Archive for January 2010

Banks VS Obama

January 28, 2010

The battle lines are drawn.  The fight has commenced.  Who will win and what will change?

The war is between leaders Obama, Brown and Sarkozy VS the Big Banks.  The former three (well, in Brown’s case it was more other representatives of his team – Mr King for one) have all made a clear stance on how they think the banking systems of their- and other nations should change – drastically.

Now, heads of some of the world’s largest banks have fought back, sayingt that they see no evidence that cutting up their corporations into smaller ones would make any changes for the better.  Furthermore, they blame US and UK leader of being too concerned with domestic concerns (such as local elections).

Meanwhile over in the foreign exchange market, the pound is still riding high against the euro – the latter having problems thanks in part to the economic woes from Greece and Portugal.

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Fourth Quarter brought Growth – by a tiny percentage

January 27, 2010

The poor pound.  It was really having a good morning yesterday, rising against the euro as currency exchange investors acted on the good prospects for the fourth quarter figures which were to be released later that day.

Most analysts expected that the growth figures would show between 0.2 per cent and 0.4 per cent, but the acutal total came to a rather more feeble 0.1 per cent.  So.  The recession is over – but by a whisker.

The pound, unsurprisingly, took a plunge after the news .  It fell by 0.6 per cent against the dollar and now many are wondering what first quarter GDP will look like.  Will it, fear some, fall back to negative growth?  After all, it wouldn’t have far to fall.

Still – at least growth did hit the positive numbers!  Could have been in the minus!

Pound given a Boost as Traders expect 4th Quarter Growth

January 26, 2010

Will the United Kingdom be given the official thumbs up later today?  Could it, will it really be true that the economy left the recession in the fourth quarter?

Economists, analysts, experts and the rest are all expecting a level of growth that is enough to say that the exit took place.  Over on the foreign exchange market, the pound has already gained on the expectations in this morning’s early trading activity.

It is unlikely that the forecasts are wrong, but still – there is an air of nervousness as to what the number will be.  If growth is weaker than expected then the pound is likely to retreat back down.

So: fingers crossed, ears sharpened and eyes peeled…..

Sterling Edges up Again

January 25, 2010

Perhaps a free handout of Rescue Remedy might be in order on the City’s streets this morning.  Soya yogurt just wouldn’t fit the bill right now…

Shares, mainly in the financial sector, fell in this morning’s early trading as the big banks deal with US President Obama’s major plans for the banking sector in the US.  HSBC, Commerzbank, Deutsche Bank, BNP Paribas – they all took a hit this morning as investors acted nervously.  Mr Obama plans to limit the amount of profit that large banks may make and may even split up some of the largest corporations.

The foreign exchange market is looking equally jumpy – investors have been widely selling the dollar and heading over to the yen.  Meanwhile, the pound took a hit last week thanks to weak retail sales figures.  However, this morning it edged up again as investor risk appetite improves slightly.   The sterling gain will remain limited until latest GDP figures are released tomorrow.  Will they call below forecast or be better than expected?

China to become Second Largest World Economy?

January 21, 2010

It doesn’t seem fair, does it.  While the UK is struggling with growth levels and getting out of the minus zone, China is busy entering the double figures!

To clarify: China’s GDP grew to over 8 per cent in 2009 with the final quarter over 10 per cent compared with the year before.  10 per cent?!  The UK would be lucky to see that kind of growth in 2010, let alone the year after that!  So what is going on?

Well, China did experience a downturn at the end of 2008 but perhaps not as extreme as was felt in the UK.  No big news there – many countries experienced a less extreme downturn because they had been a bit more careful than the UK in the years before.

In addition, China put a massive stimulus package in place last year, which put the economy back in the black nice and quickly.  Now, they are in the running (say some economists) to take over from Japan as the world’s second largest economy.  Not bad, for a country that is still classed as ‘developing’.

However, there is a downside to the growth factor: it is happening so speedily that there is now risk of too much inflation.  Check how the markets have reacted to China’s news – is the pound‘s recent strength in jeopardy?

Investors Cautious

January 19, 2010

Welcome to Tuesday!  And in today’s markets, investors are seen to be a little on the careful side as they wait for important earnings data from the US.  Also, they are waiting for Mervyn King (Bank of England chief) to make a key speech this evening, in which they hope he will say something about the current QE programme – will it be brought to a close soon?

They (‘they’ being currency exchange, CFD, Futures traders and all the financial markets) are also keen to hear something about Britain’s interest rates – will the Bank raise them soon?  If they do, this would give a clear sign that things are looking up!

So – not surprisingly, the FTSE 100 opened, as expected, down.

W shape Recession Warning from IMF

January 18, 2010

Apparently it will be crucial for governments (including that of the UK) to focus on pubic debts in the coming year.  Tell us something we don’t know about, Mr Strauss-Kahn aka head of the International Monetary Fund (IMF)!

Mr Strauss-Kahn made a general warning to all developed nations that they ought to be careful about exiting current fiscal stimulus plans, as doing so too quickly could cause another downward turn.

Meanwhile, emerging economies (is China really still classed as emerging?) in Asia are leading the way for the recovery, said Mr Strauss-Kahn.  Overall though, he said that the IMF predict that the global economy will grow by 4.1 per cent in 2010.

Over in the currency exchange market, the euro stayed weak in early trade in the London session.  It reached to below 88 pence against the pound meaning its weakest point in four months.  Most experts warn that Greece’s fiscal woes are the main reason for the euro’s performance.