Podcast Summary
Expand your hiring reach with LinkedIn: Don't miss out on high-quality candidates by not using LinkedIn for job postings. Over 70% of LinkedIn users don't visit other job sites, making it a valuable resource for small businesses.
LinkedIn is a valuable resource for small businesses looking to hire top talent. Sandra, a potential candidate, emphasized that many professionals, including those not actively seeking new jobs, can be found on LinkedIn. In fact, over 70% of LinkedIn users don't visit other leading job sites. This means that by not posting jobs on LinkedIn, businesses could miss out on high-quality candidates like Sandra. Another important topic discussed was the situation facing British expats and savers with money in Cypriot banks. Following weeks of negotiations, a bailout deal has been reached, which includes a levy on deposits over €100,000. However, the UK government has announced that it will protect certain groups, including armed forces and government employees, from this levy. The implications for Britons living in Cyprus and those with savings in Cypriot banks remain uncertain, and further information is available from the JD Power website. In summary, businesses should utilize LinkedIn to expand their candidate pool and hire top talent, while Britons living in or with savings in Cyprus should stay informed about the situation and its potential impact on their finances.
Cypriot Expats with Large Cash Holdings Face Fund Access Issues: Expats, regardless of nationality, with significant cash in Cyprus face access issues due to new taxes and withdrawal limits, causing uncertainty and limiting spending.
Expats in Cyprus with large sums of money, who are not part of local banking groups, are at risk of losing their funds due to new taxes and cash withdrawal limitations. The situation has led to concerns about people trying to take large sums out of the country. The UK savers with Cypriot banks based there, numbering around 65,000, have been reassured this week, as the new financial regulator moved their deposits to UK-based branches of these banks, ensuring they now fall under the UK's deposit protection scheme. However, those with large cash holdings in Cyprus, regardless of their nationality, may still face difficulties accessing their funds due to the ongoing restrictions. Essentially, the uncertainty surrounding access to cash and potential taxes has left many in Cyprus limiting their spending to essentials.
Debate on how to return UK's part-owned banks to private ownership: RBS and Lloyds aim to leave government ownership, but methods for achieving this, such as good/bad bank structure or nationalization, are debated. Bank CEOs focus on profitability and good relationships with government.
The UK's part-owned banks, Royal Bank of Scotland and Lloyds, are looking forward to being returned to private ownership, but there is ongoing debate about how this should be achieved. Mervyn King and Lord Lawson have suggested breaking up RBS into a good and bad bank, while nationalization is another option. However, both banks' CEOs, Steven Hester and Antonio Horta Osorio, have emphasized their good relationship with the government and their focus on profitability. Despite this, there have been challenges, particularly for RBS due to its larger government stake and the politicized nature of the banking sector. The UK's Financial Investments (UKFI) manages the government's shareholdings at arm's length, and its banker appointees have not interfered significantly in the banks' operations. The banks' leaders, Hester and Horta Osorio, plan to stay in their roles for at least another year.
Banks' dividends and privatization linked: Lloyds and RBS, after receiving state aid, are expected to pay dividends and privatize, but complications with share types and branch sales hinder progress
The ability of Lloyds and RBS to pay dividends and move towards privatization is closely linked. The banks, which have received significant state aid during the financial crisis, are currently not paying dividends, but are expected to do so in the near future as a sign of their financial health and readiness for privatization. However, there are complications for RBS due to the creation of different types of shares during the government bailout, which makes paying dividends on the government-owned shares prohibitively expensive. Negotiations to resolve this issue are ongoing and expected to signal the bank's improved financial situation and readiness for privatization. Both Lloyds and RBS also need to complete the sale of branch estates as part of their ongoing restructuring efforts, which is a requirement under European regulation and a significant hurdle to their privatization plans.
RBS Faces Lawsuits and Impairments, Possible Free Share Transfer Discussion: RBS deals with lawsuits and impairments, including PPI issues, affecting profitability. Free share transfer proposal for RBS is under consideration, but no decision yet. Bond prices reach unrealistic levels due to retail investor demand for yield, causing concerns about a potential end to the 30-year bond market bull run.
RBS, like other banks, is facing potential lawsuits and impairments, including from PPI issues, which are negatively impacting their profitability and outlook. Regarding the proposed transfer of RBS shares back to private ownership, an idea gaining traction is to give them away for free initially but with a predetermined floor price. The treasury is considering this proposal, but the jury is still out. In the world of bonds, there's growing concern that retail investors' craving for yield has pushed bond prices to unrealistic levels, with countries like Bolivia borrowing at lower rates than expected despite expropriating assets from foreign investors. Financial planner Brian Dennehy expresses his concerns about the extreme valuations in bonds, which may be nearing the end of a 30-year bull market.
Retail and emerging market bonds: concerns of extreme yields, questionable quality, high leverage, and liquidity: Investors should understand their fund's risk profile and consider alternative investments due to concerns of extreme yields, questionable company quality, high leverage, and liquidity crisis in retail and emerging market bonds.
The current state of the retail and emerging market bonds, particularly in Asia, presents significant concerns due to extreme yields, questionable company quality, high leverage, and a severe liquidity problem. While some investors may feel secure in their strategic or investment-grade corporate bond funds, they should be aware that these funds may contain riskier holdings and that ultra-low yields could be negatively impacted by inflation. As the speaker emphasizes, it's crucial for investors to understand their fund's risk profile and consider alternative investments that offer better value or lower risk. The liquidity crisis, which was a less pressing issue before the 2008 financial crisis, could become a major problem if a large number of investors attempt to sell their bonds simultaneously. The speaker's advice is to reduce holdings in these bonds and explore alternative investment opportunities.
Investors should consider a barbell approach during market rallies: Maintain a high exposure to lower risk areas while investing in higher risk equities for balanced portfolio, consider absolute return funds and dollar as safe haven, stay informed and consider stepping aside if uncertain, be aware of government's role in investors' money.
Despite the strong rally in equities during Q1, investors should be cautious about swapping one set of risks for another by moving funds from bonds to stocks. Instead, a barbell approach, which involves maintaining a high exposure to lower risk areas while also investing in higher risk equities, could be a good strategy. The dollar, for instance, is seen as a relatively cheap and safe haven, and there are also absolute return funds that don't rely on bonds. It's important for investors to stay informed and consider stepping aside from the markets in the short term if they feel uncertain, as opportunities may emerge in the future. Additionally, the history of compulsory gold-for-dollars exchange and devaluation during the Great Depression raises questions about the role of governments in investors' money.
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