June 30, 2009
The UK economy shrank by 2.4% in the first quarter of the year in what is now thought to be the biggest contraction since 1958, the Office for National Statistics reported today in London. The median estimate in an earlier Bloomberg survey of about 30 economists was a 2.1% decline.
The construction activity fell by 6.9%, three times as much as initially predicted. The UK’s Gross Domestic Product (GDP) is now estimated to plunge by 4.3% in 2009, the Organisation for Economic Cooperation and Development reported on 24th of June. Continue Reading »
Posted in Global Economics | No Comments » Posted by: The What Girl
June 17, 2009
European stocks declined for a fourth day signalling fears that the first quarter’s sucker’s rally (as it is very nicely put) is coming to an end. For those who still haven’t understood what a sucker’s rally is, this is that!
Stock prices have risen substantially (some over 80%) over the past 3 months but was this rise justified? Theory says that prices go up when earnings expectations rise. As we are counting almost 2 years into the worst recession of the modern times, I really cannot see how anyone expects earnings to go up. What we do expect and hope is for their (and ours!) debt to go down! And this is what is happening. We have actually funded their debt repayments in a barely disguised stockmarket trap. Continue Reading »
Posted in Investment Ideas | No Comments » Posted by: The What Girl
May 27, 2009
General Motors, the once-upon-a-time largest US automaker is finally coming to terms with the bankruptcy scenarios that have been around for the past year or so.
GM had so far used up $19.4 billiion in US Treasury loans but billions more are needed to keep the giant running. So the suggested a deal to their existing bondholders… an exchange offer that got easily rejected. Continue Reading »
Posted in NewsWire | No Comments » Posted by: The What Girl
April 23, 2009
EURUSD is higher at 1.3030 as the US Dollar lost a little ground against most currencies. Today sees the release of economic data that may give further clues on the need for another rate cut from the ECB.
Support & Resistance
Support at 1.2985 should hold to keep the short term uptrend intact and the outlook higher with 1.3060/70 as first, and 1.3130 as next target levels on the way up.
Resistance at 1.3150 should hold to keep the outlook bearish with 1.2750 ase the next target on the way down.
Bears have managed to contain price action below the retracement zone and the 200DMA to remain in medium-term control. The latest break under the 61.8% retracement of the latest up-swing should now increase optimism for a retest of 1.2834, which shields the key lows between 1.2455 and 1.2328.
Oscillators are pushing into over-sold territory but show no sign of an immediate reversal (or corrective bounce). Only a recovery above 1.3581 would start to question the latest decline for another attempt at the 200 DMA and the high at 1.3737. However, only above the latter would change the medium-term outlook for EUR/USD. Below 1.2328 would resume the down-trend towards 1.1832.
Posted in Investment Ideas | No Comments » Posted by: The What Girl
March 17, 2009
According to Wikipedia, manufacturing production is a wealth-producing sector of an economy, whereas a service sector tends to be wealth-consuming. However, as the recent economic data indicate even the strongest of the world economies undergo the reverse process of de-industrialisation.
De-industrialization as a concept can generally be defined as “a decline in the ratio of the workforce employed in industry” (Patnaik, 2003). Drawing upon previous analysis by Alford (1997) it was decided that the key measures of de-industrialisation that should be considered would be the number of people employed within the manufacturing industry, manufacturing output/productivity, and the level of import and exports of manufactured goods. Continue Reading »
Posted in Global Economics | No Comments » Posted by: The What Girl
March 16, 2009
The situation in the markets is a rather strange one at the moment… everyone is simply repeating pretty much what has been said before but the truth is that nobody really knows will lies ahead.
The G20 meeting over the weekend could not be much different and it was bound to let people down as there was no speculation of new policy agreements. Good intentions were voiced though in the shape of more regulations both for hedge funds and rating agencies. More money supply to help emerging countries and clearance of toxic assets were also discussed but the markets remained heavily indifferent as all of this is pretty much a repetition of what has been heard before. Continue Reading »
Posted in Global Economics | 1 Comment » Posted by: The What Girl
February 17, 2009
Today sees the release of economic sentiment in Germany and the Eurozone along with the release of UK inflation data that should once again indicate a sharp fall due to the weakening economy.
USDJPY is higher as Japanese Finance Minister Nakagawa said he would resign after budget bill had passed through parliament. Nakagawa’s decision comes after he was seen slurring his speech at G7 which he stated is due to ill-health.
Posted in NewsWire | 2 Comments » Posted by: The What Girl
February 16, 2009
The Republic of Ireland’s announced yet more measures to support its tormented banking industry. The government said it would invest EUR3.5 billion in each of Bank of Ireland and Allied Irish Bank, the country’s two largest banks. The EUR 7 billion cash injection will be funded from the taxpayers’ money - or as the official news state - from the state’s pension reserve.
In return, the state will receive preference shares that pay annual interest of 8%. Still no mention of what the taxpayers’ will receive in return, other than the bill of course! The government will also get warrants giving it an option to buy ordinary shares that will take its stake in the banks to 25%.
The credibility of Ireland’s banking system is torn apart following corruption allegations at the nationalised (since last year) Anglo Irish Bank. The amount of financial assistance the state has given to support the banking sector has put significant strain on its finances.
Ireland’s CDS spreads are now the highest in the Eurozone, exceeding the so-called PIGS (Portugal, Italy, Greece, Spain) and even wider that the newest entrants Slovenia and Slovakia. CDS contracts are usually traded for protection and the higher the credit default swap spread the higher the perceived risk by the market. Ireland is now seen as more likely to default by the market than the aforementioned PIGS and therefore a higher fee is being charged in order to protect against this event.
The expansion of the balance sheets of Aaa-rated governments as a result of large-scale state interventions to support local industries - also referred to as the “socialisation of risk” - has prompted Moody’s Investors Service to tackle the question of whether government debt is still the ultimate sanctuary for investors.
The wide-scale “risk socialization” that began more than a year ago – with governments deploying their balance sheets and raising public debt – is now reaching historic proportions. Poor earnings and weak economic data cemented negative sentiment and trends in January and early February are as bad as or worse than November-December, suggesting that the first quarter of 2009 is going to be worse than the last quarter of 2008.
The world economy feels as being in free fall, looking for a bottom that it can’t yet see. The Search for Honest Earnings Reports will be the longest ever… and is likely to resemble the Search for the Meaning of Life.
Posted in Stockmarket Watch | No Comments » Posted by: The What Girl
February 3, 2009
Investment bank bonuses seem to be in the centre of the global attention in the past few weeks and there is a very good reason for this. It is clear – hopefully – by now that the investment bank model resembled closely that of a casino, ie huge returns and bonuses for the insiders and uncountable losses for the majority of players.
Continue Reading »
Posted in NewsWire | 1 Comment » Posted by: The What Girl
January 2, 2009
The EURO showed signs of weakening against most major currencies after reaching record highs against more them over the past few months. In more detail, the trigger for this corrective movement in the currency market has been a report showing that the European manufacturing is shrinking and the recession is deepening for the 16 nations that comprise the Euro region. Continue Reading »
Posted in Best Deals | 1 Comment » Posted by: The What Girl
