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

To: Chispas who wrote (31544)	6/6/2005 11:01:49 AM
From: mishedlo	Respond to of 116555

There's Something, Something, on the Wing! good article by RussWinter on Cots wallstreetexaminer.com

To: Chispas who wrote (31544)	6/6/2005 11:19:15 AM
From: mishedlo	Respond to of 116555

U.K. rates cycle ´in extra time, looking for goal´ - Monday, June 6, 2005 2:23:34 PM afxpress.com U.K. rates cycle 'in extra time, looking for goal' - UPDATE 1 LONDON (AFX) -- The U.K. interest-rate cycle is about a year ahead of the U.S. and is "in extra time, waiting for that golden goal," one economist said Monday ahead of this week's rate decision by the Bank of England. John Butler, an economist at HSBC in London, used the analogy of a match-winning goal in soccer after normal time has elapsed to illustrate how sentiment has moved quickly from expectations for a rate rise to expectations for a cut, with investors seeking conclusive data to provide a sense of direction "The market is looking for clarity," Butler said. The Bank of England is expected to keep the short-term interest rate on hold at 4.75% on Thursday, with most economists expecting an easing later this year. But growth prospects for the U.K. depend as much on the health of the U.S. economy, and the Federal Reserve rate-tightening cycle, as it does upon domestic data. Butler's soccer analogy follows a statement made by Fed board member Richard Fisher last week, who said the U.S. rate cycle is "in the eighth inning" and suggested rising rates may be coming to an end soon. U.K. a year ahead Butler said the U.K. is about a year ahead of the U.S. consumer cycle. "The lesson we can take from the U.K. is that the consumer has taken on so much debt that it makes him more sensitive to small shocks," he said. British retail sales fell 2.4% in May on a same-store basis, the British Retail Consortium said Monday, citing consumer caution and the slowing housing market. The three-month trend rate of growth fell in May to -1.5% from -0.9% in April. "While some analysts still claim that the continuing weakness in retail sales is only a 'blip', these figures should remove any lingering doubt that we are now in a consumer-led recession," said the consortium's director general, Kevin Hawkins said. The BRC urged the Bank of England to cut interest rates at this week's meeting. With HSBC forecasting the Fed will raise U.S. interest rates from 3% to 3.75% by September, Butler said the higher cost of borrowing will start to "bite the U.S. consumer." But George Buckley, an economist at Deutsche Bank in London, is more optimistic about the U.S. economy. Rising wages concern him, though employment is still strong despite Friday's disappointing jobs number. "The economy is adding around 150,000 jobs a month on average," Buckley said. Deutsche Bank expects U.S. interest rates will be at 4% by the end of the year Cuts seen coming soon Which way will U.K. rates head? "Several economic indicators have softened recently," Butler said, referring to weaker-than-expected service-sector activity. Rates are on hold, he said, because of competing data. With continued signs of a slowdown in consumer spending, there's been no hurry to raise rates. At the same time, Butler said a lack of spare capacity in the labor market and data showing that inflation has risen slightly means the rate-setting Monetary Policy Committee is in no rush to cut rates either. "But the cavalry hasn't arrived," Butler said, meaning growth from the non-service sector parts of the economy hasn't compensated for this slowdown. Deutsche Bank's Buckley believes the committee will cut rates in August and then again in November, taking them to 4.25%. But he said concerns about the health of the British economy are misplaced. "This is part of cyclical downturn," Buckley said. Butler, meanwhile, predicts the central bank will hold rates until next year, and then follow with cuts to 4% by the end of 2006 "What we are seeing is a dress rehearsal for the main event," Butler said. "I'm not convinced the economy is falling apart," pointing to factors such as high employment. "But we will see the fundamentals start to deteriorate on the back of a much weaker outlook," he added. Chancellor of the Exchequer Gordon Brown expects the U.K. economy to grow between 3% and 3.5% this year, a target most economists and think tanks expect him to miss. HSBC forecasts growth slowing to 1.7% in 2006

To: Chispas who wrote (31544)	6/6/2005 11:23:02 AM
From: mishedlo	Respond to of 116555

UK govt to suspend plans for referendum on EU constitution - Monday, June 6, 2005 12:28:26 PM afxpress.com (updates with quotes) LONDON (AFX) - British Foreign Secretary Jack Straw will announce today that his government is "suspending" plans to hold a referendum on the EU constitution, Agence France-Presse cited a spokesman for Prime Minister Tony Blair as saying Straw "will this afternoon basically say that we are suspending the parliamentary process, that the constitutional bill is put on hold, until there is more certainty about what is going to happen," the spokesman said "Basically that is consistent with what we have been saying over the last week and a half, that there is a need for a debate and obviously a need for certain European leaders to get together and talk about how we're going to take this forward," he said The UK is keen not to be seen to be anti-European, so deciding to suspend the poll, -- or "put on ice", as government sources said -- leaves the option open if leaders can reach agreement that the constitution is still alive "We want to give (France President) Jacques Chirac the pleasure of killing the treaty," senior government sources said The European Council is scheduled to discuss the matter on June 16-17 Blair's spokesman told a separate briefing this morning that after the French and Dutch rejections of the constitution "there is an issue to be discussed at the European Council" "Given that, it does not make sense to proceed at this point, but that does not mean withdrawing the possibility of the British people voting if there is a constitution to vote on," he said He said suspending the referendum was not a concession from the government that the constituion was dead "What we are doing is reflecting the fact that we are in uncertain times, and in uncertain times you should not just give a knee-jerk response. You should try to think your way through as to what the implications are," he said

To: Chispas who wrote (31544)	6/6/2005 11:44:35 AM
From: mishedlo	Respond to of 116555

BGO sold In at 1.78 out at 2.28 Mish

To: Chispas who wrote (31544)	6/6/2005 11:46:17 AM
From: mishedlo	Respond to of 116555

Article has interesting observations about euro and gold. I quote two paragraphs. “In the last two weeks, the euro price of oil surged from 38.70 to 45 euros per barrel, a 16.3% rise, surpassing 40 euros per barrel for the first time ever. During that same time period, the euro price of gold rose from 331 to 345 per ounce, a 4.2% gain, closing within five euros of the key 350 level, a resistance area which has capped every gold rally since the creation of the currency. A gold breakout in euros would not be well received by the inflation hawks at the ECB, and the bank's reaction should it occur, would not only be a major test of its credibility, but perhaps help determine its very destiny.” “For years gold languished, as those seeking an alternative to the dollar chose the euro as their preferred alternative. As more of the world's savers question the wisdom of fleeing one doomed fiat currency only to embrace another, gold may finally reclaim its role as the safe-haven of choice; ironically not as a result of a weak dollar, as most gold bulls have been expecting, but of a weak euro.” safehaven.com