Shares, Gold Up and Unemployment stagnant

The FTSE 100 and mining stocks were up this morning as the price of gold reached over $1,000.  This was mainly due to a weaker US dollar which enticed investors to gold as an alternative asset.

Meanwhile the unemployment situation in the UK is not likely to improve much in the remaining months of 2009.  Employers are largely expected to continue job cuts but overall the trend is slowing down.  Will the unemployment situation slow down enough to prevent it from reaching 3 million?

Over in the G20, it is said that nations are divided as to their recession-tackling tactics.  The official G20 statement runs as follows:  “The recovery is uneven and remains dependent on policy support, and high unemployment is a major concern.  To restore the global economy and financial system to health, we agreed to maintain support for the recovery until it is assured.”  But within the meetings, it is said that cracks are beginning to show as to the right way to solve the many issues.

US Hedge Fund: 20 Arrested for Insider Trading

Before you get involved in a hedge fund or any kind of fund and place your investments in the hands of a fund manager – make sure you understand what you are getting involved in.

This golden rule can always be applied but unfortunately crime does penetrate the investment world – and the latest case is one that reads like a crime thriller novel.  Galleon Group, a large hedge fund based in the US, is at the centre of a huge criminal case of insider trading.

The Group’s founder Mr Rajaratnam, born in Sri Lanka, is at the core of the case though denies wrongdoing.  The total of illegally-gained profits currently stands at around $50 million dollars and involves mangers, lawyers, traders and executives from all around the US.

Around 20 people have been charged in the case and Mr Rajaratnam is on $100 million bail.

Gold to Record High

The foreign exchange market is set for a shift …. the IMF is preparing to sell off around 400 tonnes of its gold reserves in a bid to boost the market and aid developing nations.  India’s central bank has already announced that it will buy around 200 tonnes for a cool $6.7 billion.

The news has caused the price of an ounce of gold to reach record highs at $1.092.60 an ounce.  It is widely expected that the price could reach $1,100 in the coming months.

China is the country tipped to be the purchaser of the remaining 200 or so tonnes from the IMF – it already holds some the world’s largest gold reserves at 1,054 tonnes worth around $40 billion.

The UK holds just 310 tonnes after around a half of the total reserves were sold off in the 1990s – when the price of an ounce was around a quarter of today’s price.

US dollar drops and European Shares too

The foreign exchange market is waiting for the US Federal Reserve’s latest decision on the US interest rates.  It is expected that they will keep them near zero, where they have been for about a year.  So far the Fed has indicated that it has no intention of raising the rate despite the fact that the US economy is clearly recovering from the recession.

In early trading, the US dollar retreated against a basket of currencies.  This is expected to continue and stocks are set to receive a boost.

European shares sank this morning as confidence in the banking sector of Europe is definitely seeing a low point.  European banks have reported more quarterly losses while the UK banking sector is apparently in as bad a state as it was a year ago.  Wholly- and partly-state owned banks are set to receive yet more taxpayer money – to a total that exceeds the amount they received just over a year ago.

 

Forex Market – Always Active

Growing numbers of people are entering the world of trade for investment – whether they choose to invest large or small amounts of capital.  But one thing to bear in mind for all prospective investors is that risk is ever-present.

Forex trading – trading on currencies is one of the best-loved ways to invest.  The foreign exchange market is one of the largest in the world and while the UK resident sleeps, the Australian is wide awake and busy trading – and vice versa.  In other words, the market never sleeps (well, except for Sundays when everyone has a rest).

But there are so many factors affecting the market and currency movements – just think of the size of the world and the amount of events happening every minute…politics, natural disasters, economies, finance, terrorism…all of these affect the value of currencies as traders increase and decrease their interest in a currency.

Risks are ever-present but the wise trader takes steps to lower these including by signing up with a good broker (obvious but vital), taking training, practising, research, employing stop losses and so on.

USA back to Growth

The US economy is, as predicted, back to growth.  In the latest published quarterly results, the GDP there grew an annualised 3.5 per cent.  This growth was better than expected and share markets reacted well – both the Dow Jones and FTSE 100 jumped up.

The USA has had a rollercoaster year – the first quarter GDP sharply contracing by a whopping 6.4 per cent, while unemployment rose and consumers panicked about the steady decline.

Now things are heading back to better times and President Obama says that the “recession is abating”.

 

 

Is your Credit File correct?

We might see them as mysterious institutions that hold key information on our financial past, present and possibly future…credit reference agencies are becoming ever stronger as lending criteria in the UK tightens.

Many people have been turned down for a loan but there are ways to improve your rating – aside from being a good boy/girl with your borrowing habits.  You can view your report and check that it is correct.

A growing number of people are finding that their report is filled with inaccuracies such as age-old address details, unpaid debts which have long been paid and so on.  Therefore, it is crucial to make sure your file is up to date – as it has also been complained that the agencies can take a long time to correct mistakes.

 

Tougher Credit Card Rules

Credit card companies are in the firing line from the government and consumer watchdogs.  A new set of proposals is set to be assessed which would change some of the ways in which credit card companies operate.

For instance, they may be forced to inform customers clearly of any interest rate changes and may not be allowed to change an existing cardholder’s credit limit without consent from the cardholder.

Overall, it is felt that card customers are being unfairly treated with confusing information and a lack of clarity.  Many card customers end up spending decades just paying off their card.

Euro up but not to Monday’s Highs

The US dollar has retreated a bit against the Euro after the Euro experienced 14-month highs on Monday at over $1.50.

It is widely expected within the forex markets that the dollar is poised for a stronger period after a sustained period of weakness.  However, no-one seems to know what exactly the catalyst will be for the foreign exchange market!

Some say that the data release later this week in the USA – of third quarter results, expected to signal the end of recession in the US – will provide a boost for the currency.

The Euro is now hovering around $1.48.

Pound extends Losses

The UK is now lagging around 4th place behind other “leading” economies as the US is set for emergance from the recession.  Data to be released this week is expected to show that the US economy grew in the third quarter.

Now Germany, France, Japan and likely the US are out while the UK is expected to stay in the doldrums for a while yet.  The sterling extended losses over the weekend as investors lost interest – last week’s figures that the UK had its sixth consecutive quarterly decline came as a surprise to many.

An aggressive sterling- selling trend is expected to take place as the UK interest rate is to stay low.

UK still in Recession

Britain’s economy has now shrunk for the sixth quarter in a row – a fact that has shocked the financial markets (foreign exchange, banking, trade etc) , economists and analysts.   Indeed, the figures (released today by the Office for National Statistics) which show the economy shrank by 0.2 per cent in the third quarter, mean that the UK is still in a state of recession.

It had been predicted and hoped by many that the latest financial data on the economy would bring some better news.  Some hoped that it would be announced that the country had left the recession.  But today’s report means that there is still ground to be regained in order to return to growth.

That said, both the Chancellor (Alistair Darling) and the Governor of the Bank of England (Mervyn King) apparently believe that there will be a small fraction of growth by the end of the year. 

However, output in many sectors is still down, unemployment continues to rise and the fiscal stimulus that has been filtered in within the last year still has not pulled the country into a sustained recovery.

Banks under fire

Banks may not be quite so popular these days and now a new revelation has come to light – that of the “cold call”…

Many people cannot bear the call just as their favourite TV programme is about to begin – some over-friendly young man from a call centre asking if your broadband package is working well and did you know that you are due for a free package?  Usually these can be dealt with, but what if the caller asks for personal details and claims to be your bank?

The Banking Code tells us never to give out personal information or account details unless we are sure that the recipient is trusted.  So, if you suddenly receive a call from a call centre, how do you know it is legitimate?

Apparently, banks do call customers now and then out of the blue – it may be because there have been some suspicious transactions on your account and these may need to be verified.  But if you are in any way uncomforatble, just say you will contact them.  The same goes for foreign exchange banks – although stories like these are not known in connection with them.

Bonus Payouts bigger this year than 2008

Now the row is really hitting new heights – bonus payouts for City workers are set to soar way up to around £6 billion!   £6 billion?  Last year the total payout for bank workers was £4 billion, so how on earth are they doing better this year – fresh out of the recession turmoil?

It certainly makes for head-scratching stuff.  After all, these banks were close to collapse but one year ago – the taxpayer was hauled in to bail them out (to the tune of £3 trillion) and now they are back to vast profits and fat slaps on the back.  Goldman Sachs, one investment bank which has a very large bonus pool set aside, has argued that there are so many other things regarding its business to discuss rather than bonuses. 

The Governor of the Bank of England has had his say over the matter, last night: in a scathing attack at the banking sector, Mr King echoed Winston Churchill by saying “Never has so much been owed by so few to so many”… he called for better reforms on the banking system.

Oil beyond $80 a barrel

The US dollar is still weak which is seen as one of the factors which has driven the price of a barrel of US crude oil to over $80 a barrel.  The long-term outlook for oil prices is that they are to stay strong although there may be a price tumble in the short term.

So is it good or bad news that the dollar is weak?  This is a topic of some confusion for many…and the answer is that it depends on where you are based!  So far, it seems as though generally the world is pleased about the dollar’s weakness, but in actual fact there are those who want it to strengthen.  

In the US, there is of course the worry that countries like China are increasingly adding pressure for a new world reserve currency to replace the dollar.  It has been said that intervention is needed to “rebalance” the world foreign exchange market so that the dollar increases.

The US dollar: a has-been?

Is the US dollar’s heyday really over?  Foreign exchange markets and governments, analysts and economists are all eagerly debating the dollar’s decline and what will happen if…when?…it loses its status as the world reserve currency.

That emerging markets are the “place to be right now” is no news but the increasing strength of the voices of nations like China is taking speed.  Iran has already changed its reserve currency to the Euro from the dollar..well, given its relationship to the USA, this is no great surprise either.

But while the BRIC (Brazil, Russia, India and China) nations were hitherto ushered out of the way whenever the currency debate arose, now their wishes look close to coming to pass.  How will the USA react?

IVAs in the Forefront

A massive percentage of UK residents are in debt – and not just by a few quid.  But this may not come as a great surprise (recession, anyone?) – what is interesting is the majority of them are not getting all the help they could be!

IVA – Individual Voluntary Agreement.  These are great little tools to help anyone in severe debt, but get ignored!  An IVA can prevent you from reaching full bankruptcy and court procedures, yet most people take this option rather than apply for an IVA.  This is for no particular reason other than that they are not very well known and people are suspicious of them.

However, IVAs are supported by our very own Government despite being provided by commercial insolvency practitioners.  A reputable provider won’t charge fees for the initial assessment but may introduce a few costs.  The best option is to shop around as there are plenty of more than reasonable providers available.

Positive Sentiment and a return to Bonuses

Investment banks are set to announce massive profits for the quarter and hefty bonuses are to be dished out to employees.  Hold on…isn’t it 2009 and we’re just struggling out of a huge recession, the likes of which haven’t been seen since World War II?  The first sentence here sounds like something out of 2007, during the boom period.  However, despite the massive downturn it seems as though investment banks are back on track. 

The bonus issue has been raging around governments and watchdogs from here to the USA since the financial disaster that took speed in September 2008 from the near-collapse of the Lehman Brothers.  Many feel that the reckless lending habits of banks were to blame, along with the “bonus culture” of the financial world.  But now they are back – despite efforts by the Financial Services Authority to crack down.

The financial market as a whole is enjoying some positive sentiment.  The US dollar is continuing its weak streak, leading to a rise in the price of oil (it reached over $75 a barrel) and the Euro expected to reach $1.50 in the near future – according to the foreign exchange market.

Travel FX Cards without fees

Sometimes it is hard to find something to write about on a financial blog.  Daily updates about how the UK isn’t quite out of the worst yet followed by a story that one survey finds that the recession is over can be a waste of time.  On days when there seems to be no new news (well, on the economic front), many financial journalists look to neverending themes – things like how to save money, how to budget, what financial products are great – and which are a waste of time. 

So, here we shall do that today.  After all, it’s always good to refresh our minds on some products which are worthwhile.  Today’s star is the Prepaid Card for Travel – the Travel FX Card.  We are travelling on a regular basis (despite what they say about Brits who aren’t going on holiday) and with the pound’s poor performance against key currencies (mainly the Euro and the US dollar) it is definitely worth making sure that you get the most out of your money when you go overseas!

The Travel FX Card is an absolute winner – and finding one which gets you both an excellent rate AND no fees for ATM withdrawals and purchases is a massive bonus.  Usually, when we use a regular debit or credit card abroad, we hold our breath and try to ignore the vast fees which are taken each time we go to withdraw some money.  That is where some Travel FX Cards can step in. 

Shop around for a good deal and don’t forget to compare exchange rates!

There.  Good deed for the day done – spreading the word about Travel FX Cards!

Self-Cert Loans to get the Axe

The Financial Services Authority is closing in on self-cert loans.  In a new plan it is expected to change the way in which lenders handle applications.  Self-cert loans are seen as one of the number one reasons for the banking meltdown, thanks to their loose criteria: applicants were not required to prove their income…leading to high levels of lying and defaults.

Now, the amount of new self-cert loans are close to zero, with but one lender still offering them.  The FSA is set to outlaw self-certification so that lenders must ask for full proof of income from borrowers.

Is this fair enough given the last few years or are self-employed and irregular income households being pushed back to the back of the queue?

Markets Await The Recovery

Currency and other financial markets are speculating over the future of the British economy.  Aren’t they always?  Well, yes, but this is over the apparent slowness of the UK recovery and the fact that the Bank of England and Monetary Policy Committee (MPC) are still divided over the matter of QE.

Not just that, but there is increasing speculation that the programme will be extended.  The current programme was extended to £175 billion in August, a move which was met with shock within the City.  Surely, thought some, there was no need to continue to inject money into the British economy?  The need for further stimulation indicated that the UK was not quite as recovered as had been hoped…

Many are hoping that there will soon be a clear sign that the worst is over.  Now is clearly not that time.