Welcome to our #121 weekly newsletter.
“For women taking control of their financial future”
-Jana Hlistova
From The Purse
In this week’s newsletter, we focus on a study about more women taking out loans to cover maternity leave (plus 23% of women are convinced they will never return to the financial position they were in prior to giving birth).
This comes as the cost of living crisis in the UK continues: inflation is expected to reach 11%+ in Q4 of this year.
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And you can review the news in brief so you stay on top of global financial, economic and investing trends.
I hope you enjoy this week’s newsletter.
Until next week,
Jana
Maternity leave: more women are taking out loans to cover costs
Women are often financially disadvantaged throughout their life
According to a study by Credit Karma, more women are taking out loans to cover maternity leave, as reported by HuffPost.
Here are the results from the study:
26% of women go into debt to cover maternity leave - averaging £2,800 in borrowing. That's a £560 increase from 2018.
23% are convinced they will never return to the financial position they were in prior to giving birth.
Loans are being used to pay for essentials like:
groceries (42%)
bills (32%)
baby clothes and supplies (26%)
A new mother accrues an average of £1,770 loan interest in just six months of leave if they have a student loan.
Maternity leave can also impact women’s credit score, setting them back an average £17,000 in interest over the course of their lifetime.
And even after maternity leave, 44% of women say they are working less hours than they like because it does not make sense financially to work longer with the costs of childcare.
The new research comes as the cost of living crisis in the UK continues, with inflation rising to 9.1% (CPI) in May and is expected to be at 11%+ in Q4 of this year.
Akansha Nath, head of partnerships at Credit Karma UK said: ‘Women are often disadvantaged financially throughout their life, and the responsibility to give birth plays a huge role in this gender disparity’.
In the UK, employees can legally take up to 52 weeks maternity leave and can be paid for up to 39 weeks. And two thirds of UK organisations offer enhanced maternity pay if employees have been at the company for a minimum amount of time.
What can women do?
Start financial planning for your baby: split out essential expenditure vs non-essential expenditure
Take advantage of saving offers, increase credit score & consolidate debts.
Build up an emergency fund for unplanned spending (3-6 months+)
Check for employer benefits and government schemes including national insurance credits.
News in Brief
Financial news
Global financial markets snapped a losing streak on Friday, registering their first weekly gains this month as fears of a looming recession prompt investors to rethink how aggressive central banks will need to be in order to tame high inflation.
Global stock markets are still not cheap when measured by the Warren Buffett metric: The global market cap to GDP ratio has dropped to 114% but is still above the 100% threshold.
Government bonds rally on fears of global economic slowdown. Disappointing eurozone business activity data and comments from Federal Reserve chair add to cloudy outlook.
To put things into perspective: The S&P 500 is set for the worst first half since the Nixon era in 1970, Bloomberg has calculated.
S&P 500 may have another 24% to fall, 150 years of market history shows. That’s according to Societe Generale, which calculates the benchmark gauge may need to tumble as much as 40% from its January peak in the next six months to hit bottom. The sell-off might in the early stages.
Berenberg sees a recession in the US and Europe as base case for 2023. Aggressive Federal Reserve reaction to rise in US inflation to 8.6% Year-on-Year in May & new spike in gas prices in Europe have tipped the balance – fall in GDP in US & Europe has now turned from a serious risk into our base case.
The Bank of Japan (BoJ) has overtaken the Swiss National Bank (SNB) to take the lead in the global race to print money. BoJ's total assets have swelled to 137% of GDP. SNB's balance sheet equals 'only' 135% of Swiss GDP.
The European Central Bank (ECB) balance sheet hit another all-time high as Christine Lagarde keeps printing money (QE) despite record-high inflation. Total assets rose by €7bn to €8,827.9bn. ECB balance sheet now equal to 82.4% of #Eurozone's GDP vs Fed's 36.6%, BoE's 39.6%, BoJ's 136.3%.
Barclays expects recession in the Eurozone as straighter monetary policy & reduced fiscal space in high-debt countries increase risk of 'doom loop' as in summer of 2011: house prices could fall in countries with overheated markets, according to Barclays. Financial stability risks are also a concern.
The FTSE 100 closed up by 2.6% on Friday, clawing back ground in a turbulent week for the markets.
UK consumer confidence falls to lowest level since records began. Mood gloomier than at height of pandemic or in 2008 financial crisis as inflation hits household pockets ie 9.1% CPI in May.
UK mortgage lenders told they can scrap affordability rule for buyers. Bank of England (BoE) feels other measures will play stronger role in guarding against household debt.
Crypto: bitcoin, ethereum, DeFi & NFTs
To put things into perspective: A Bitcoin crash of 74% as at present is nothing unusual. In history, there have already been 4 collapses in which the leading cryptocurrency went from peak to trough by 80%+. (see current bitcoin price).
Bitcoin’s tight relationship with tech stocks (fuelled by declines in both amid US Federal Reserve hikes & high inflation), drops amid crypto rout. Bitcoin’s 20 day correlation with the Nasdaq 100 has fallen from ~0.88 in early May to the low-0.30’s now, according to Bloomberg.
Solana, Ether lead gains in relief rally (adding 9.7% in market cap), but traders say macroeconomic concerns remain (see current price of ETH).
Almost $4 billion in Bitcoin miner loans coming under stress, Bloomberg says. Analysts say an increasing number of loans are underwater.
BlockFi secures $250 million bailout from FTX. The crypto lender says the deal ‘bolsters our balance sheet and platform strength.’
Shiba Inu's SHIB jumps amid speculative frenzy, BONE Proposal. SHIB rose by nearly 48% in value since last weekend before a sell-off Thursday morning.
Coffee Break? Read This
We’d love to hear from you. Get in touch with Jana via the The Purse website or tweet @jointhepurse and @janicka.
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