fuss investment.

Add some stability to your portfolio: check out Arrived’s home investments.

Find Out More

Old Lady of Threadneedle Street Calls It A Recession

Old Lady of Threadneedle Street Calls It A Recession

What’s Going On Here?

The Bank of England (BoE) hoisted interest rates to a 14-year high of 2.25% and warned of more “forceful” action ahead.

What Does This Mean?

On the coattails of the Federal Reserve (the Fed)'s 0.75 percentage point rise on Wednesday, the BoE whacked up its interest rates by half a point. But it didn’t stop there: the BoE also announced plans to start selling the government bonds it’s accumulated over the last 14 years, in a move that’ll drain money from the financial system. This comes against a backdrop that was already pretty gloomy: Bank officials have lowered this quarter’s growth projections, predicting economic activity will shrink for the second quarter in a row. That, ladies and gentlemen, would be a technical recession.

Why Should I Care?

Zooming out: UK housing can’t defy gravity forever.
The UK’s housing market’s been flying pretty close to the sun, and it looks like it’s about to get burnt. The fact that most UK borrowers are on fixed-rate mortgage deals is delaying the pain, but every rate rise is like another tequila after midnight – brewing one almighty hangover that’ll hit with full force when refinancing time comes. Expect borrowing, home buying, and prices all to take a hit.

For markets: Is sterling a one-way bet?
The euro’s already arrived at the US dollar parity party, and it looks like sterling’s en route but fashionably late. This isn’t just a reflection of differing interest rates: the US is a safe harbor in stormy seas, which prompts investors to anchor their cash in dollars and dollar-based assets – further boosting the greenback. For sterling to steer clear of parity, either the BoE has to get more heavy-handed than the Fed or the UK economy needs to miraculously emerge from its current economic quagmire. Neither, to be frank, seems likely.

Copy to share story: https://www.finimize.com/wp/news/old-lady-of-threadneedle-street-calls-it-a-recession/

🙋 Ask a question

💬 Quote of the day

“In three words I can sum up everything I’ve learned about life: it goes on.”

– Robert Frost (an American poet)
Tweet this

SPONSORED BY ARRIVED

Don’t get locked out of homes

Forgetting your keys isn’t the only way you could get locked out of property.

High up-front investment costs, tedious property management work, and endless red tape has shut the door on many potential investors before.

But Arrived has changed all that: their fractional-ownership approach means you can enter the property market for as little as $100.

And you can forget about the form-filling, box-ticking, washing-machine-fixing work that normal landlords endure: Arrived has got it all covered.

Browse rental properties on Arrived today.

Check Out Arrived

When you support our sponsors, you support us. Thanks for that.

🌍 Finimize Live

🎉 Coming Up Soon…

All events in UK time.

📈 Your Guide To Investing During Stagflation: 5pm, September 28th
🇺🇸 What’s Next For The US Economy?: 1pm, September 29th
🌍 How To Profit From A Net Zero Future: 5pm, September 29th
🏡 The Pathway To Property Investing In 2022: 12pm, October 11th
🚀 Modern Investor Summit: 12pm, December 6th-7th

🎯 On Our Radar

  1. This Vietnamese hacker stole $200 million. Now he’s searching the dark web for criminals.
  2. Muscle knots suck. It also sucks that we have no real idea what causes them.
  3. WALL-E’s a writer. And he’s getting better day by day.
  4. A personal library can be a thing of beauty. Learn how to nurture your bookshelves.
  5. iOS 16 brings you next-level privacy. Just make sure you enable these features.
❤️ Share with a friendYour Referrals: 0

Thanks for reading Josh. If you liked today's brief, we'd love for you to share it with a friend.

Share your unique link:

https://finimize.com/invite/?kid=15WFHK

You stay classy, Josh 😉

We’d love to hear your thoughts. Give feedback

Want to advertise with us too? Get in touch

Image Credits:

Image credits: stockshutterit – Suhtterstock | Nigel J. Harris – Shutterstock

Preferences:

Update your email or change preferences

View in browser

Unsubscribe from all Finimize Emails

😴

Crafted by Finimize Ltd. | Bow Bells House, Bread Street, London, EC4M 9HH

All content provided by Finimize Ltd. is for informational and educational purposes only and is not meant to represent trade or investment recommendations. You signed up to this mailing list at finimize.com or through one of our partners. © Finimize 2021

View Online