Thank you – we raised £100,000 for the Prostate Cancer Charity

Thank you very much for those of you who sponsored me and the team in last Sunday’s bike race from Greenwich to Canterbury, a ride of 120 miles along the route that the Tour de France took yesterday. I didn’t get near Robbie McEwan’s Tour de France time of 4 hours 39 minutes – I managed a more leisurely 8 hours 37 minutes. But then again Robbie didn’t get 3 punctures or have to ride through a f…

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UK homeowners aren&#39t crippled, they&#39re rolling in it

I’m quite bemused by the press reaction to yesterday’s interest rate hike in the UK. Almost every newspaper has chosen to focus on how the average homeowner is going to be crippled now that UK interest rates have gone up from 5.5% to 5.75%. The Daily Mail calls it Homeowner Misery, and has calculated that the average cost of a £125,000 mortgage is up £130 per month compared to this time last ye…

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Tight global labour market suggests inflationary pressure will rise further

The global unemployment rate is plummeting. France’s unemployment rate fell for the 24th consecutive month in May, reaching a 25 year low; Italy’s unemployment rate dropped to an all time low in the first quarter of this year, while Spain’s unemployment rate has fallen from 21% a decade ago to 8.5%. Likewise, the Japanese and German jobless rates stand at 9 and 12 year lows respectively. The UK…

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Northern Rock not so solid any more – question from a client

The following question was sent to us from a client last week:

The recent profits warning from Northern Rock has clearly taken the equity market by surprise in the short term, though equally many people will regard it as a victory for common sense that sooner or later they had to pay the price of such an aggressive strategy. But where does this leave sentiment in the mortgage-backed securities …

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Not waving, but drowning

I thought I’d quote the introduction of a piece out today by Albert Edwards, Dresdner’s Asset Allocation strategist:

Warren Buffet said "Only when the tide goes out do you discover who’s been swimming naked." As the US housing tide recedes, the skinny-dippers are racing up the beach to find their beach-towels. But this is not a crisis driven by the US sub-prime mortgage debacle. The housing slu…

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Investors Strike Back

It would appear that the distinct lack of confidence that I alluded to yesterday, (see here) has led to one or two interesting developments in the primary markets (the market for new debt issuance). Private equity houses KKR, Clayton and Dublier & Rice were, yesterday, forced to drop their bond offering funding the acquisition of US Foodservices. Covenant weak leveraged loans have also been rec…

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Test

"Liquidity is confidence" according to Fed Governor Kevin M. Warsh and right now it feels like confidence and liquidity in financial markets is starting to ebb. Why you ask ?

Well first the evidence. Volatility has returned. As I write, volatility as measured by the Vix Index is currently at levels approaching those witnessed back in late February and early March. The world’s major equity indic…

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Water water everywhere, nor any drop to drink

Just as Samuel Taylor Coleridge’s thirsty mariner lamented that he had nothing to drink despite being surrounded by water (it was sea water), Iranians in Tehran are rioting over a shortage of gasoline. Iran is sitting on the second largest conventional crude oil reserves in the world, second only to Saudi Arabia, and yet the government has suddenly imposed gasoline rationing. Drivers are being …
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The UK consumer – outlook is dour

Graham Secker, Morgan Stanley’s equity strategist came in to give us his top down views on markets last week. I’ve attached an interesting chart that he produced (click on chart to enlarge). You’ve probably read a lot about the forthcoming wave of mortgage refixes in the UK – rising rates mean that those coming off old "cheap" deals are re-financing at higher rates, and Morgan Stanley have trie…

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Does it matter if Mervyn King starts getting outvoted on the MPC?

Just a quick one to point out Roger Bootle’s article in this morning’s Telegraph. He wonders whether the MPC will lose credibility if the Governor is consistently on the wrong side of the interest rate vote. It’s only happened twice so far (most recently at the start of this month when he was in the minority calling for a hike), but Bootle thinks that his position becomes untenable if it become…

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