 |
It's Still the Economy, Stupid
Author: Mike Wright  | Posted: 16-04-2008 | Comments: 0 | Views: 6 | Rating: (50)  (?) 
Fed Chairman Ben Bernanke has stated that much depends on the depth of US housing declines from here, and in the UK Gordon Brown has said that the Government will do everything in their power to help homeowners. Prior to the MPCs quarter point rate cut last week, Brown went as far as saying that the Bank of England can afford to cut rates because the UK has low inflation. With oil around $109, low inflation might be gilding the lily somewhat, but Brown knows and fears that a plummeting UK housing market could have a dramatic impact on the wider economy.
Last week it was revealed that some mortgage companies actually put up their rates following the Bank of Englands rate cut. It was a further blow for consumers when it was announced that UK mortgage approvals were down 3.5% on the previous month, and to make matters worse house prices experienced their biggest monthly fall since 1992.The two factors are of course inextricably linked. Many, including chancellor Alistair Darling have argued that the UK wont follow the US with a housing slump. It is not just politicians who are be hoping the optimists are right.
Friday got off to a bad start and got worse as the day progressed. European equities were stagnant until the news of General Electrics earnings miss hit the wires. Almost immediately, the FTSE crashed 100 points with the DAX and CAC falling even further in percentage terms. GE was at one stage the worlds largest company by market capitalisation, and due to the fact it earns most of its revenue outside of the US, it is often seen as a bellwether for the global economy. US markets opened down on the news and were driven down lower with the release of the Michigan Consumer Sentiment Survey and inflation data, which showed the worst readings since 1982 and 1900 respectively.
Next week starts with UK PPI data on Monday, and the RICS house price balance around midnight. Tuesday starts with more UK inflation data, with CPI figures in the morning followed by US PPI and Empire State Business Conditions Index around midday. Average UK Earnings and bonus data arrives on Wednesday morning followed by US core CPI around lunchtime. US Unemployment Claims come in on Thursday with Friday being a relatively light day on the data front.
At one point last week the Nasdaq recorded its lowest volume for over a year and the VIX volatility index dropped to its lowest level since February. Low readings of the VIX can indicate complacency in the market and Fridays rout could be an indication that this was the case. As it is, Fridays sell off has hardly moved the VIX from its recent low and next week earnings season starts in earnest. There may therefore be some value in a volatility trade next week. Try an Up or down trade with BetOnMarkets.com, it will pays out if either of two triggers are hit. An up or down trade on the Nasdaq Composite with the triggers set as 2200 and 2400 could return 20% over the next 16 days.
Rate this Article:
Current: 0 / 5 stars - 0 vote(s).
Article Source: http://www.articlesbase.com/currency-trading-articles/its-still-the-economy-stupid-388502.html
|
Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free! |
|
Got a Question? Ask.
Ask the community a question about this article:
Q&A Powered by: 
More from Mike Wright
Unprecedented Stock Market Volatility, Unpredictable Future
By: Mike Wright | 04/10/2008 | Currency Trading
Apart from Monday’s opening salvo, it was quieter week for global equities. After Monday’s dramatic reversal, daily movements between high and low, were mostly restricted to sub 2% range days. Between Monday the 15th and Monday the 22nd of September, the level of volatility was unprecedented. The US S&P moved 3.5% between the high and low of the day, something not seen since 1982, according to Jason Goepfert’s Sentimentrader.
Financial Markets Stabilize After Recent Beatings
By: Mike Wright | 25/09/2008 | Business Opportunities
Traders, investors, and financial journalists must have been glad to reach the end of a week that will surely go down in the history of financial markets. The FTSE closed the week just 66 points down which the S&P 500 actually managed a small profit. Homeowner, the closing figures do not even begin to tell the whole story with the FTSE trading in a 521 point range and posting its best one day rally in history on Friday.
British Pound Slides Deeper Against US Dollar
By: Mike Wright | 11/09/2008 | Currency Trading
It was a dire for stock markets, with all major world indices trading well in the red. Thursday saw the bulk of the selling as US markets moved quickly to pre-empt Friday’s poor Non Farm payroll figures.
Pound Made Record Lows as Fear of Recession Increased
By: Mike Wright | 04/09/2008 | Online Business
It was a good week for European equity markets with the FTSE100 finishing the week at 5636, its highest level for nearly two months.
The Big Uncertainty in the End of Summer
By: Mike Wright | 28/08/2008 | Online Business
It was another edgy week for stock markets with both bulls and bears frustrated and unwilling to take on big positions.
British Pound Crashes on Dovish Boe Inflation Report
By: Mike Wright | 20/08/2008 | Online Business
The FTSE finished the week down slightly, but the real loser last week was UK PLC. The pound crashed as various factors come to a head.
Commodities Slide Down, Indices Edge Up
By: Mike Wright | 12/08/2008 | Investing
A one touch trade predicting that the Euro will continue to fall against the pound and touch 0.7775 in the next 16 days could return 68% at BetOnMarkets.
Bleak Picture for Economy
By: Mike Wright | 06/08/2008 | Investing
Next week has the potential to be another volatile week says BetOnMarkets financial analysts, especially with so many top tier economic announcements due. A double touch trade returns a profit if both pre determined levels are touched within the time frame specified. A double touch trade on the FTSE 100 predicting that the 5450 and 5100 levels will be hit over the next 51 days could return 140%.
|
|
Finance 
