UK Services PMI (Oct)
Actual: 62.5 Survey: 60 Prior: 60.3
Cable up, chunnel down!
JMK
UK ECONOMY
(266 posts) (11 voices)-
So does the BOE's forward guidance and 7% unemployment target take account of demographic changes?
Queue here to work in Britain
JMK
-
Growth in unsecured in consumer credit reaches 5.8% pa
Sorry to be a party-pooper, but this is the wrong kind of growth
http://www.cityam.com/article/1383270044/sorry-be-party-pooper-wrong-kind-growth
JMK
-
I agree that, between you and me, its the likely event.
Practically its impossible, as i think we covered a few months ago with Johny or vimax or alanm?
Basically international accounting standards would need to be ridden rough shod over. It would make a mockery of the entire western central banks. In practice i still think its likely but on some war emergency, in my cynical view!
But watch the bullion when they try it. And watch how the russians and asians flick the switch on their own currencies and inter trade payment systems etc and open the gates to a new gold standard. Etc.. So its the nuclear option this!
The world could split in two. Ie DM fiat fx vs EM bullion/commodity backed.
Anyway, for now the dms have it perfectly. Their central banks are allowed to monetize their entire debt and many more credit paper. And they return the interest to the government in a virtuous circle. No side effects either. Its perfect! Why not continue as is!? The central banks do not have to mark to market so who cares what happens to the paper's nominal theoretical worth. Its perfect really. An endless creation of money with no inflation and side effects. Alchemy no less!
Back to the real world. Uk families are seeing disastrous declines in their living standards. Its hurting. No wonder the government is now starting to move to impose price controls on the uk economy. Ie energy prices. Once you cap the price of money ie interest rates you quickly have to move on to cap other prices. Its an irony that its a conservative government doing all these socialist things.
Margret Thatcher would be turning in her grave. "you can't buck the market' etc.. Well you can if you are Carney! "The BOE will back stop private markets to support the uk recovery". Yes.. We have gone full circle. We are back to the 70s!
Here the Asada latest survey. A modern version of the 19 century Round Tree reports!
http://your.asda.com/press-centre/income-tracker-october-2013
Rich
P.S. the three largest elements of cost for the middle class and working classes are..
1) Food
2) Rents
3) EnergySo its totally logical to expect action on all three sooner or later as this housing bubble boom bypasses 95% of the population completely. Ie most people only own their own house. They cant easily consume the paper housing atm profits. The number of private landlords in the uk are around 1m people. Another 1m people own 2 or more properties. (But recall capital gains taxes are applied to second homes and BTLs!)So around 2m people out of 65m people positive could benefit from the ponzi scheme. or around 3.3%. 23.5m households in the uk. Of course the 3.3% are the wealthiest people in the uk, typically.
My point here is that they thee wealthiest are benefiting and that they are therefore a very very easy target for the champagne socialists just as they were in the 1970s!
The smart money will use the excess liquidity to get ahead of the curve and leave the asset class selling into strength to reallocate fx and asset class! Property 95% of the time is an illiquid asset class.
Rich
-
Well I have been pondering Rich.
1. US Govt sell treasuries (aka debt) to entities around the world
2. Repeat 1 as many times as you like and spend like crazy
3. US Fed Creates "money" and buys treasuries in open market
4. US Fed repeats until it owns 100% of US Govt Debt
5. US Fed "forgives" the debt and interest and nobody external gets hurt so US$ doesn't get destroyed
6. US Govt is free from debt.
7. US Fed doesn't care .... it wipes out its "debt".Is this the plan?
-
P.S. Just to put things in to perspective.
This is the latest ONS statement re wages below.
The average UK national salary rose 0.7% unadjusted, nominally for the last 12 months!
Ie in real terms it has fallen by over 2% in the last 12 months, which is a pattern we have seen for a long time in the uk. Ie falling incomes in real terms. Disposable family incomes are far worse as the items they typically consume ie rent, food prices and energy have risen on a + beta to the official inflation rate.
The compounded squeeze over the last few decades is immense!
Enjoy the bubble.. but don't be suckered into thinking it can ever sustain my friends. Ride the bubble and take the profit and re allocate. Use the elite's game to your advantage!
The fundamentals remain a complete disaster zone. Dont forget all those off balance sheet commitments nor the 7.5% public deficit again for 2013/14.
The unfunded commitments are mind boggling. The demographics simply awful.
Lets drink deep enjoy and move on.
Rich
-
We said earlier this year correctly so, "when you see a bubble starting to form you buy".. This is a good one in the uk. Risks to the upside are starting to flow!
http://in.reuters.com/article/2013/10/29/britain-lending-idINL5N0IJ1IY20131029
-
I agree wholeheartedly with this,
http://rogerhelmermep.wordpress.com/2013/10/23/energy-prices-blame-the-politicians/
-
And the energy companies fight back.Take away the subsidies and i guarantee you that there would hardly be a windmill in sight.
The cost to get the power from these monstrosities to the power grid without huge subsidies would and is unsustainable.IMHO -
Yes its inevitable this and will get much much worse in the years to come. Wait for the rent controls. That will be interesting.
And note to self..
"when ever government's are on the hook for guarantees prices will be forced to rise so that the guarantees aren't called on. Every resource open to gov will be used to enable prices to rise or else total insolvency beckons".
http://uk.reuters.com/article/2012/03/21/uk-banks-bonds-guarantee-idUKL6E8EL9M020120321
http://citywire.co.uk/money/help-to-buy-state-to-guarantee-home-loans-up-to-600k/a693164
http://www.theguardian.com/business/2008/oct/08/creditcrunch.banking
Whats very interesting is the speed with which these guarantees are flowing now. Like QE they are the magic bullet to create growth for free. A sort of fiscal alchemy to mirror the monetary alchemy from the BOE.
The result is the wonder of the uk domestic boom, leading the world!
For now.
Rich
p.s. if they keep pushing down the peddle this hard inflation will come in the uk in a meaningful way. The BOE would be forced to increase rates and things could get interesting as room for debt servicing is limited given the stretch to incomes, for England at least. Things could quickly get out of control if they aren't careful here. Its starting to get too hot this at a time when the government are pressing harder still on the growth peddle.
-
Rich you did warn that energy firms would get targeted
-
Now he is a genius..
http://uk.reuters.com/article/2013/10/21/uk-britain-economy-osborne-idUKBRE99K0J720131021
The central planners aren't content though.. In their efforts to direct private capital now they are targeting corp cash. How long will it be before some new tax is imposing on hoarding cash for corporates?
Stoking that fire.
Rich
-
Europe Turning a Corner?
J.P. Morgan Funds
By Brandon Odenath
October 17, 2013“Overview:
• Since late last year, investors have seen periods of strong outperformance by assets from the most impacted parts of Europe, leaving many observers wondering if Europe is turning a corner.
• Intervention by the ECB and the ability of those liquidity injections to stop the bleeding in the economy has helped.
• The reduction of austerity and drag coming from fiscal policy should be the key to faster economic growth”http://advisorperspectives.com/commentaries/jpmorgan_101713.php
-
The Curious UK economy
http://online.wsj.com/news/articles/SB10001424052702303902404579147451058252382rsj
-
Ten yr rates negative.. just.. Far from wanting to see inflation fall i would guess they want it to rise. No signs of existing qe yet in the uk and certainly no signs of rate rises. More that the BOE is annoyed that the 'transmission' process isnt more efficient and the market is mis-pricing uk interest rates. ie they should be lower. Right to buy will release more money supply and if the MV continues her recent trend its boom time in the uk. Well, boom time for asset holders, financiers and some high value services sectors. As and if the boom spreads higher end retail should do nicely. Higher value home builders. Lets see, its in motion at least which is more than you can say for the euro zone and even USA here given the lending nos and mv there.
http://uk.reuters.com/article/2013/10/15/uk-britain-inflation-idUKBRE99E06M20131015
Cheers rich
-
It seems EY have simply combined the CS and EY reports into one. Low transactions mean housing no bubble? And consumers will reduce savings to increase consumption. Perfect!
http://www.bloomberg.com/news/2013-10-13/u-k-s-housing-bubble-hysteria-is-misguided-ey-item-club-says.html
Rich -
A big discussion on the uk.
What i don't discuss here is the short term.. Dont misunderstand me, on the short term I love the UK and am allocated accordingly. She is hell bent on total suicide on the medium longer term but short term these policies are rocket fuel! It will be a golden period. Albeit a short lived one.
One word of caution, on the short term. If we get a reversal in the markets and world sentiment this may badly affect sentiment in the uk. The reversal could be dangerous. Short a complete disaster on world wide rates nothing will derail the uk mono line boom, imo.
The danger are rates but for the moment they are subdued and if they do rise world wide the UK BOE would be likely to fight very hard against the rise especially as the treasury average duration is long!
Drink deep and enjoy.. but please reallocate!
All the best
Rich
-
I am dreaming this. Right ?
http://www.bbc.co.uk/news/uk-politics-24339347Budget surplus my ar*e.
rsj
-
The US fiscal cliff, European unemployment and the Italian chaos, Asia and its shadow banking crisis. The rest of the world may all be falling apart but one state powers onwards and upwards relentlessly buoyed on a giant credit housing bubble. Its impressive stuff indeed. She is the Alpha - no question.
-
Checks in carefully in place for next sept! haha, wonderful stuff.
Osborne really being cautious with this latest news.
In a sense can we blame him? Wouldn't labour do exactly the same thing - probably. Its just too easy to get growth via these means. Its a very popular measure as well with the people. Everyone wins, short term, inc the banks so let the party begin. Its unsustainable and madness but who cares.
Everyone, even those that know its madness, believe they can get out in time and will bank the profits to gain financial freedom etc. Everyone is for such actions. Collectively all are playing with fire and one large group or another will be left with the consequences. The UK's reputation will be severely damaged, part of the long post colonial decline with intermittent blips.
Looking ahead, the lucky few will escape with vast profits. The window for escape is when sterling is high and capital prices nominal extend upward. Look for the combination of the two to extract capital and reallocate to other economies and assets.
Its cyclical not structural this, don't forget it.. bubbles generally can last longer than we imagine but the consequences on the currency must be watched. For the moment sterling maintains a sweet spot as inflation low. This is good and i hope it sustains. Technically its promising stuff!
All the best
Rich
-
Read the detail not the headline. Its nonsense.
http://www.bloomberg.com/news/2013-09-19/u-k-retail-sales-unexpectedly-fall-as-food-plunges.html
July's figures surged up and so now August's figures disappointed. Mean reversion. Ignore!
Food dropped 2.7 percent after increasing that amount the previous month, which was the biggest gain since April 2011.
"Excluding food, sales rose 0.4 percent. From a year earlier, total retail sales were up 2.1 percent in August. Excluding fuel, sales fell 1 percent from July and increased 2.3 percent from the same month a year ago.
Today’s report also showed that non-store retailing surged a record 28.7 percent in August from a year earlier. The statistics office said the “exceptionally high growth†was due a weak figure in 2012 during the London Olympic Games."
The uk is enjoying a very strong boom driven by the housing ATM cash machine as interest rates are artificially held down by the BOE and waves of liquidity are pumped into the system. There are no signals for that this credit fueled cyclical wave is done and whilst inflation remains lowish the fx will do just fine. Ride it for now. IMO.
Rich
-
The uk needs some sort of fixed rate system here or else when rates do turn the uk consumer and her banks and the economy will quickly be on her knees.
Here the ft on the uk's housing market from march13 and some options.
http://www.ft.com/cms/s/0/3b6e50f6-9545-11e2-a4fa-00144feabdc0.html#axzz2eZUWn1ff
-
-
And its classic economic stuff here straight from the text books.
Ie if you run a mono line zero interest rate, fiscal stimulus via housing plan for your economy against a back drop of a weak global picture then of course you will eventually see your balance of payments deteriorate. This is exactly what is starting to occur for the uk.
World non eu exports falling -16% mom as domestic demand shoots up. To mono line growth in a keynesian model is an uber dangerous thing until you are fiscally super strong. This is not a market timing post here. This is a macro economic observation. It will end badly, no question as it mathematically has too.. unless other significant economies stimulate domestic demand via similar fiscal incentives as the uk is employing.
If none follow, looking ahead, recall all you do is increase volatility not the end price of assets. That's what the macro economic theory and practice presents.
With those words in mind, onwards.
http://ca.reuters.com/article/businessNews/idCABRE98509M20130906
rich
Reply »
You must log in to post.