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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: zonder who wrote (16177)	11/18/2004 9:10:11 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Sterling weighed down by weak economic data - Thursday, November 18, 2004 11:03:42 AM afxpress.com (Updating to add analyst comment) LONDON (AFX) - The pound found itself under selling pressure after a raft of weaker-than-expected UK economic data weighed on sentiment Markets believe UK interest rates have hit a peak of 4.75 pct in this cycle and may have to come down late next year if the economy is to survive intact The euro emerged as the biggest beneficiary from the pound's troubles, touching its highest level against the UK currency since early January At 10.05 am, the euro was at 0.7028 stg, off a high of 0.7034 set at 9.35am just after the data were released "The numbers have clearly been a drag on the pound but the currency had been struggling all morning," said Gary Noone at Informa Global Markets The office of National Statistics said retail sales during Oct fell by 0.4 pct, double expectations of a 0.2 pct drop. In September, retail sales had increased by 1.1 pct The figures hint that consumer appetite has been dampened by higher borrowing costs and are likely to cement expectations that the Bank of England may not raise interest rates again in this cycle from the current base rate of 4.75 pct The drop comes after two months of strong retail sales and may only signal a lull before the pick up for Christmas. But the main worry is whether consumer spending is about to decline further, said Noone At the same time, the trio of mortgage lending data from the British Bankers Association, Council of Mortgage Lenders and Building Societies Association all bore out what the market had already been expecting - that the housing market is slowing down rapidly

To: zonder who wrote (16177)	11/18/2004 9:14:36 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

DATAWATCH UK data reinforce view interest rates have peaked Thursday, November 18, 2004 11:43:26 AM afxpress.com LONDON (AFX) - The prospect of lower interest rates next year increased today as a raft of UK data showed further weakness in the consumer sector While official figures showed high street spending falling in October for the first time since July, a series of releases from industry bodies suggested the housing market is moderating in the wake of higher borrowing costs "Today's data increase the chances that interest rates have peaked but more importantly, they open the door further for rate cuts next year as the consumer and housing downturns gather pace," said Vicky Redwood, UK economist at Capital Economics The Bank of England's rate-setting Monetary Policy Committee has lifted its key repo rate by a quarter point on five occasions to 4.75 pct over the last year, in an attempt to rein in inflationary pressures stemming primarily from rampant consumer spending The biggest evidence suggesting that the MPC's strategy of slowing consumption growth emerged in this morning's October retail sales data The office of National Statistics said retail sales during the month fell by 0.4 pct, double the expectations of a 0.2 pct drop. In September, retail sales had increased by 1.1 pct It also noted that the three-monthly growth rate was 1.2 pct, down from the first half average of 1.8 pct "This should take the pressure off the MPC, which can now afford to wait to assess the strength of retail sales over the crucial Christmas period, and moreover, the strength of economic activity in the fourth quarter," said Robyn Barnett, economist at UBS She cautioned that if consumer spending proves to be relatively resilient despite the cooling housing market, then the MPC may have to raise rates a little further The housing market remains crucial for the future direction of interest rates, analysts added, and today's data raised the prospect of house price declines A leading industry body reported today that UK mortgage lending fell for the third month running in October to 23.3 bln stg, down 8 pct from September The Council of Mortgage Lenders also said the value of loans for house purchases slumped to 10.3 bln stg - the lowest since February, which is traditionally a quiet month John Butler, economist at HSBC, said the CML's findings reveal a sharp slowdown occurring in the housing market to levels last seen in 2001, before the MPC began cutting rates in the wake of the global economic slowdown and the terrorist attacks on the US Coupled with the retail sales data, Butler thinks a consumer slowdown is taking place "rather than a collapse"

To: zonder who wrote (16177)	11/18/2004 9:31:31 AM
From: mishedlo	Respond to of 116555

U.S. weekly initial jobless claims off 3,000 to 334,000 Thursday, November 18, 2004 1:54:05 PM afxpress.com WASHINGTON (AFX) -- The number of people filing for state unemployment insurance for the first time fell 3,000 to 334,000 last week, the Labor Department said Thursday The level of initial claims for the week ended Nov. 13 was in line with forecasts, according to a survey of economists conducted by CBS MarketWatch. Meanwhile, the four-week moving average of new claims rose by 1,000, reaching 338,250 Economists prefer the four-week average to measure the state of the nation's work force because it smoothes out errant data caused by unexpected events, including hurricanes In the week ended Nov. 6, jobless claims increased a revised 5,000 to 337,000, up from an initial estimate that the week's claims rose by 2,000 to 333,000 The insured unemployment rate remained steady at 2.2 percent The number of former workers continuing to receive state unemployment benefits fell by 16,000 to 2.79 million in the week ended Nov. 6. The four-week average of continuing claims rose by 500 to 2.8 million The Labor Department said next week's data would be released Wednesday, a day early, as a result of the Thanksgiving holiday.

To: zonder who wrote (16177)	11/18/2004 10:25:52 AM
From: ild	Read Replies (1) \| Respond to of 116555

<<<short the short end and long the long end of the yield curve>>> Isn't there overwhelming consensus that long rates are going much higher? IMO flattening of the interest rate curve is bad for the banks and they are not able to hedge for it. Also doubling of short rates is bad for the economy and the banks are part of economy. Credit cards, retailers are still offering 0% APR, but their cost of funds has significantly increased.

To: zonder who wrote (16177)	11/18/2004 10:43:16 AM
From: mishedlo	Respond to of 116555

Eichel says Germany aims to cut 2005 budget deficit to 2.9 pct of GDP UPDATE Thursday, November 18, 2004 2:15:18 PM afxpress.com (Updating with details) BERLIN (AFX) - Finance Minister Hans Eichel said Germany is aiming to cut its budget deficit to 2.9 pct of GDP next year He also said the G20 meeting of finance ministers and central bankers in Berlin this weekend will not be a forum for discussing exchange rate issues Germany's deficit will be above the EU's 3 pct ceiling for the third consecutive year in 2004 Eichel spoke to reporters after attending a meeting of the Finance Planning Council, which meets twice a year to discuss the budget of the national and state governments as well as those of the municipalities He said the national and state governments as well as municipalities have agreed to keep the EU stability pact next year by trimming the overall state deficit to 2.9 pct of GDP They also confirmed the Council's decision reached last June that overall growth in expenditures will be limited to an average of only 1 pct in the next two years Eichel said the 2005 net borrowings of the national government and majority of the federal states will be less than the overall investments planned for that year

To: zonder who wrote (16177)	11/18/2004 11:08:08 AM
From: mishedlo	Respond to of 116555

U.S. leading indicators fall for 5th straight month - Thursday, November 18, 2004 3:34:36 PM afxpress.com WASHINGTON (AFX) - The U.S. economy is losing steam, the Conference Board said Thursday, reporting that the index of U.S. leading economic indicators fell 0.3 percent in October, the fifth straight decrease. The string of declines "is a clear signal that the economy is losing steam, and may start off 2005 with a relatively weak pace of economic activity," said Ken Goldstein, economist for the board. A separate business confidence survey "suggests that worries about where the economy is heading may cause some strategic plans to be put on hold," Goldstein said. "And the signal will be much stronger if consumers turn more cautious, just as the holiday season approaches." The September leading index was revised lower to a 0.3 percent decline, from a 0.1 percent drop previously Seven of the 10 leading indicators fell in October, led by consumer expectations, money supply and interest rate spreads. Vendor performance, factory workweek, building permits and new orders for capital goods also contributed to the decline in the leading index. Three indicators gained ground in October: initial claims for jobless benefits, orders for consumer goods and stock prices. In the past six months, the leading index has dropped 0.7 percent, with three of the 10 indicators strengthening. The coincident index rose 0.3 percent in October, with all four indicators rising. The lagging index increased 0.2 percent in October