What is Hezbollah’s role in Lebanon?🇱🇧

While the media frame the story through Hezbollah’s lens, it’s crucial to recognize the terror org’s influence, destruction, and control of Lebanon. pic.twitter.com/dDLjUR7K3G

— HonestReporting (@HonestReporting) October 1, 2024

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We are seeing the beginning of an easing cycle in monetary policy. Many now ask how far might interest rates fall and what those falls might mean for our economies. Yet, for me, the more interesting questions are longer-term. To be precise, there are three. First, have real interest rates at last made an enduring upward jump, after their secular decline to extraordinarily low levels? Second, has the valuation of stock markets ceased to be mean-reverting, even in the US, where mean-reversion had long seemed the norm? Third, might the answer to the first question have any bearing on the answer to the second?

In answering the first, we have one invaluable piece of information — a direct estimate of real interest rates for the UK provided by 10-year index-linked gilts for just under 40 years. US Treasury inflation-protected securities provide comparable information for the US, but only since 2003. These match each other well between 2002 and 2013. Since then real rates have fallen notably lower in the UK than in the US. The explanation must be the regulation of UK defined benefit pension plans, which has forced them to fund the government at absurdly low real interest rates, at great cost to the economy.

Between their peak in September 1992 and their trough in December 2021, UK real rates fell by more than eight percentage points. In the US, they fell by more than four percentage points between their peak in November 2008, at the beginning of the financial crisis, and December 2021, after the pandemic.

Two things happened: a long-term decline in real interest rates and then a sharp fall triggered by the global financial crisis and the pandemic. The longer-term decline must in large part reflect the impact of globalisation, notably China’s huge excess savings.

Yet the recent rise in real rates has not brought real interest rates back to pre-financial crisis levels: today, they are 1.5 per cent in the US. These are modest rates. Estimates by the Federal Reserve Bank of St Louis (using a different methodology) give real interest rates of above 2 per cent in the 1990s in the US.

We have some reasons to expect real rates to go even higher. After all, they are still not all that high. Fiscal positions are stretched, notably in the US. There are the investment needs of the energy transition to fund, too. We have also moved from ageing to aged societies. This will tend to lower savings and raise fiscal pressures in high-income countries and China. Global turmoil will also raise spending on defence. This suggests that further increases in real rates are plausible. At the same time, ageing societies will tend to spend less on consumer durables and housing. This would weaken demand for investment. Moreover, as the OECD interim Economic Outlook notes, global economic growth is not widely expected to pick up strongly.

On balance, it is hard to have a strong view on future real interest rates, in either direction. Yet one might still have a view that inflation is set to return, perhaps as a result of soaring fiscal deficits and debts. That would show up as higher nominal interest rates if (or when) confidence in the ability of central banks to hit inflation targets started to erode. They have contained the recent price upsurge. But inflationary pressures could very easily return.

Now consider equity prices. What have today’s higher real interest rates meant for them? So far, the answer is: very little. If we look at the cyclically adjusted price-earnings ratios (Cape) developed by the Nobel-laureate Robert Shiller, we find that in the US both of the ratios he currently uses are close to all-time highs. The implied cyclically adjusted earnings yield on the S&P 500 is a mere 2.8 per cent. That is just one percentage point above the Tips rate. It is also much lower than for any other significant stock market.

“Sell”, it seems to scream. Needless to say, that has not been happening. So, why not? Today’s earnings yield is, after all, almost 60 per cent below its historic average. One answer, lucidly propounded by Aswath Damodaran of the Stern School of Business, is that the past is not relevant. Certainly, he is right that backward-looking valuation ratios have been a poor guide to future returns, at least since the financial crisis. We cannot know whether this will remain true. Yet it is not hard to understand why he has jettisoned the past in favour of forecasts of future earnings. But the future is also highly uncertain. It is not difficult to imagine shocks able to disrupt markets that are far worse than the recent ones.

What we do know is that the margin between the real interest rate and the cyclically adjusted earnings yield is very small. It seem safe to argue that prospective returns from owning US stocks are unlikely to come to any large extent (if at all) from revaluations, given how highly valued they already are. Even the current valuations must depend on a belief in the ability of earnings to grow at extremely high rates far into the future, perhaps because existing (or prospective) monopolists will remain as profitable as today’s tech giants (now including Nvidia) have been.

This is essentially a bet on the ability of today’s US capitalism to generate supernormal profits forever. The weakness of other markets is a bet on the opposite outcome. If investors are right, recent rises in real interest rates are neither here nor there. In sum, they are betting on the proposition that “it really is different this time”. Personally, I find this hard to accept. But maybe, network effects and zero marginal costs have turned profitability into “manna from heaven”. Those able to collect it will enjoy their feast of profits forever.

Real interest rates? Who cares? Soaring inflation might be another matter.

martin.wolf@ft.com

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A HOMEOWNER was ordered to flatten their garden after raising its height to peer over their neighbour’s 6ft fence.

An argument broke out after the offender piled dirt to create a terrace which caused a “significant degree of overlooking”.

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The resident, who lives in Dinas Powys in Wales, laid artificial grass over the raised bed for a barbeque and summer house – all the same height as their patio doors.

Furious by the lack of privacy, the neighbour complained to the local council.

Council staff paid a visit and were not impressed with what they saw.

The Vale of Glamorgan’s planning committee found that the height of the garden had been increased by 600mm and would need to be lowered by 300mm.

However, the resident refused to flatten their garden and instead submitted a planning application.

It was denied by the council, who deemed the change to the garden and the infringement on their neighbour’s privacy “unacceptable”.

A Vale of Glamorgan Council spokesperson told The Sun: “Every planning application is different with each considered on its merits.

“In this case, it was decided that the development would involve and unacceptable loss of privacy for a neighbouring property so the application was rejected.”

Whilst the majority of councillors on the planning committee agreed that the garden’s height was inappropriate, Cllr Christine Cave said the decision was “hypocritical “.

A former primary school in the area had portable homes erected through special planning powers.

The temporary accommodation was passed for Ukrainian refugees, but the councillor argued that they were tall enough to see into people’s gardens – like the raised garden.

“When we made the site visit [to Eagleswell in Llantwit Major] and we actually asked why the ground had been built up and why the buildings could then be overlooking into peoples’ gardens. 

“This seems a bit hypocritical to me here, that the council have done exactly the same on a much grander scale with huge overlooking of peoples’ gardens and now we are being told it is not permissible.”

Vale of Glamorgan Council allowed the development of the site at Llantwit Major through what is known as permitted development rights.

The planning powers are usually used in an emergency, but the scheme must eventually get planning permission within 12 months of the construction starting.

The council’s planning committee voted to allow the 90 units permission to remain for a minimum of five more years.

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It was just another ordinary day in the emergency department, but I was depressed.

Bed zero usually held gravely diseased patients requiring urgent resuscitation. At that time, a young female patient occupied it. She had been out with her boyfriend when she fell into a lake. We had administered CPR when she was brought to the hospital half an hour later but hadn’t been able to revive her. A white sheet now covered her from head to toe.

The boyfriend’s legs shook as he cried. It was the first time I had seen someone literally “fall to their knees.” The father had stormed into the emergency department, took one look at his daughter, screamed and grabbed the boyfriend by his neck. Despite the father’s thin frame, it had taken four security guards to separate them.

But it wasn’t the tragic love story that had me depressed. I sighed as I twiddled with the two-milliliter syringe in my hands.

Bed one contained a young male patient. He’d been rushed into the emergency with multiple notable abrasions on his face. I had rushed to reach him to ask his name, intending to evaluate if his airway was intact. Since he had answered without a problem, he didn’t require an intubation. I walked away, disappointed.

But not having been able to try an intubation wasn’t why I was depressed. Forget intubation; I couldn’t even do one of the most basic procedures required of a doctor. I glanced at my syringe. All I had managed to do was successfully coat its insides with heparin to prevent blood from coagulating when I took a blood sample. 

On bed two lay a twenty-year-old female patient in a bright red, traditional wedding dress. She clearly belonged to a family with a high social standing. Before her marriage ceremony to a man her family had betrothed her to, she had jumped from the top of the fancy palace at the marriage site. The jump resulted in complete fractures of both her femurs and a few vertebrae. Her oddly angled legs didn’t fit the picture of her glowing skin and mehendi patterns at all. She was currently being uncooperative with the doctors despite being in a lot of pain. It probably didn’t help that instead of being sympathetic, her father seemed to be scolding her. Her story sounded like a classic feminist tale: a strong woman who rejects the man her patriarchal family promised her to.

Her story was common in India, but that wasn’t why I was depressed. I raised the syringe in my hand. It glinted in the light above me. The speck of blood inside it taunted me, a reminder of my failure to obtain an arterial blood gas, or ABG, sample.

For most laboratory investigations, either a venous or an arterial blood sample would work. However, an arterial blood sample becomes particularly important when administering oxygen to a patient. Since arterial blood contains the oxygen absorbed in the lungs, the measurement would indicate whether or not the patient is responding to the supplied oxygen.

My success with ABGs was like playing tennis: on some days, my top spins were inside the court, and on others, my racket became a cricket bat and launched the ball into space.

Today was one of those cricket bat days. I had tried three ABGs and failed all of them. Obtaining these samples had become so normalized for me that today’s failures were equivalent to forgetting how to breathe. Perhaps someone ought to take my ABG and check my oxygen levels.

I knew that until I solved my current problem, I wouldn’t be able to function normally. But the situation was complicated. ABG success rates are linked to confidence. My first failure at the ABG had put me on a vicious cycle that ensured the rest. But why had my self-confidence been low during the first one? Was it because I was sleep-deprived, having been doing twelve-hour night duties for three days now? Or was it because I’d had a quick dinner because I woke up late? Or maybe I was annoyed at my friend during our debate yesterday about his firm beliefs in the subjectivity of emotions?

My hands clenched involuntarily. I looked down at them in surprise, finding nail marks in my palms. Ah, so this is the reason.

My friend claims that emotions are irrational and unpredictable. He said that each person reacts to situations in different ways, and therefore emotions are subjective. On the other hand, I believe that the emotional response is not only rational but very predictable. Emotional responses stem from patterns formed from accumulated experiences. Understanding a person would make it easier to anticipate their reactions. Businesses and social media even exploit this technique when advertising their products. But my friend had been thoroughly unwilling to consider my ideas.

Four attendants rushing a stretcher into the emergency snapped me out of my musings. I instantly got up along with the other emergency medicine residents. The patient’s eyes were partially closed and his face was lacerated in various places. A large flap of his scalp hung loose, revealing red and black tissue beneath. 

By the time I realized that his altered consciousness was an indication to perform an intubation, a resident was already in position at the head of the patient with an endotracheal tube in her hand. Disappointment rose in me. But then I scoffed at my foolishness: what was the point of feeling disappointed about not having the chance to perform intubation when I couldn’t even take an – 

“ – ABG, now!” someone called.

The world kicked into high gear. Of course. The patient was being intubated and connected to a ventilator. An ABG would be needed to check that the intubation had his oxygen saturation under control.

I glanced at the syringe in my hand. It would be poetic to say that this syringe that had failed me previously would now help me succeed. However, this needle carried the risk of HIV transmission since I had already pricked a patient with it. I threw away the syringe and took a new one, quickly flushing it with heparin. I stood beside the patient, gazing at his wrist, imagining I had ultrasound eyes that could see directly to his radial artery.

“Please, he’s already in so much pain.”

One of the patient’s companions was looking at me. Judging by her age, I assumed she was the patient’s mother.

“I know,” I replied. “This sample will help with the treatment.”

“He’s already been pricked. Look at how hurt he is. Don’t cause him more pain,” she pleaded desperately.

I glanced at the patient. His eyes were directed at the ceiling, unseeing. He groaned intermittently, straining against the cuffs tied to his hands to prevent him from pulling out the tube reaching down his trachea. With multiple lacerations, a few skull fractures and a part of his head peeled off, I doubted he’d feel the prick of a needle, even if it was for a procedure as painful as an ABG.

Because arteries are deep beneath the skin, the needle pierces a lot of tissue to reach the artery, causing pain. Additionally, arteries aren’t directly visible like veins are. People inexperienced in the art of taking ABGs usually end up poking around blindly until they finally pierce the artery. When I had first managed to get my first ABG, it left me ecstatic for the next week. Today, however, I was proving incompetent. I felt as if my failures to obtain an arterial blood sample had rendered five years of the effort I had put into medical school useless. What had gone wrong so suddenly? What if this happened to me later on when I became an established doctor? Forget established – was I even worthy of becoming a doctor?

I closed my eyes and tried to shut out my thoughts and the patient’s mother’s talking. With each passing second, her buzzing complaints got louder and more distracting. I knew I needed to do this fast before she changed her mind about letting me take the sample.

I opened my eyes and uncapped my syringe. The patient was lean and thin; hence, his veins were prominent. They were begging to be sampled. I had to remind myself they weren’t important here; the unseen radial artery was. I placed two fingers on the patient’s wrist, trying to locate the pulse that indicated the artery’s position. I held my syringe slightly above, poised to strike.

If my looks could burn, I would have turned the patient’s hand to ashes. The pulse teased me. At one moment, I felt I had gauged their directions perfectly, and in the next, they seemed to have shifted. Every micro-adjustment of my fingers left me feeling dissatisfied. I turned my needle a few degrees clockwise, then counterclockwise; a few degrees upwards, and finally downwards. Yes. If it were going to work, it would work like this. With a final feel for the pulse, I poked the patient’s skin in one clean stroke. He didn’t even twitch his hand. I moved my needle deeper with a bated breath. 

Suddenly, red flashed in my plastic syringe, and my heart soared. It was perfect. With each beat of the pulse, the volume increased. 

When the blood reached the mark of one milliliter, I placed a piece of cotton at the puncture site and withdrew the needle. “Press that cotton against his wrist for at least 5 minutes,” I instructed decisively. It was verbal confirmation to the universe that I had collected the sample against all odds.

Task completed, I turned to leave when the patient’s mother spoke. “You’re just going to keep taking his blood instead of healing him.”

I opened my mouth to reply, paused, and then closed it. At my level as a medical intern, there was a limit to how much I could help patients. There was nothing more I could do than take the sample. So I didn’t respond.

I walked towards the blood gas analyzer. As usual, it was in the calibration process, something it did whenever it wasn’t running a sample. And for some reason, it would go on and on repeatedly four or five times in a row before it decided to perform its duty. It was as if it had an Indian government job. So, as I waited for it to (metaphorically) drink its tea, I thought about the mother’s comment.

Was there really nothing else I could do for the patient?

I should have been happy. At long last, I’d gotten my hand back on collecting arterial samples. However, an uncomfortable feeling gnawed at me, like butterflies in the stomach coated with uneasiness. I had been questioning whether or not I could become a good doctor since I couldn’t take blood samples. But now, even though I had taken one, the patient’s relatives had still not been convinced of my worthiness. I looked at the syringe in my hand. Was there a point to it?

Almost poetically, the blood gas analyzer beeped, signifying its readiness to work again.

It’s not about the sample

The difference between the emergency department and the medicine wards is time. In the emergency department, patients don’t have time because…well, they need treatment as fast as possible. In the wards, however, most of the patients are stable. And because they are no longer in a dire condition, they have plenty of time to ask questions. 

So, while in the emergency room, I didn’t face issues taking blood samples from patients. The ward was a different story altogether. 

“I have been pricked three times since the morning.”

“Yeah, but those were different samples…”

“Ouch, ouch, OUCH! AHHH!”

“I haven’t even pricked you yet!”

“Sir please please please…”

“I’m trying to heal you, not torture you.”

“Sir, I’m sick, I’m sick!”

“You think I don’t know that? That’s why I’m doing this.”

“Do you promise this is the last time?”

“Do you promise to get better without treatment?”

It was currently 10:30 pm in the medicine ward. The evening rounds had dragged on particularly late. Considering that I’d been here for over 13 hours, I was a little desperate to finish up and go have dinner. But of course, I’d been given one of the most time-consuming samples to collect – a bacterial blood culture.

I walked towards the assigned patient’s bed, my arms full of gloves, syringes, blood culture bottles, clean gauze pieces and a betadine bottle. The patient eyed me menacingly as I dumped my tools onto his table.

“I’m not going to be giving you my blood,” he declared, putting on his glasses as if he were a lawyer getting prepared to argue his case.

I sighed. It was going to be a long blood draw. 

“Why is that?” I asked as I unpacked my sterile gloves, confident that I’d change the patient’s mind in the time I needed to prepare my equipment.

“I’ve had no change in my condition since I arrived here. The only thing that you doctors have been doing here is taking my blood and nothing else. Don’t bother with your sample. I won’t give it to you.”

And here I’d been hoping to get this done within ten minutes. I looked up at him. He was around 60 years old. He seemed educated, too, and well-off economically. His son, sitting beside him on a stool, gave me an apologetic look.

Realizing that my plan wasn’t going according to my predicted timeline, I put down my half-opened gloves. “Look. Medical treatment takes time. Your diagnosis…” 

I glanced at his file. He had multiple myeloma, a cancer of the bone marrow that forms defective white blood cells. Because these white blood cells can no longer fight against infections, the patient becomes susceptible to microbes. This patient was running a fever, which meant there was a chance he had an infection. And to check for that, we needed to get his blood cultures.

“I have a friend who is a doctor,” he interrupted me. “I visited him a month ago. He gave me some medication, and my back pain resolved instantly.”

“Yes, but he didn’t treat the underlying condition, did he? You’re here in our hospital. That means you aren’t well.” I was no longer arguing.

“There is no underlying condition; there’s only destiny. What has to happen will happen. Just the other day, I had parked my car outside my house. I’ve been parking in that exact spot for over ten years now. I’ve never had any trouble. Yet, one week ago, someone crashed into the side mirror. I’ve never had an accident while driving, but my car got damaged while stationary.”

“Uh…okay?”

“That’s destiny. What happened is completely illogical. I should know since I’m a math professor at university. How do you explain that?”

“Bad luck?”

But he wasn’t waiting for my response. Whether or not I answered, he continued within two seconds of asking a question.

“If I’m going to die, I’m going to die. You and all your medicines can’t stop it from happening.”

“Your disease can be controlled. There is a decent chance of remission,” I insisted.

But he wasn’t listening to me. “All you can do is take my blood and test it. And with the amount you take, you’ll kill me faster than my disease is. As a matter of fact – “

“Can I take your sample while we talk?” I asked.

He didn’t answer my question and continued talking. I slowly reached for his hand, waiting for him to resist. He didn’t. I assessed his veins, tied a tourniquet, wore gloves, cleaned the sample site and held up my syringe. He was looking at me, fully aware of what I was doing. He didn’t stop me, choosing to just keep talking instead.

All I had to do was “hmm” and “ahh” intermittently. I was vaguely aware that the patient was discrediting the medical community with his supposed logic. He was also saying something about how honest he was and didn’t accept bribes from students for a passing grade on their test papers. All the while, I took his samples. He didn’t even wince or complain about the fact that I had pricked him in two different sites as required for a blood culture.

When I finished my work, he was still speaking. “Politics is involved everywhere. Take my university, for example. Some of the students – “

“I’m done with taking your samples.” I showed him the two bottles.

He took a few seconds to register them. “Good for you. But it won’t change anything. Remember that.” He huffed.

I checked the time on my phone. It was almost 11:00 pm.

“Well, goodbye,” I said and walked away.

A voice followed me. “Sir?”

I turned around. It was the patient’s son. He had followed me into the hallway.

“What’s wrong?” I asked.

“You are currently a student, right, sir?” he asked.

“Yes.”

“You’ll be a very good doctor in the future, sir.”

I tilted my head. With faculty, senior and junior residents all working here, and considering their pivotal roles in treatments, I hadn’t even considered myself a doctor. Forget a good one. “Uh…thank you.” I fiddled with my culture bottles.

“No one talks to him,” the son continued. “Everyone just comes, does their work and goes away. You were the first person to truly talk to him.”

I felt a little guilty. I hadn’t exactly spoken to the patient to make him feel good; I just wanted to make him amiable to give up his blood. “You’re welcome.” I decided that was the best response. “I’ll see you tomorrow.”

When I arrived the next day, however, I didn’t see the patient or his son. When I asked where he was, the junior resident told me that the patient’s vitals had collapsed in the night and that he’d died. They had tried resuscitating him without success.

I sat back in my seat, silent and confused. The patient had been just fine yesterday. I had a conversation (albeit a one-sided one) with him. Now, suddenly, he was dead. I’d seen a lot of patients die before, but I hadn’t talked to any of them for that long before it happened. The discussion I had with the patient hadn’t meant much to me yesterday, but today, it felt as if it should. Had I really made the patient better? Did it even matter since, ultimately, he had died just a few hours later?

I thought back to the son’s words. Neither he nor the patient had cared about the fact that I had successfully collected his blood sample. They had just appreciated that I talked to him. It hadn’t been my medical skills that impressed them. It was as if only I appreciated my skill at taking blood cultures and ABGs. Were my medical skills not enough to make me a good doctor?

Perhaps having maximal knowledge wasn’t entirely the correct answer to being a good doctor. Sometimes, quack doctors, the kind who prescribed pointless medication and unnecessary IV fluids, were preferred by patients purely because they received more attention. I had heard multiple studies suggesting that what patients wanted from their doctors was to be adequately heard.

Was this why the patient’s son had appreciated me yesterday?

Maybe if doctors were receptive as well as knowledgeable, that might put them above the rest. Still, it seemed much more logical to hone my medical knowledge and procedural skills than to invest time and energy in my communication ones.

I didn’t have an answer then. Until I figured out what was suitable for me, the sight of blood in my syringe during a successful sample draw would continue to fuel me.

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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Greggs shrugged off slowing sales in the past quarter, which the UK bakery chain blamed on violent riots and poor weather, and said its appeal to cost-conscious shoppers would endure even as inflation eased.

However, shares in the food-to-go retailer — which continues to expand rapidly as its popularity has soared in recent years — still fell 6 per cent on Tuesday as sales growth slowed in the three months to September 28.

“We had the riots, and we know that in some key shopping locations the public decided to stay away from those locations for a period of time just because of the unrest that was taking place,” chief executive Roisin Currie told the Financial Times. The UK experienced about a week of anti-immigrant and far-right violence from late July, as masked men attacked hotels housing asylum seekers and mosques while clashing with police.

She added that the “wet and damp weather of the British summer” as well as uncertainty over the general election had weighed on trading in July and August, but that it had recovered in September.

Like-for-like sales for company-managed shops were up 5 per cent in the 13-week period, a slowdown from a 7.4 per cent rise in the first half.

Currie said she was confident that 2025 would be “better than the preceding two years” for Greggs, which grew significantly amid the cost of living crisis, as consumers will stick with its products such as the popular sausage rolls even when they have more disposable income.

“Customers, through the cost of living crisis, have now just become more savvy,” she said. “Even when you might have a bit more cash in your pocket, you want to choose where you spend that.”

“We’ve probably got more customers who maybe came to us occasionally previously, but are [now] more frequent consumers, and I believe that behaviour will stay,” Currie said, adding that new products and opening into the evening were broadening the chain’s appeal.

She added that the easing of inflation including food commodities would also relieve cost pressure on the business, even as wage costs continued to grow.

Data published by the British Retail Consortium said UK shop prices fell for the second consecutive month in September, with the 0.6 per cent contraction the lowest rate in more than three years.

Currie’s bullish comments come as Greggs gears up its expansion. The Newcastle-based group is set to open between 140 and 160 new stores this year, after adding 145 in 2023.

In 2021, Greggs set out a plan to double its sales by 2026 and to have “significantly” more than 3,000 shops in the UK. It currently has 2,559.

Shares have surged over the past year, rising 28 per cent before Tuesday’s fall. Clive Black, head of research at Shore Capital, said the third quarter was “weaker and also more volatile than the management would have expected”.

“Greggs is undoubtedly very well placed when times get tough”, which has been the case over the past few years, Black said. “As inflation falls and living standards rise, is Greggs as well positioned as some others? Probably not.”

For income investors, there are typically three legs to the stool – the yield, total return and a stable, or growing, dividend stream.

Key to a successful strategy above all else is generating a real yield, ensuring income is not eroded by inflation over time.

Prior to the global financial crisis of 2008, when interest rates sat comfortably higher than inflation, this real yield was relatively easy to achieve.

Over the decade that followed, however, the economic environment reversed, with interest rates languishing below inflation, meaning cash held in the bank, and accordingly asset prices, lost value in real terms.

As long as rates remain above inflation, income investing once again looks more appealing

Subsequent rounds of quantitative easing suppressed yields on fixed-income assets and investors were forced to look to more growth-oriented assets.

Today, however, the picture looks very different. Inflation and interest rates have crossed over once again, with the former sitting below the latter. This creates an environment more favourable for both yields on bonds and equities.

While it is hard to say with certainty how long this will last, as long as rates remain above inflation, income investing once again looks more appealing.

In the case of fixed-income yields within the UK market, those available from both gilts and corporate bonds fell drastically in the aftermath of the financial crisis.

Income investors no longer need to look to riskier areas of the market to secure the same yield

However, with the base rate as it stands today, the economic backdrop is much more supportive of fixed-income yields. This is because fixed-income securities adjust to cash rates given the additional risk involved in investing in them.

The implication for income-seeking investors is that they no longer need to look to riskier areas of the market to secure the same yield. Instead, it is possible to remain in the relatively safe areas along the capital-risk spectrum.

In contrast, yields from equities have been relatively static over the last decade, as fixed-income yields dropped off and then subsequently rose strongly.

Yields from the UK equity market today stand at around 4% and at around 2% for global equities due to the dominance of the US, which has typically paid lower levels of income.

The outlook for dividends has been steadily improving, with strong gains posted year-on-year

But that is only part of the story.

Another major element to the overall picture is dividend stability. Dividends took a significant hit during the pandemic – in the UK to the tune of 40%, in part due to UK banks being forced to suspend payments and the impact of travel restrictions on oil companies’ profitability, both fertile sectors for income investors.

Since then, however, the outlook for dividends has been steadily improving, with strong gains posted year-on-year.

Indeed, in the first quarter of 2024, some 93% of dividend paying companies globally either increased their payouts or held them steady, demonstrating the robustness of these businesses as a source of income. Even firms considered high growth stocks – the likes of Meta and Alibaba – started to pay a dividend, albeit from a low base.

The combination of these elements means it is now possible to secure much higher levels of yield without incurring additional risk.

Investors might consider adding some spicier funds to the mix offering exposure to high yield debt, or equity strategies that employ an options overlay

Nonetheless, it is important to blend income styles with strategies that reinvest dividends to secure the compounding effect, thereby producing an attractive total return complemented by more defensive approaches focused on more stable or growing dividend streams – stocks that are sometimes referred to as bond-proxies.

These may lag in more exuberant market conditions but their return profile tends to be steadier, with the added attraction of offering some downside protection.

Finally, investors might consider adding some spicier funds to the mix offering exposure to high-yield debt, or, on the equities side, strategies that employ an options overlay to enhance income, albeit by sacrificing some capital appreciation.

The implications for income investors, typically those in or approaching retirement and therefore needing to replace a salary with an alternative source of income, are important.

Earlier this year, the Financial Conduct Authority’s review of the pensions freedoms introduced some 10 years ago found income portfolios had been largely neglected for such individuals.

While annuities are once again looking attractive as a means of delivering a baseline level of retirement income, a much broader range of natural income generating solutions are now coming into play that sit above that, helping to ensure that, in retirement, the financial liabilities linked to funding a comfortable lifestyle can continue to be met.

Daniel Pereira is investment manager at Square Mile Investment Consulting and Research