Will the Fed keep cutting rates in 2025? Or will resurgent inflation force renewed hikes? Will UK and eurozone cuts prove too little, too late? Will more Bank of Japan hikes derail its gross domestic product bounce?
Anyone telling you what central banks will do is a liar or fool. You can’t know, ever. The good news? You don’t need to. Central banks’ power is hugely overrated. Cut, hike or hold, their actions rarely mean much. Sound heretical? Hear me out.
Two years ago, I showed you why central banks aren’t predictable. While their sterling resumes and pseudointellectual wisdom make the masses quiver, central bankers are, well, just people. People who say one thing and do another, change their minds, make mistakes and are overly convention bound. Their forecasts of their own actions are better at predicting what won’t happen than what will.
The European Central Bank (ECB) openly predicted no 2022 hikes but raised rates 50 basis points that July – then three more times. And six more in 2023. The Bank of England flip-flopped twice this cycle. They all flip-flop – often and always have. Hanging on every word is time misspent.
So is presuming wisdom drives their actions. Take wages. Fed folks deem wage growth inflationary. But US economist and statistician Milton Friedman proved five decades ago that rising wages always follow inflation – never cause it. We just lived it.
US inflation started spiking in February 2021 towards a 9.1 per cent peak rate, while wages fell. Later, wage growth began accelerating in May to a 5.9 per cent mid-2022 peak, while the inflation rate plummeted (to 2.7 per cent now). Then, wage growth slowed to 3.9 per cent. Inflation moves first; wages later – always. That holds globally, too, as inflation’s slowing came while UK and eurozone wages surged. Central banks never learn.
Nor do most investors, who keep insisting rate moves directionally drive economies and markets. History shows repeatedly that hikes and cuts swirl swiftly to background noise.
Yes, 2022’s already existing global stock bear market worsened as central banks hiked rates. But if rate hikes caused it, why did a rip-roaring rally start that October and soar as even more and bigger rate hikes rolled in?
Consider how the fear of hikes, not the hikes themselves, drove 2022’s slide. The S&P 500 gained 70.9 per cent since that October’s low – preceding six straight rate hikes. Stocks boomed in 2024, while early rapid rate cut expectations imploded.
The ECB hiked starting in July 2022. By its first cut this June, eurozone stocks were 38 per cent above pre-hike levels. The Bank of England hiked 14 times from December 2021 until this August’s cut. UK stocks rose 24 per cent in pounds over that stretch. With hikes like those, who needs cuts?
Consider: If cuts were massively bullish, European stocks should be partying, while Japanese stocks would be crying in the corner. Instead, eurozone stocks are down 1.1 per cent since June’s initial cut. The ECB cut four times through December, but the bloc’s stocks kept stumbling sideways. No monster rally. No swift economic data improvement as recession fears rage, while German GDP limps.
UK stocks are down 1.9 per cent since August’s first rate cut. Neither it nor November’s second cut was some massively bullish catalyst. Yes, monetary policy moves may hit the economy at a lag. But were there massive juice here, stocks would pre-price it. They aren’t.
Then consider Japan – the exception proving the rule. While western banks cut in 2024, Japan hiked for the first time in over a decade. Since July’s hike, the MSCI Japan index actually rose while Europe fell.
Markets spent all of 2024 showing you rate moves are just one small variable. They paled beside the larger trends driving markets. Solid growth, burgeoning tech demand and Trumpian fear fading – drove stellar US returns.
Falling luxury goods spending and economic jitters weighed on eurozone stocks despite rate cuts. Sector concentrations mattered more in Britain, too, where commodity-orientated stocks’ headwinds hurt.
Think longer term. Many claim now is like the late 1990s tech bubble. If so, note 10-year US Treasury rates rose all through 1999 from 4.6 per cent to 6.5 per cent, all higher than now, while the S&P 500 gained 20.1 per cent.
Meanwhile, the Fed Funds rate rose from 4.1 per cent to 5.3 per cent. Then, before the “bubble” burst, the Fed was already cutting rates and continued that entire bear market – all the way down to 1.3 per cent. Ignore their gyrations. They simply aren’t what moves stocks.
Successful investing requires looking where others don’t. While the world focuses on central banks’ sideshow, your time is better spent seeking whatever the masses overlook. Next month, I’ll show you that with my 2025 forecast. Happy New Year.
How Alia's experiment will help humans get to Mars
Alia’s winning experiment examined how genes might change under the stresses caused by being in space, such as cosmic radiation and microgravity.
Her samples were placed in a machine on board the International Space Station. called a miniPCR thermal cycler, which can copy DNA multiple times.
After the samples were examined on return to Earth, scientists were able to successfully detect changes caused by being in space in the way DNA transmits instructions through proteins and other molecules in living organisms.
Although Alia’s samples were taken from nematode worms, the results have much bigger long term applications, especially for human space flight and long term missions, such as to Mars.
It also means that the first DNA experiments using human genomes can now be carried out on the ISS.
Zayed Sustainability Prize
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Know your Camel lingo
The bairaq is a competition for the best herd of 50 camels, named for the banner its winner takes home
Namoos - a word of congratulations reserved for falconry competitions, camel races and camel pageants. It best translates as 'the pride of victory' - and for competitors, it is priceless
Asayel camels - sleek, short-haired hound-like racers
Majahim - chocolate-brown camels that can grow to weigh two tonnes. They were only valued for milk until camel pageantry took off in the 1990s
Millions Street - the thoroughfare where camels are led and where white 4x4s throng throughout the festival
RESULTS
Lightweight (female)
Sara El Bakkali bt Anisha Kadka
Bantamweight
Mohammed Adil Al Debi bt Moaz Abdelgawad
Welterweight
Amir Boureslan bt Mahmoud Zanouny
Featherweight
Mohammed Al Katheeri bt Abrorbek Madaminbekov
Super featherweight
Ibrahem Bilal bt Emad Arafa
Middleweight
Ahmed Abdolaziz bt Imad Essassi
Bantamweight (female)
Ilham Bourakkadi bt Milena Martinou
Welterweight
Mohamed Mardi bt Noureddine El Agouti
Middleweight
Nabil Ouach bt Ymad Atrous
Welterweight
Nouredine Samir bt Marlon Ribeiro
Super welterweight
Brad Stanton bt Mohamed El Boukhari
IF YOU GO
The flights: FlyDubai offers direct flights to Catania Airport from Dubai International Terminal 2 daily with return fares starting from Dh1,895.
The details: Access to the 2,900-metre elevation point at Mount Etna by cable car and 4x4 transport vehicle cost around €57.50 (Dh248) per adult. Entry into Teatro Greco costs €10 (Dh43). For more go to www.visitsicily.info
Where to stay: Hilton Giardini Naxos offers beachfront access and accessible to Taormina and Mount Etna. Rooms start from around €130 (Dh561) per night, including taxes.
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
UK-EU trade at a glance
EU fishing vessels guaranteed access to UK waters for 12 years
Co-operation on security initiatives and procurement of defence products
Youth experience scheme to work, study or volunteer in UK and EU countries
Smoother border management with use of e-gates
Cutting red tape on import and export of food
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Mountain%20Boy
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Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
UAE currency: the story behind the money in your pockets
Richard Jewell
Director: Clint Eastwood
Stars: Paul Walter Hauser, Sam Rockwell, Brandon Stanley
Two-and-a-half out of five stars
The Settlers
Director: Louis Theroux
Starring: Daniella Weiss, Ari Abramowitz
Rating: 5/5
The specs: Macan Turbo
Engine: Dual synchronous electric motors
Power: 639hp
Torque: 1,130Nm
Transmission: Single-speed automatic
Touring range: 591km
Price: From Dh412,500
On sale: Deliveries start in October
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
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Super heroes
Iron Man
Reduced risk of dementia
Alcohol consumption could be an issue
Hulk
Cardiac disease, stroke and dementia from high heart rate
Spider-Man
Agility reduces risk of falls
Increased risk of obesity and mental health issues
Black Panther
Vegetarian diet reduces obesity
Unknown risks of potion drinking
Black Widow
Childhood traumas increase risk of mental illnesses
Thor
He's a god
Dengue%20fever%20symptoms
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Padmaavat
Director: Sanjay Leela Bhansali
Starring: Ranveer Singh, Deepika Padukone, Shahid Kapoor, Jim Sarbh
3.5/5
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Indoor Cricket World Cup - Sept 16-20, Insportz, Dubai
Mohammed bin Zayed Majlis
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SPAIN SQUAD
Goalkeepers Simon (Athletic Bilbao), De Gea (Manchester United), Sanchez (Brighton)
Defenders Gaya (Valencia), Alba (Barcelona), P Torres (Villarreal), Laporte (Manchester City), Garcia (Manchester City), D Llorente (Leeds), Azpilicueta (Chelsea)
Midfielders Busquets (Barcelona), Rodri (Manchester City), Pedri (Barcelona), Thiago (Liverpool), Koke (Atletico Madrid), Ruiz (Napoli), M Llorente (Atletico Madrid)
Forwards: Olmo (RB Leipzig), Oyarzabal (Real Sociedad), Morata (Juventus), Moreno (Villarreal), F Torres (Manchester City), Traore (Wolves), Sarabia (PSG)
Killing of Qassem Suleimani
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House-hunting
Top 10 locations for inquiries from US house hunters, according to Rightmove
- Edinburgh, Scotland
- Westminster, London
- Camden, London
- Glasgow, Scotland
- Islington, London
- Kensington and Chelsea, London
- Highlands, Scotland
- Argyll and Bute, Scotland
- Fife, Scotland
- Tower Hamlets, London
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Abu Dhabi Sustainability Week
Zayed Sustainability Prize
Background: Chemical Weapons
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
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COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
