Visiting Venice recently, some local friends told me firsthand about the pickpocketing problem.
Their 8-year-old is adept at spotting them. In summer, when tourists descend on the island in the highest numbers, they are in full operation.
The most professional pickpockets are well-dressed men with a coat draped over their arm. This disguises their thieving fingers.
Source: Jon Cates / Flickr
Then there are those that operate in groups. They target tourists that appear wealthy and vulnerable. (It is best to look scruffy in Venice and thus avoid interest).
Sometimes children and pregnant women do the stealing. If they are caught, they have to be let go.
They operate at the train station, in the streets, and even on the water boats. In a case on board, my friend saw a man reaching into another person’s bag.
He waggled his finger at the thief and whispered, ‘No, no…’
The thief slowly withdrew his hand, not taking anything.
Yet pickpockets in Italy are apparently in decline. Social media means many get photographed and exposed online. This is a great deterrent.
Well, during my time away in Italy during winter, I did not come across any physical pickpockets. But I did see my New Zealand dollars decline almost 5% as US Treasury yields continued to rise.
Inflation is the ultimate pickpocket. Silent — and like the juvenile or pregnant, it too is not easily detained.
Is inflation back in operation?
Sure feels like it. Prices are still rising, especially for public transport.
With the water and electricity turned off, a month in Italy provided some welcome relief. Especially on the coffee and wine front. These are considered as necessities in Italy and up to 50% cheaper than here.
The market story last year was that prices had started moderating. Central banks could cut interest rates (which many have already done). The global real-estate demise would soon turn positive again.
Then Trump won. The prospect of deregulation, tax cuts, and tariffs all began to fuel a view that prices would take off again. Remember: prices rise on sentiment. They rise on expectations. This is what we’re seeing, starting with long-run Treasuries:
The still steady rise of US 10Y Treasuries. Source: Investing.com
Now, higher Treasury yields aren’t resolutely bad for stocks. They can signal strong company earnings are coming. The economy is hot. But, as with many things, it’s situational.
- Tech stocks hate high interest rates, since these companies often leverage. We’re now seeing a rotation from tech into value.
- Real estate hates high interest rates. They smash the yield margin and affect the value of the property.
- Consumer, materials, and industrial stocks — which make up a lot of the index — can do well.
The question is whether inflation is really back, or have expectations gotten ahead of things?
I tend to believe the latter.
- China is now experiencing deep deflation and needing to stimulate its economy. This has ramifications for the whole world.
- Europe is back to its old problem of slow growth. Inflation is now only at around 2.4% — almost at the 2% target. The ECB is expected to move to a loosening cycle later this year.
- UK inflation unexpectedly fell to 2.5% this month, while US inflation also surprised — remaining largely static at 2.9%, with core inflation actually softening.
- Trump may not be as inflationary as predicted. Deregulation and reduced taxes spark productivity, which is deflationary. Tariffs are likely negotiation tools as much as immediate shocks. Read The Art of the Deal.
Opportunity
We took this dip opportunity to buy into the inflationary fear. Focusing on the sectors that might be being unfairly penalised.
In a world of low fertility rates and ageing populations, growth is hard.
The expectation remains: Central banks will keep cutting rates, albeit a little later when the coast is clear.
Real estate should deliver over the long-term. Particularly quality real estate at scale owned by listed businesses.
Savvy investors can beat the inflation pickpocket over the long run.
That means investing in the right assets before the cycle turns.
Are you looking to invest now before the cycle turns?
We’re still seeing significant discounts on offer across REITs and other counter-cycle stocks.
Our strategy is to build diversified and income-rich portfolios for our Eligible and Wholesale Clients.
Do you have previous experience in investing?
Are you a sophisticated investor?
Or have you built significant wealth?
All these characteristics could qualify you as an Eligible or Wholesale Investor for a managed account under our strategy. The assets remain in your name, and you retain full ownership and custody of your assets.
We are currently offering free consultations on this opportunity.
Regards,
Simon Angelo
Editor, Wealth Morning
(This article is the author’s personal opinion and commentary only. It is general in nature and should not be construed as any financial or investment advice. Please contact a licensed Financial Advice Provider to discuss your personal situation. Wealth Morning offers Managed Account Services for Wholesale or Eligible investors as defined in the Financial Markets Conduct Act 2013.)