Worldwide Financial Planning

US business created almost 340,000 new jobs last month, far more than expected. The number of people quitting their jobs increased slightly but this remains well below the recent average, while US manufacturing has remained far more resilient than expected.

The government has mooted a potential change in Inheritance Tax rules - a tax which is rated as the least popular tax, well below Value Added Tax (VAT), a tax where it's hard to see how they add any value at all.

Both Spain and Germany reported prices rising slower than expected, which led to a cooler overall inflation picture for the Eurozone as a whole. There was further good news from the US, as
the annual rate for Core PCE inflation, the Federal Reserve’s preferred measure of inflation, came in more or less in line with expectations as it continued its steady decline.

What has to be understood, is that the ‘Kick Out option’ is there to protect the market maker, i.e. the product designer, not you. By creating exotic options, you will never comprehend inside the product’s design, the product designer is protected from large market rises and caps your return. Also, these ‘Kick Out options’ are cheaper for the product designer than standard call options, so more background profit for them.

Markets expect to see only minimal tightening from here as banks wait for the impact of rate hikes already announced. This week’s meetings still had an effect on markets. The dollar continued to rise strongly against pretty much every other currency and US Treasuries have declined again

I try to write like we are sat having a beer, wine or coffee together, but this ‘simple’ product is highly complicated. Please stay with me. My biggest concern is that they are generally made appealing to risk averse investors with nice round numbers offering ‘capital protection’. Central to all of this is the line in the product brochure that states whether or not you should take out such a plan: “You understand how the Deposit Plan works”, or “You have read the brochure and understand how this investment works”.