Inflation and investment

What is the relationship between inflation and investment? Conventional wisdom says that businesses adjust their investment spending according to changes to the cost of capital. Intuitively, that makes sense: more projects become worthwhile as funding costs go down, while few make the cut when capital is expensive. (In reality, it turns out that interest rates, spreads, and volatility are all irrelevant for capex decisions, but let’s put that aside for now.) If central bankers want to boost investment to encourage economic activity, conventional theory suggests they should lower interest rates. However,…

Fears of UK economic slowdown

Services sector slump fans fears of UK economic slowdown PMI/Markit survey shows business activity at lowest level since February 2013 as EU referendum and global slowdown fears take hold A sharp slowdown in Britain’s vast services sector, which covers everything from banking to hotels, has fanned fears of UK economic slowdown, hurt by a downturn in global trade and jitters ahead of June’s knife-edge EU referendum. A closely watched survey of businesses in the UK’s biggest sector showed activity slumped in April to its slowest pace for more than three years. That…

Best Dividend-Paying Funds

3 Best Dividend-Paying U.S. Financial Mutual Funds (FSVLX, PRISX, RYSFX) After a strong performance in 2015, the financial sector is off to a rocky start in 2016. Through March 17, 2016, the sector was down 5.71%. After an initial surge following the lead up to the Federal Reserve Board interest rate hike, bank stocks have come under pressure from concerns over low oil prices and troubling emerging markets debt. Banks and other financial institutions are expected to perform better with higher interest rates, but they may not rise fast enough to turn…