Monthly Archives:

April 2008

Watch out below

One of our favourite economic lead indicators was released yesterday – the rate of new mortgage approvals in the UK. Readers will probably be familiar with this by now as we discussed mortgage approvals in October, November and January. Mortgage approvals are an excellent house price predictor because they show the amount of new money entering the housing market. Mortgage approvals drive the ho… Read the article

Food glorious food

Inflation is public enemy number one for us because it picks our pockets by eroding the real value of our bonds. The latest twist to the inflationary story is the rapid rise in food prices, from the staples of wheat to rice (click chart to enlarge).

Normally central banks can dismiss volatile food prices as temporary, because prices are influenced by random effects such as drought and weather …

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Bernanke’s 2002 thoughts revisited

With food inflation hitting record highs, and oil at over $115 per barrel, it’s difficult to see that policy makers might be more worried about deflation than inflation. In fact a bit more inflation in the global economy might be secretly felt to be a good thing – anything that erodes the consumer’s debt burden could help economic growth get back towards trend. But as Jim pointed out (see artic…

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Airlines heading for a crash

Sunday night’s TV showing of The Aviator told the remarkable story of Howard Hughes, who as well as being an engineer, Academy Award winning film director, and a little nuts, was also one of the world’s richest men. It covers the early years of the airline industry, focusing on TWA‘s battle with Pan-Am (Hughes had to take on Pan-Am and the US government in attempt to end Pan-Am’s monopoly as an…

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UK unemployment lowest since the 1970s – watch it rise

The government’s official unemployment rate (which looks just at the number of people claiming benefits) stands at 2.5%, the lowest rate since 1975. The UK unemployment rate under the International Labour Organisation’s measure stands at a slightly more realistic 5.2%, which is higher that 2003-06, but still way below the long term historical average.

A widely held view is that the UK economy w…

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How much do homeowners stand to lose on the UK housing market?

At the beginning of October last year, Richard asked “Is the UK housing market on the brink?” (read article here). Conclusion – little danger of collapse in the short term, but any dropping away of mortgage approvals would change this view. By the end of November, mortgage approvals had indeed started to fall sharply, and Richard said the UK housing market was “over the edge” (see article). Mor… Read the article

Interest rates to fall? Not by much, if you believe the bond markets

Continental European economic data has held up reasonably well so far. Consumer and business confidence has been reasonably robust in countries such as France and Germany, although retail sales numbers released earlier this week were weaker than expected. The big problem for the euro area has been a worrying rise in inflation (European inflation reached 3.5% in March, the highest rate in 16 yea…

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