Monthly Archives:

July 2008

Eurozone economy in danger of slumping

Taken as a whole, the Eurozone economy had until recently been relatively robust in the face of the credit crunch. This is about to change. There have already been some worrying data releases this month, particularly in the manufacturing area. Things got worse yesterday, when the European Commission economic sentiment index collapsed. The index saw the second biggest monthly drop since the surv…

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Lipstick Theory

The credit crunch and the prospect of a global economic slump isn’t bad news for all companies. In fact, there’s an argument that some companies, or at least some products, can thrive.

While Leonard Lauder was chief executive of Estee Lauder, he noticed that sales of his firm’s lipsticks tended to rise during economic downturns – not what one might expect, particularly of a luxury good. The rat…

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Bear in mind

Attached is a link to the best article I have yet read on the twists and turns of the Bear Stearns saga. In my opinion, it is really worth a read. The article highlights that when confidence (which is essentially the life-blood for highly levered financial institutions) disappears, liquidity soon follows. The fall from grace can take place in a matter of days, if not hours.

The article emphasis…

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Letter from the Governor to the Chancellor, July 2009 – "sorry about the deflation"?

It’s difficult to remain relaxed about the outlook for inflation in the UK given today’s strong CPI and RPI numbers (all above expectations), but, if oil is still at $145 a barrel, and food prices remain at these levels in a year’s time, we’ll be facing deflation. Not because these elevated prices levels will cause a collapse in consumer spending and reduce the demand for discretionary goods – …

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European banks – things may not be what they seem

Spectators at recent ECB press conferences may well have come away thinking that there is little, if any, evidence of a credit crunch in Europe. According to the ECB, ‘the growth of bank loans to non-financial corporations has remained very robust despite the rises in short-term rates’ and ‘the availability of bank credit has, as yet, not been significantly affected by the tensions.’

We suspect…

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Stagflation? Watch wages

The soaring oil price has meant that UK National newspapers and the trade press are rife with stagflation fears. The fears are understandable – following the 1973 oil crisis, UK inflation surged, reaching an all time high of 26.9% by August 1975. By the beginning of 1979, UK inflation had fallen below 10%, but the 1979 oil crisis helped propel UK inflation back up to 21.9% by May 1980. The oil …

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