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'The world is upside down' for investors

Today Programme

BBC Radio 4

Euro coins and the Dax index
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If you needed proof that investors are living in strange times, look no further than Germany's fund raising efforts on Wednesday.

Germany sold a 30-year bond at 0% interest.

What's more, institutions were so eager they ended up paying Germany more than the face value of the bonds. Why?

"The world is upside down," says Alberto Gallo, fund manager at Algebris Investments.

"Investors are essentially going to lose money over a 30-year period because they are going to get back a bit less than they paid. But actually now every government is borrowing below inflation"

He says: "The reason why this is happening when investors buy bonds instead of stocks, is because they're worried about inflation. So we have been in a 10-year recovery after the financial crisis, where central banks lowered interest rates, trying to spur growth, and also bought assets - the so-called quantitative easing...but this hasn't really worked.

"It's been a bit like central banks pushing the accelerator and governments pulling the handbrake at the same time. Governments are worrying about a lot of political issues including Brexit, but they're not really pushing for growth."

Good morning!

Welcome to Business Live.

After a positive meeting between Boris Johnson and German Chancellor Angela Merkel regarding Brexit and the Irish backstop, the UK Prime Minister is likely to get a chillier reception when he has talks with French President Emmanuel Macron today.

We'll be watching for market reaction.

Speaking of Europe, Germany will show how its manufacturing sector is performing later this morning with the release of new data. The EU's economic powerhouse recently revealed that GDP shrank in the second quarter.

Among the companies reporting financials on Thursday are Mecca Bingo-owner Rank Group as well as Premier Oil and construction firm John Laing.

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