Wednesday, Jan 13, 2010
The alcoholic Lady of Threadneedle Street cured herself - with a big bottle of whisky!
Guardian: Inflation lurks in wings as recovery gets going, warns MPC member
... but she's still not very keen on moving to black coffee ...
Posted by paul @ 08:44 AM (1467 views) Add Comment
37 Comments
- If you do not have an admin password leave the password field blank.
- If you would like to request a password allowing you to add comments and blog news articles without needing each one approved manually, send an e-mail to the webmaster.
- Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
- Please note that any viewpoints published here as comments are user's views and not the views of HousePriceCrash.co.uk.
- Please adhere to the Guidelines
1. flashman said...
Overall, a nicely balanced piece.
"Sentance said it was not unusual for early growth estimates to provide a confusing picture and there was a good chance that the 0.2% contraction in the economy in the three months to September would be revised away "in the fullness of time".
So, we probably exited the recession in the third quarter of last year, which means that the recession only lasted two quarters. If this is the case, the history books will not record this recession as anything other than run of the mill. They will of course still record the banking crisis as monumental
"Sentance said he saw little risk of a double-dip recession in the UK. It would take a setback for the global economy that few economists expected"
In BOE speak, this means that they see virtually no chance of a double dip
"The inflation outlook is not entirely driven by the level of the output gap."
So, they expect commodity prices to increase (as a result of vigorous overseas growth) and consequently they expect to increase interest rates this year
I’m sure this prognosis will disappoint the depressionistas but I think it is good for the HPC. As soon as we exit the support and recovery phase, house prices will become subject to the gravitational forces of the fundamentals
2. estrader said...
"So, they expect commodity prices to increase (as a result of vigorous overseas growth) and consequently they expect to increase interest rates this year"
As I recall it, 'they' didn't see the 1st recession coming, then 'they' denied we were in a recession until 'they' had to bailout a few banks here and there and print a few £100 billion here and there, now 'they' are confident there will not be a double dip recession. Do you expect me to trust what 'they' say about inflation?
'They' haven't got a clue. I trust my own figuring as I have been right far more often than 'they' have.
3. paul said...
It has to be said that the BoE does not have a shimmering track history of accurately forecasting or actively anticipating anything in recent years. All they've managed to do is find various highly questionable justifications for lowering rates and printing money - akin to burning the log cabin to stay warm.
Sentance is priming the market to expect unprecedentedly low rates if house prices start falling again. That after all, is the only definition and measure of economic wellbeing the MPC uses lately.
And that children, is incidentally how we came to find ourselves where we are ...
4. flashman said...
estrader: In the City we listen very carefully to what the FED, ECB and BOE say "between the lines" and also consider very carefully what they don't say. There is an art to decoding their language. If you do ‘your own figuring’ then you might be unnecessarily discarding an analysis technique. Mind you, it took me years to understand cental bank code
5. hpwatcher said...
house prices will become subject to the gravitational forces of the fundamentals
They have shown time and time again, they don't want the fundamentals to exert themselves as it will mean that we are back in recession.
6. hpwatcher said...
In the City we listen very carefully to what the FED, ECB and BOE say "between the lines"
Why should anyone listen the them (FED, BOE), when they have got it wrong time and time again?
7. timmy t said...
Flashman, I am sure you are absolutely right about having to decode what they say, and what they don't say being equally important. Perhaps if they were a bit more honest about the state of the economy all along, we wouldn't be in this situation. For a start, they should have said about 8 years ago "look we know everyone likes low interest rates, but if they carry on it will all end in tears, so we are raising them a little". But we all know that the whole system is geared towards making those in the city rich and those in government more popular. We've taken the decision to emigrate - had enough.
8. cat and canary said...
yep,
he said "it was not unusual for early growth estimates to provide a confusing picture and there was a good chance that the 0.2% contraction in the economy in the three months to September would be revised away in the fullness of time."
he said "he saw little risk of a double-dip recession in the UK"
he said"the early stages of the recovery would feel "fragile and uncertain",
...what he DIDNT say was
1) how long this period of near zero GDP would last...
2) a -0.2% revision to -0.1% or 0.0% is basically noise, if we remain stuck around 0%
3) how fast unemployment would pick up
4) what would be the effects of unknown shocks, events in Greece, Japan, China
I'm not a believer in the double dip outcome, but in a prolonged "slow turning of the screw outcome." First it was the interest on your savings, next your pay rise, next the job market, next the VAT and oil price rise, next the public sector cuts, next the tax rises, next the interest rate rises....and so on....and so on....
Its not that im being negative, we will fully come out of this, in several years. The real outcome is somewhere between what the doomsayers say and what Gordon Brown says! But i'm just sceptical of the MPC's flag-waving press releases. IMO, all they did was change the inevitable course of the downturn into a long drawn out affair
9. techieman said...
Flash yesterday it was:
------------------------------------------------------------------------------------------
""Has the percentage probability for the double-dip increased?"
That's a very difficult question because I don't know how I would quantify such a thing. I would also need to know your definition of a double dip? Presumably you would define it as one quarter of positive growth followed by a certain number of negative quarters?
Having said that, my instinctive read on the situation (just listening to the bods who work this stuff) says that the chance of a double dip recession has recently increased to about 40% from 20%. There is quite a bit of anxiety, that wasn't there before Christmas."
-------------------------------------------------------------------------
and today its:
"Sentance said he saw little risk of a double-dip recession in the UK. It would take a setback for the global economy that few economists expected"
In BOE speak, this means that they see virtually no chance of a double dip"
-----------------------------------------------
The grand old duke of York!
10. hpwatcher said...
Nailed, well and truly.
11. mark wadsworth said...
OK, Flash & Timmy T: decipher this:
"A Bank of England policy maker has said that Threadneedle Street has done enough to lift Britain out of its deepest post-war slump and will need to consider raising interest rates this year if a recovering economy poses a threat to inflation."
I'd submit: "He hopes that they got away with the myth that QE was to help' the economy' rather than reflate banks and keep gilts prices down. It is highly unlikely that there'll be a strong/inflationary recovery any time soon, but if there is, then they'll waffle about hiking rates a bit but probably won't do it"
12. timmy t said...
MW - what they want you to think is:
"The Bank of England, depsite being confronted with an unprecedented financial situation, dealt calmly with the meltdown and fixed the problem as it predicted it would".
What they actually mean is:
"We hope to f*ck that QE worked because this country sure as sh*t can't afford to do any more of it. There is only one single thing that the BoE can do from here and that is to raise interest rates, so if I mention that now, when we are forced into it, it will look like I was right".
13. flashman said...
techie @9: Yesterday I told you my thoughts (or rather the collectivee thoughts of people around me). Today I am giving a precise of the BOE's opinion. They are not one and the same. Surly you can see the difference?
14. flashman said...
hpwatcher: In the City we listen very carefully to what the FED, ECB and BOE say "between the lines"
Why should anyone listen the them (FED, BOE), when they have got it wrong time and time again?
Are you serious??? I said that you had to listen to what they said between the lines (its in the quote above) and also to what they didn’t say
15. hpwatcher said...
Are you serious??? I said that you had to listen to what they said between the lines (its in the quote above) and also to what they didn’t say
Perfectly serious. Their failures are too great to go into.
16. techieman said...
Flash - dont get me wrong i actually wasnt being critical in the least, of either your "chums" or the BOE. I assume you mean precis of the opinion rather than precise? Sorry if thats pedantic.
The point i was illustrating was the degree and speed to which financial markets can change. And also that no-one really knows what will happen- including yours truly!
I wasnt trying to be a smart ar5e at all. However whatever the BoE actually think its a truism that its often right to fade em after the initial move has exhausted?!?!?
17. flashman said...
Yes precise/précis was a typo. I would have been astonished if you were being a smartar$e (not your style) but you will notice that it was gleefully taken as such by someone else. It can get very annoying when a question is answered in good faith and it gets deliberately taken out of context at a later date.
I was only claiming that the article was a balanced piece in that they presented the BOE's comments in an unbiased way.
It goes without saying that if we took the BOE on face value, we would get a bum steer every time. They make Confucius seem straightforward. Its fun watching he market react one way then quickly react the other as people think about what they didn’t say and what they are really are up to
Like you say, our business changes with the wind and sometimes you’ve got to change with it. Very tiring, but profitable if you get it right
18. techieman said...
Well thats not 100% accurate. I mean i am often a smart ar5e - i think you have to be in this game or is that confidence or cockyness or ... well really im not sure. Otherwise you would be taking losses left right and centre (rather than giving your entry points a bit of time to breathe!). Its just on here im generally not.... a smart ar5e. In reality i am a bit of a "ship it in shag" merchant but i try to quell that on here. Really I post some levels here to just reinforce my view.
19. mr g said...
" Andrew Sentance said the economy was bouncing back from the recession"
Where??
20. flashman said...
"giving your entry points time to breathe"
Confucius say you can almost dispense with everything else if you can master that art. Even now I struggle to resist the urge to fiddle about when I’m playing with my pension
Your levels are posted with full explanations of targets and stops. That makes them valid
I have recently seen other people boasting of their entries and subsequent wins without giving the stops!!!! Mcfucking nonsense. They could claim that almost all their trades worked out if we didn’t see their stops being gunned down
Hopefully the snow will melt and I can get some builders on my site. My work has ground to a halt and so has my training. Very frustrating
21. techieman said...
Flash - i dont want to bore people with any more trading points - given its not a trading thread - well not really. But i dont normally post stops on here, just entries and targets - of course i dont have to post stops because my entry points are always right at the extreme of the moves and i never ever get stopped out :-).
I suppose the case in point was the other day re FTSE - where, in real time, i indicated the pull back level i wanted to be 5570, and got some away @ 68 without any pain at all (stop was just above the 5600 high). I remarked that was my first FTSE trade for months.(i got some more away at 5550),
I was then told in the same thread that someone had got short @ 5594!!! Assuming thats true (and im not saying it isnt) that really is outrageous in my book - of course someone must have traded there but being a poster on here too! Wow. I suppose it could be that they arent position traders like myself so i suppose it could have been one of many trades where they were scalping. But of course only he will ever know. By the same token i dont say what my size is so it could be anywhere from a few pence a point to a few grand a point. (its somewhere in between by the way). And this particular trade - since i was looking for a move "off the top" - was smaller than usual.
We are now 5460 and change so im quite pleased - i wouldnt normally hit the bids unless i had seen some more confirmation. Yes since i have had 100 points i have taken some profits, so effectively i have a MBG. [since i have been drafting has blipped up to 5475]
I think the validity comes from posting before the event, mine on 1st January said " I would definitely prefer to see the Euro / $ retrace back toward 1.4570 to 1.46, before some renewed $ strength. That would prob then help gold to around the 1150 level. I am sure i deserve a retracement of that magnitute to get back in, but we dont always get what we deserve!!"
I didnt trade Gold - i had said on here that a good trade looked like long below 1100 and looking for 1150 and then a much lower probability if it went higher (not that it wouldnt - just wouldnt want to trade it) but i did today trade the Euro @ 1.4575 - 1.4620 the stop and have got out of 25% of that @ 1.4500, lowering the stop on the rest to today's high.
You obviously know where we are there too.
Good luck with the snow - im in hospital Friday for a disk slippage. I dislike that even more than the other slippage we both know about. So i have been unable to get out on the MB and feel the crunch of the frost and snow beneath my Panaracers!!
22. techieman said...
BTW flash i am sure you know why i thought 1.4570 was an (at least) interim pullback area !!!
23. flashman said...
techie: yes I was equally incredulous about that one :) A true miracle trade. A bit of a fishing tale.
"but i did today trade the Euro @ 1.4575 - 1.4620 the stop and have got out of 25% of that @ 1.4500, lowering the stop on the rest to today's high".
Looks like you grabbed a proper slice of a short term Keltner (or similar channel) or did you have a support line/fib target? Nice either way. I used to tune my own hybrid Keltner and try to take 80% of the channel or bust. Those were the days.
I don't much like the Euro at the moment, so I'm quietly confident that you'll do well with that one.
Is slipped the same as a prolapsed disk? Very nasty. I wish you a speedy recovery and dont rush it.
24. techieman said...
No i didnt look at the Keltner - it was a "Fib" retracement - i cant "lie!". These things seem to work well when the moves around are quite big. I couldnt have worked out a channel on the 1st Jan... . Around the top of the Bolly - depending on yr parametres though. All that stuff is far too difficult for me.
"yes I was equally incredulous about that one :)" - i think you read between my lines there but fairs fair SOMEONE traded there and obviously at 5600. Maybe the +@ 5600 posts here too, but is a little bit more quiet.
Re the slipped disk, apparently its a 10mm herniation at L5. Ouch - its actually been misdiagnosed for months because i dont have any sciatica or other leg pain. Lucky i was BUPAised otherwise i am pretty sure i would have taken about a year to be sorted and that they would never have MRI'd me anyway. The consultant shook his head after the scan came back and i told him "nope no matter how many times you ask the answer will be the same - i have no leg pain!"
You did your elbow in a while back - i assume thats all sorted now!?
25. flashman said...
Thanks for asking. I returned to action within five weeks but it’s still a bit puffy and aches after a long ride. I did it in mid summer - bloody hell, time flies! I use two layers of gel tape on my bars and gel gloves to stop it taking too much of a beating. I'm sure it would have been fine months ago but I can't spare a weeks training. I was doing 150 miles of hill work a week, until the snow but I’ve lost serious ground now
10mm herniation! Bloody hell. Thank god you are with BUPA. You can do permanent damage when waiting on a list for months on end. I am also with them and they have been consistently good. It is amazing that you didn't have sciatica or leg pain or at least numbness. I was wracked with pain for months when I did a disk. I couldn't feel my outer toes
It’s kiddies’ bath time, so cheers for now. If I don't blog to you before, good luck on Friday. I’ll throw some salt over my shoulder on the 15th
26. p. doff said...
Techie, sorry if I'm treating this thread like a chatroom blog (well it seems like one sometimes) but can I just say you have my sincere sympathies re the slipped disc. I had a similar experience several years ago, although I did have the sciatica - and a numb foot as well. I'd had it on and off for years. Like you, Bupa sent me for an MRI and I was referred for surgery, but I bottled it a couple of weeks before I was due to go in. Well, actually, bottled it is not strictly true - I'd noticed some improvement and decided a wait and see approach might be a good idea.
I never had the op in the end, and my back rarely bothers me now as I have learned to avoid the type of thing that would set it off. Perhaps you should give up motor cycle scrambling and hang-gliding!!!
Good luck with it anyway.
27. hpwatcher said...
Hopefully the snow will melt and I can get some builders on my site. My work has ground to a halt and so has my training. Very frustrating
I was wondering why you have suddenly become so bullish, you have become a property developer!
28. paul said...
@flashman
f you do ‘your own figuring’ then you might be unnecessarily discarding an analysis technique. Mind you, it took me years to understand cental bank code
Just a second. Did you just infer that the Bank of England is codifying their communications to the city? Let me explain why that simply isn't the case. The Bank of England's 'code' has been the same for the last five years at least.
"Squawk like a hawk, walk like a dove"
The reason they say these things occassionally is to game the currency market, which relies on the greater fool interpreting the hawkish message (no doubt supported by their dealer egging them on for transaction fees).
But of course, the Bank never follows the message up with hawkish action. Extend and pretend. Extend quantitative easing, pretend there's a need to keep interest rates low.
To the informed, there is no code.
29. flashman said...
Paul: With the greatest respect, I don't think you understand the currency market. It is a little naive to believe: "The reason they say these things occasionally is to game the currency market, which relies on the greater fool interpreting the hawkish message (no doubt supported by their dealer egging them on for transaction fees). "
There are billions at stake and the currency markets don’t blindly allow themselves to be gamed by anyone. Come on, be realistic, do you really think it is feasible that the world’s biggest players could be gamed by every release? Don't you think they would catch on after a few bum steers? By the way the main players deal direct with each other so there is no dealing desk to do any egging on (Individual traders are a miniscule part of the market). It is actually the other way around. The Bank of England sometimes scrambles to please or placate the currency markets. BOE releases are a just a tiny part of the puzzle and most of what they say has already been telegraphed in a different form, long before the public release. The whole point of being an insider is that we do the gaming.
The main players in the currency markets make a lot of money. If they were being gamed, they would lose money
30. techieman said...
Flash @ 25 and p.doff @ 26 thanks for your good wishes. I have tried the http://www.losethebackpain.com/ workouts and they worked pretty good. Apparently brilliant if you do get sciatica. Anyway yes the pain is just dull normally but a nightmare when you sneeze!!!
As for surgery i think thats a bit of a last resort - i am hoping to get down to the gym pretty soon after the injection... touch wood!
Flash i hope it gets progressively better and p. doff glad you are coping, and hope there is no re-occurnce.
31. paul said...
@flashman
The Bank of England is the information authority. What direction the players think the market will go is irrelevant as there will always be enough greater fools influenced by the Bank of England releases. The market therefore moves with or without currency traders that have their own personal opinion.
Uncomfortable thought I know, but look at how the market reacts to the hawkish messages which are then forgotten by the time the rate decision is made. The timing is always the same too. Which is why the currency market is being played, as are its participants.
32. flashman said...
Paul: I hope this is not going to get heated.
"The Bank of England is the information authority"
There are hundreds of sources of information (understatement) and the vast international nature of the currency market makes a mockery of the idea that the BOE could be "the information source". The BOE as a source of information, vis-a-vis the currency market, is pretty insignificant
"The market therefore moves with or without currency traders"
The currency traders ARE the (currency) market so it could not possibly move without them. Btw, I have worked in the currency markets for more years than I care to count.
Your loathing of the BBC and the BOE is fair enough. I understand and share your frustration at the lack of independence of the BOE and the BBC but lets not get carried away. The BOE is a minnow compared to the international juggernaut that is the currency market.
33. flashman said...
Paul: Some currency movements are fake outs by the big players and some are caused by international currency reserve movements. Yet more are caused by large scale hedging operations. Sometimes an announcement (that wasn't actually a surprise) is used as cover to make a disposal or acquisition that was already planned. Sometimes the markets game the governments. All markets are like this to an extent but the currency markets are not as regulated as 'normal' markets and have no central pit or globex style computer or even a real price. The international big players employ an army of analysts and technicians who work feverishly to get an edge. The idea that one relatively small central bank could manipulate a vast international market is not realistic. Central banks live in fear of the markets and very often have to get down on one knee to the markets
34. timmy t said...
Inclined to agree with Flash on this one - when inflation is over target the BOE has to write a letter to the Chancellor to explain why... let's face it, that has got to be the most redundant communication in the history of communication... as though the chancellor is waiting for the postman each morning because he's dying to know why inflation is over target.
35. techieman said...
Paul : http://www.youtube.com/watch?v=AHDsO7gvXHQ
That was when i realised (i remember cause it cost me a few bob in the short sterling pits at the time!!) that when the government wants to take on the forex markets - there is only one winner.
As Peter Jay says @ 3:50 "perhaps thatcher was right when she said you cant buck the market".
This is what i needed at the end of that day : http://tradingpithistory.com/gallery/22//177/brokerage_ibj
Others needed to do this:
http://tradingpithistory.com/gallery/22//181/brokerage_chemical_bank
Really Paul you can believe whatever you like and to an extent you will think you are right by what happens MOST of the time.... but at the end of the day if you trade markets believing anything with absolute certainty will only lead you to one place - the poor house.
“those who do not remember history are condemned to repeat it.”
36. paul said...
@flashman
"The Bank of England is the information authority"
There are hundreds of sources of information (understatement) and the vast international nature of the currency market makes a mockery of the idea that the BOE could be "the information source".
This has nothing to do with my loathing of the BBC, the BoE or brussel sprouts.
The issue is that the Bank of England sets the price of holding UK sterling - through interest rates of course. It also knows how to get the market lathered up just by saying the right thing. If what they say from time to time in an attempt to fillup the market didn't influence currency traders (like yourself), why would you spend so much effort on 'decoding' the message they're trying to give out to the market (hence people like ... you!)
?
37. This comment has been removed as it was found to be in breach of our Blog Policies.