Friday, May 23, 2008
Bill Mott (Ex Credit Suisse)
Investment Week: Mortgage data will force BoE to cut rates, says Mott
Data emerging in the coming months showing that the UK is on the verge of a recession will force the Bank of England to cut interest rates, according to PSigma’s Bill Mott. He is extremely critical of the MPC’s policy to hold interest rate cuts in a bid to stem what he believes are non-existent inflationary pressures. “We remain of the view that the Bank of England are following an inappropriate interest rate policy and that domestic inflationary pressures are almost non-existent.” He anticipates figures regarding mortgage approvals due to be printed on 27 May will be ‘truly horrendous’ and could trigger a change in policy either by the government or the Bank of England.
Posted by jack c @ 12:52 PM (1123 views) Add Comment
19 Comments
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1. uncle tom said...
This is a bit daft - mortgage approvals data is of passing interest to the MPC, not something they lose sleep over.
2. bystander said...
Mr Mott wouldn't have a vested interest in the devaluation of sterling would he? It is not the job of the MPC to react to mortgage rates, but to control inflation. "..domestic inflationary pressures are almost non-existent", does he live in another country, I would have thought that anyone doing their daily shop, filling up their car, heating their homes would disagree Mr Mott. I am unsurprised by Investment Week giving a platform to VI's like this, lower rates and this "non-existent inflation" will become entrenched and bite deep for a very long time. He is however shoring mining companies, interestining, did he miss the latest gold rush, although ofcourse he is in oil, like all speculators at the moment. Is PSigma a hedge fund by any chance?
3. handle_it said...
** “We remain of the view that the Bank of England are following an inappropriate interest rate policy and that domestic inflationary pressures are almost non-existent.” **
Just can't let it go can they..
4. hpwatcher said...
I fully expect - as time advances - that the attempts to preserve the bubble in the housing market will become more absurd....and more futile.
The times are changing.
5. Panda said...
I hope that the long arm of the law catches up with this man. Britain has never known such inflation; it is greater than at the peak of the oil shock in the 1970's and is growing at a rate that beggars even remote credulence. The result of this comment by Bill Mott being taken seriously is to quite probably condemn many tens of thousands of men, women and children to long, drawn out starvation, or at the very least, very damaging malnutrition... as has not been seen since the early part of the 20th century.
This business of grossly, shamelessly, and repetitively representing lies of this magnitude to this extent ... is truly novel. Nothing in British history that I have ever been aware of comes close to it, neither in war or peace time. There is a massive sense of confusion and fear about inflation - every household in this country has seen energy bills rise by an average of 35.5% in the last year, to say nothing of exploding council taxes, food bills which have been accurately measured in terms of three digit inflation for basic staple materials and a growing, if diffuse sense of general instability.
When the government talk about inflation, right now, people get very, very angry. Some time soon, it's going to get far worse than even that. This is infinitely worse than the poll tax because the thing at stake is the future health of a massive percentage of the population for a generation. This is nothing to do with the frustration of aspirational hopes; it's the introduction of real misery and despair for a very large number of people who have no one to turn to and are told that they have never had it so good. The result is quite predictable.
Apart from ALL of this, there is the danger that the government have genuinely lost any control of the covert business of separating the real statistics from the fradulent set of massaged retail prices used by the treasury. In this way, the individual departments and consulatative bodies within Westminster and the treasury have no way whatsoever of formulating any coherent fiscal planning.
This is a very important point politically. The paralysis that afflicted Brown prior to the latest byelection is only symptomatic of a far greater and extensive malaise which prevents almost any strategic policy formulation - tragically, the BBC are powerless to question the supositions of any particular minister appearing in the infamous and derided "morning programs" because to do so would result in instant and violent retribution; the result is invariably a hopeless, pathetic melange of timid questions with the usual half wits giving rehearsed template answers that never vary from month to month, invariant even with the questions and context given - it's like a party political broadcast done on a continuous tape with no opportunity to refute or reply.
Sooner or later, external forces will eventually become predominant in the net economic pressures impinging on UK Ltd. It was only external discipline being brought to bear that exposed the appalling behaviour of the City of London - (which will cost Britain decades of the most profound poverty) - and similarly, every single bit of light shed on what has been wrought in this terrible decade of waste and destruction will come from without.
There is scarcely any reliable and uncorrupted body in this country with any authority that dares speak the truth about the economy - that we are in a state of calamatous debt, industrial shrinkage, poverty and crime beyond control and inflation that is literally beyond belief.
6. Jsync said...
These people don't seem to realise that home ownership is a luxury not a necessity - food is! The lowering of interest rates may mean cheaper mortgages for a few people but it will definately mean higher food costs for everyone......... so tell me again which would have the worst impact on the economy
- A few people not being able to afford their mortgages and being forced to sell
- Every single inhabitant of the UK suffering from increased food costs
I guess Mr Mott needs help with this one.
7. jack c said...
Mr Mott might have a point here - (1) he holds a lot of financials in his fund and presumably will receive regular updates on lending volumes hence he probablly knows in advance that the figures are going to be ‘truly horrendous’ (2) Gordon Brown has been responding to the Labour defeat in Crewe and stated he will do all he can to "help the people" (3) Businesses are suffering and use of the R word is now commomplace.
So although I dont agree with a call for a cut I can see the government leaning on the BOE to make one.
8. bystander said...
Jack c - you have stated the reason Mr Mott wants rate cuts - "(1) he holds a lot of financials in his fund" - simple no more needs to be said. If rates are cut, financials can, whether they will or not is debatable, lend more cheaply to each other, or invest the cheaper credit in more profitable/ speculative markets, like oil, commodities, hard and soft, and eventually businesses etc. They will make huge profits and pay huge dividends, that is why Mr Mott is desperate for cuts, for as long as the financials store cash the dividends will be low, when they ease credit and start to take risks again, with low BoE rates to act as a financial buffer, the dividends will rise. He is an 'income' fund manager so he needs dividends to keep coming and keep growing to keep his clients happy. He is a VI, pure and simply, this is not for the common man/ woman/ dog etc. it is for his and his clients enrichment, stuff the inflationary consequences.
9. growler said...
As everyone says: the MPC is there to keep inflation between targets, not mortgage lending. But it's no use pretending that the MPC won't be under pressure. The problem is the PM is under greater pressure. He's the dream boy PM who now has the indiginity of being heaved off the throne as the "sound economic management" is every day revealed to the the product of public borrowing. Labour used to be tax and spend, its now borrow and tax and spend. Brown has the country in a corner, and various areas are cracking under the strain. But unless we want to see inflation soar and the euro and sterlgin to be worth the same, we have GOT to stop the IR going down. Sure - some unemployment will happen - but it already is. We can't afford crash Gordon.
10. housebear said...
"I fully expect - as time advances - that the attempts to preserve the bubble in the housing market will become more absurd....and more futile."
I agree totally.
Can anyone remember how long it took for reporting terminology to change after things went pear shaped in 1989.
There comes a point point when the obvious facts are there to be seen, heard and felt by all.
11. bystander said...
Do you reckon GB has worked out a way of cloning Blanchflower to replace Lomax on the MPC?? Thats what the MPC need, another arch dove. Short termism, is GB's game and there wil be enormous pressure put on Merv in June. Rose, M&S, one billion pound profit, but still bleating for a rate cut. The world is totally and utterly insane with greed, and the VI's have the floor. We all want cheaper/ more affordable housing for ours and our childrens' futures, so we are VI's, but long term this will do the country good, reducing rates will create a legacy of debt and poverty for far longer than the short term pain of keeping rates on hold for the foreseeable future.
12. mark said...
i assume this guys does not eat or drive then
13. cyril said...
Some expert. Inflation non-existent? I can only assume his wife does the shopping.
14. uncle tom said...
GB should realise now that the boom is busting, and that there's nothing he can do to stop it happening.
So what is his best strategy?
Plan A) Try to ease the pain by slowing the bust, try to show compassion, force down interest rates and throw huge amounts of borrowed cash at the problem. Hope that the electorate will believe it wasn't his fault at the next election.
Plan B) Stand back, let it happen. Try to assume the moral high ground and weather the storm. Hope that things will start looking rosier again in the run-up to the next election.
Plan B has a much better chance of delivering a result, and allows GB to be himself, without those ridiculous forced smiles that everyone detests.
Don't assume that he will force the BOE's hand - he might actually prefer interest rates to rise.
15. Yerhavingalaugh said...
What's the point of the BoE dropping the base rate? Who is going to pass the cut on?
16. paul said...
The MPC made it clear in the last meeting minutes that a fall in house prices and even recession are worthwile sacrifices to keep inflation down.
This could of course be bluster to try to shape people's inflationary expectations (saying that they will not cut rates to save the housing market but doing just that). However they can't fool people for long by flip-flopping.
17. Nathanjonathan said...
"domestic inflationary pressures"....the key word here is "domestic". The point being made by BM is that most of the current inflation in UK is caused by external forces outside our control eg. oil, gas and minerals. Amongst economists there is a debate about the point of raising interest rates in an attempt to tame externally driven inflation.
18. Jimmy Bin Man said...
Dr Mott was once regarded highly as a fund manager, before taking 4 years out to find himself. Since returning to the fast paced world of fund management at PSigma in 2007 he has not done so well. Infact, he has delivered a fairly grotty performance and lost 14% of his clients money in 1 year by investing heavily in UK banks amongst other things. To be exact random investment in the FTSE 100 would have proved far better than his judgement and expertise. Now he tells us that the MPC, who like it or not, contain 9 very clever people and several of the most brilliant economists of their generation are imagining what we all see in our pockets every day - inflation.
So there you have it; another busted flush barking at the moon in angry prayer, in some vain hope that the gods of interest rates will grant him salvation from his own limitations with any requirement for contrition. What a numpty!
19. bystander said...
great information Jimmy Bin Man, just by reading 'Dr" Mott's input you can tell he is reading his own agenda.. These 'experts' are full of sh*te