Credit Untion Rules To Be Relaxed

As the mortgage and credit drought worsens, the government is desperately trying to look as though it is doing something to ease people's burden. The government announced today, via the BBC, that it will unveil an initiative to help people, eg those on low wages, beat the credit crunch by relaxing the rules on credit unions.Credit unions are community based savings and loans organisations. They act as low-risk savings and loans providers, usually for the less well-off. It is an ugly fact of financial life that those most in debt, and least able...

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Loan Sharks

The ongoing drought of cheap loans and mortgages is forcing already heavily indebted people into the arms of loan sharks, who charge interest rates up to a staggering 1000%.Known as "pay day loans", they are taken out by the hapless debtor to provide short term cover until pay day.The Times reports that the number of deals taken out in the UK has risen by more than 130% since last August.Payday UK, Express Finance and Pounds Till Payday offer loans of up to £1,000. Payday UK demands that £125 be repaid for a £100 loan, or £937.50 for a £700 loan....

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Eurozone Stagnates

The Times reports that the Eurozone is facing the twin nightmares of inflation and stagnant growth, meanwhile the European Central Bank (ECB) signalled earlier this month that Eurozone rates would have to rise further.How has this situation come about?1 The world economy is suffering from rising commodity, food and oil prices.2 The ECB is using a "one size fits" all policy for interest rates, despite the fact that there are clear fault lines between the economies of the North of Europe and South of Europe.3 The dollar has fallen leaving speculators...

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Housing Slump

The British Bankers' Association (BBA) have issued figures today that show that mortgage lending in May has slumped to the lowest level since 1997, as the total value of loans fell by £1.5BN compared to April. Mortgage approvals fell from 34,752 in April to 27,968 last month.The remortgaging business, where people have to refinance, is remaining firm.The effect of the housing market of the mortgage drought is not entirely surprising, sellers now outnumber buyers by 15 to 1. So, what happened to the government's much vaunted housing shortage?People...

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Oil Prices

The Times reports the following:"Oil prices headed back towards record levels today after surging by more than $1 in early trading after a pledge from Saudi Arabia, the world's biggest oil exporter, to raise production failed to calm concerns following fresh attacks on a pipeline on Nigeria. US light crude for August delivery today rose $1.76 to $137.12 a barrel, below the $139.89 record reached on June 13, despite Saudi Arabia stating it will raise daily crude output by 200,000 barrels to 9.7 million barrels next month, and committed to pumping...

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Sainsbury's Site Collapses

Sainsbury's website went down on 17 June and is still down, it has yet to confirm when the site will be back up and running.Sainsbury's delivers to 90,000 customers a week and their average spend is approximately £80 per transaction. Therefore the glitch is estimated to have cost it already £1M in lost sales, plus the costs of £10 compensation offered to an estimated 20,000 people affected by the problem over Wednesday and Thursday.This is not the first time that Sainsbury's have had problems with their online delivery service, as I can personally...

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Sir John Gieve Falls on His Sword

Sir John Gieve, the Deputy Governor of the Bank of England, has fallen on his sword and is standing down from his role next year; he is taking the flak for last year's Northern Rock fiasco.Sir John was responsible for maintaining the stability of financial markets. Sir John had been accused of being asleep at the wheel during the Northern Rock debacle. He is staying on until next year, until new legislation to deal with a failing bank is in place, at the request of the Chancellor and Mervyn King (the Governor of The Bank of England).Sir John is...

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Fuel Bills To Rocket by 40%

To add further fuel (bad pun isn't it?) to the rising inflation figures (3.3% or 4% depending on which you believe), energy companies are expected to raise their prices by up to 40% this year as a result of the trebling in wholesale gas prices (which are linked to oil prices).The average UK energy bill is expected to rise from £1048 to £1467 in the next 7 months.Consumers may be forgiven for thinking that Ofgem the energy regulator will step in to protect them. However, this is a false hope, MPs have accused Ofgem of being a toothless tiger that...

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What Inflation?

I have a mixed feeling about the possibility of future inflation. On one hand, commodity prices are still increasing. Oil is touching new highs nearly every day and agricultural prices are spiking thanks for floods in Iowa. On the other side, there's an old adage: "nothing cures high prices like high prices." In other words, high prices (in and of themselves) create incentives for people to purchase cheaper substitutes (if they exist) or to produce more of the high-priced good in an attempt to make money. So, with the two stories listed below...

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Inflation Hits 3.3%

The UK inflation rate hit 3.3% in May, the highest since 1997 when the index began 11 years ago.Bank of England Governor, Mervyn King, must now write a letter to the government explaining why the rate is more than 1% above the 2% target. This is only the second time that he has had to do this.The pressure is now on the Bank to raise interest rates to curb inflation, despite the fact that the UK economy is teetering on the brink of recession.The solution to this dilemma is for the Bank's target limit of inflation to be raised in the short term,...

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Treasury Tuesdays

Let's look at the Treasury market charts to see what they're telling us.The TLTs consolidated in a rectangular pattern from the beginning of December 2007 to the end of May 2008. Since then they have dropped below the key support level established at the beginning of the consolidation.The SMA chart gives us a much better picture of what is going on....

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Today's Markets

Oil hit a new record, but then retreated from it's all time highs. Part of the reason for the new high is Saudi Arabia announced a production increase, but the dollar's drop after a the G8 failed to announced a policy of intervention didn't help. Home builder sentiment hit a new low. In the US, the Empire State survey showed another quarter of contraction....

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Market Mondays

Finally, let's turn our attention to the Russell 2000, or the IWMs.On the five year chart, we can see a strong and very clear uptrend that started in mid-2004. The IWMs continued on this path until the end of 2007/beginning of 2008 when they fell through support.On the one year chart, notice the clear downward trajectory of the chart.On the three...

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Market Mondays

Below is a run-down of the SPYS. Now let's look at the more tech-heavy NASDAQ as represented by the QQQQQs.On the 5-year, weekly chart, notice there are two trends in place. The first started at the beginning of 2004 when the index formed an upward sloping channel. The second formed in the middle of 2006 when the index moved through the upper resistance...

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Market Mondays

I'm back. While Mr$. Bonddad and I are far from done, all of out big important stuff is now in the new house. So, it's back to blogging for me. Over the course of the day I'm going to take a look at each average -- the S&P 500, the NASDAQ 100 and the Russell 2000 -- from a long-term, medium, short-term and point and figure view. The point here...

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Adaptability

Alastair Darling will use this Wednesday's Mansion House speech to make clear that Britain's framework for tackling economic and financial stability will have to change to meet the challenges posed by globalisation.Darling will say that while the current tripartite framework (created by Gordon Brown) is essentially sound, there are ways in which it can be improved.He wants to strengthen the Bank of England's role in promoting financial stability, by bringing in greater expertise and reforming the central bank's governance structure.He also wants...

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Back On Monday -- Moving Weekend

Over the next four days Bonddad and Mr$. Bonddad are going to move into their new house. I would love to tell you I can blog and move at the same time. I can't. So I'm going to spend the next 4 days moving all my stuff from the oil house to the new house. I'll be back on Mond...

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Today's Markets

Oil spiked again, closing at $136.38. There's been a ton of volatility in the oil market lately. Corn also spiked as the floods in the Midwest delayed planting. The Fed's Beige Book painted a fairy dour picture of the economy. Finally, the US Treasury reported a record deficit, largely thanks to the stimulus checks that went out.Let's take a look...

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Read This Now

What Barry sa...

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Inflation On the Brain

There is a ton of news today about inflation. Consider the following:From the WSJ:Inflation worries are heating up around the world and jolting financial markets in the process.On Tuesday, China's stock market was the latest to feel the blow, with the benchmark Shanghai Composite Index tumbling by 7.7%, to its lowest close this year. The drop came after the government announced steps to remove cash from the financial system in an attempt to tamp down inflation......Also Tuesday, officials in Vietnam effectively devalued their currency in a step...

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Wednesday's Commodities Roundup

I'm going to break this into two different sections. First we'll take the CRB and GoldRemember that overall the CRB has been rallying since the beginning of 2007. It has continually moved through upside resistance and made new highs. Also note the SMAs are in the most bullish alignment possible. The shorter SMAs are above the longer SMAs and all...

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Today's Markets

Oil fell $3 on reports of a drop in demand and s stronger dollar. The dollar rose the most in two years. A survey of economists now thinks the US will have a protracted slowdown rather than a recession. The trade gap widened to $60.9 billion, largely thanks to oil. And the Shanghai market dropped over 7%.Considering all of the action as of late,...

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Quick Oil Market News

From CNBC:Saudi Arabia's oil output increased by almost 500,000 barrels a day this quarter, to 9.54 million barrels, sources in the Saudi Oil Ministry told CNBC.However:World oil demand will rise at its slowest pace in six years during 2008 as a raft of fuel subsidy cuts in Asia erodes consumption, the International Energy Agency said on Tuesday.But the adviser to 27 industrialized economies also sharply lowered its projection for supply outside the Organization of the Petroleum Exporting Countries, increasing consumers' reliance on the exporter...

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Bernake on the Economy

From his speech last nightBefore turning to those issues, however, I would like to provide a brief update on the outlook for the economy and policy, beginning with the prospects for growth. Despite the unwelcome rise in the unemployment rate that was reported last week, the recent incoming data, taken as a whole, have affected the outlook for economic activity and employment only modestly. Indeed, although activity during the current quarter is likely to be weak, the risk that the economy has entered a substantial downturn appears to have diminished...

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House Sales Slump

The Times reports that house sales have slumped to a 30 year low last month. Chartered surveyors reported that an average of 17.4 transactions had been completed each month between March and May, down from 18.5 in the three months to April. This is the lowest figure since records began in January 1978, according to the Royal Institution of Chartered Surveyors (RICS). Given that the housing market in Britain has been made, rather unwisely, into the engine of the economy this news is not good for anyone (home owner or not).One crucial factor that...

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Treasury Tuesdays

Treasuries area still caught between their safe haven status:Renewed banking trouble Monday sent investors scrambling to buy low-risk government debt, with shorter-dated maturities making the biggest gains.The two-year note rose 8/32 point, or $2.50 for every $1,000 invested, to yield 2.512%. That is down from 2.641% Friday as bond yields fall when...

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Today's Markets

The big news today was Lehman Brothers announcing they are raising $6 billion in capital along with a $2.8 billion dollar loss. Guess what? The credit crisis is far from over. In a sign the housing market is nowhere near bottom, pending home sales dropped 13.1% from last year's level. Paulson didn't rule out the possibility of dollar intervention....

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Gas at $4/ Gallon

From Bloomberg:U.S. gasoline rose to $4 a gallon at the pump for the first time, threatening to further shake the confidence of consumers whose spending makes up two-thirds of the economy......``The fact that confidence has gone down as inflation expectations are going up indicates gasoline has been an important driver because it's one of the reasons expectations are rising,'' Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts, said.Consumers are already rattled by falling home values and a weakening job market,...

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Will We See a Second Half Rebound?

From Newsweek:First the good news:The cause for optimism: the U.S. has called in the economic cavalry, which has responded in textbook fashion. The Federal Reserve has aggressively cut interest rates, bringing the Federal Funds rate down from 5.25 percent last September to 2 percent. Earlier this spring, Congress and President Bush, in a rare moment...

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Market Mondays

Wow - what a sell-off on Friday. The big news was the employment report -- or the lack thereof. Simply put, we're shedding jobs, and have been for some time on a year over year basis. I dealt with the numbers more here. The huge jump in gas prices didn't help either. Basically, we learned that things aren't that hot and that "Goldilocks" isn't...

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