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http://www.telegraph.co.uk/finance/markets...n-17-years.html

UK stocks headed for their biggest monthly gain in almost seventeen years as banks and commodity producers rallied on optimism the worst of the recession may be over.

Bloomberg

Last Updated: 4:16PM BST 30 Apr 2009

FTSE 100

Royal Bank of Scotland and Barclays both jumped more than 9pc as Fidelity International’s Anthony Bolton said financial shares are set to rally and ignite an equity bull market.

Kazakhmys rose 5.7pc after reporting an increase in production and as copper climbed.

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The FTSE 100 Index climbed 84.69, or 2pc, to 4,274.28 at 12:48 p.m. in London. The measure is heading for the biggest monthly gain since 1992, rallying 8.9pc. The FTSE All- Share Index rose 2.2pc.

The market is “positive for an economic turnaround,” said Joshua Raymond, a London-based market strategist at City Index. “All major sectors are higher today so the buying we have seen has been broad and this is indicative of investor sentiment at the moment.”

The UK benchmark has rebounded 22pc from its low this year on March 3, trimming this year's decline to 3.7pc, as investors speculate that the pace of the economic slowdown is easing.

UK consumer confidence climbed to the highest level in a year in April while a separate report today showed house prices fell 0.4pc this month, less than economists had forecast.

Mr Bolton, president of investments at Fidelity, said that low valuations indicate recent gains that began in March are the start of a bull market. He favors financials, consumer cyclical, technology and “value stocks,” such as retailers, automakers and construction-related shares.

“All the things are in place for the bear market to have ended,” Mr Bolton said in a Bloomberg Television interview.

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The answer is a resounding NO!

This is a classic bear market rally and while stocks may have risen 30% since early March, the very fact that global stocks have risen at such an unprecedented pace, against what was supposed to have been the worst recession since 1930, is evidence enough that this cannot reflect reality.

There is this massive hoodwinking campaign underway, primarily in the US, which is designed to try and stimulate the economy through the use of positive spin. This spin should not be believed though and the talk of green shoots are almost entirely premature at this stage. Many companies earnings in quarter 1 have beaten market expectations simply because their overheads have been reduced through deflationary prices and massive layoffs. There isn't a single country in the developed world that has experienced growth in either its manufacturing or services sectors between Janaury and March, so any upticks in company earnings in quarter 1 has had nothing to do with economic expansion. And following on from quarter one, by Wednesday of next week we will have confirmation that no economy in the developed world experienced growth in either the manufacturing or services sectors in April.

Some points to ponder which help demonstrate that the optimism is exaggerated:

1) The US Federal Reserve has doubled its balance sheet over the past 12 months, essentially pumping an additional 1.2 trillion dollars into the system, yet the economy has continued to shrink and not grow. This money has not made its way into the wider economy because it has effectively been used to buy bad debts off banks and essentially pay for the wealth created and squandered in the past, rather than the future.

2) The dogs on the street can tell you that the ability of attaining credit is worse now than it ever was. The story that credit markets are easing is really to do with the fact that banks are now paying each other for loans rendered previously and that is it. They are not using the money afforded to them by Governments and Central Banks to lend to individuals or to businesses. The vast majority of businesses across the globe don't have access to enough credit to open a lollipop stand, not to mention engage in expansion programs or M&A.

3) The economies of every major country (i.e. US, Japan, France, Germany, UK, Spain etc.. etc.), with the notable exception of China, continue to shrink. While the pace of shrinkage may have slowed, they are still shrinking, which means the situation is actually getting worse, not better.

4) There was a big play last month in the US about the fact that housing starts rose 22% in the month of February, over January. It was widely suggested a bottom was in place in the US housing market and this as the evidence. However, when the report for New Home Sales in March came out last week, the figures showed that the sale of new homes had crashed during the month, with the annual rate of new home sales sinking to the lowest figure on record. One has to beg the question as to why new homes are being built in a situation where nobody is buying them. February's figure for housing starts was an anomoly, because of seasonal factors and because of the very fact we were coming off historic lows, where it couldn't get any worse.

5) US employment is falling at an accelerated pace. While changes in employment tend to be lagging indicators, an economy will not grow in a situation where more and more people are losing their jobs. Today it was reported that the number of people seeking jobless claims for the first time in the US fell 14,000 last week. When one looks more carefully at the report though, one finds that the previous week's initial jobless claims number was revised higher by 5,000, while even this week's actual figure of 631,000 is still very close to the historic highs for the indicator. What didn't gain any media attention at all was the report that the number of people seeking unemployment benefit overall actually rose by 133,000 in the week. The employment situation in the US continues to get worse, much worse.

6) US Personal income and expenditure both fell in March. Income has now fallen in 5 of the past 6 months and annual income (at 0.3%) is now running at the lowest level since records began. Consumer spending in the US fell in March for the first time in 3 months and with the annual rate of spending now down 0.9% (the lowest on record), it is clear that there are no green shoots coming from the consumer side, to offset against the shrinking industry sectors.

7) Inflation rates are falling across the globe and the current annual rate of 0.6% in the euro zone (for both March and April) is the lowest rate of inflation seen since the euro came into existence. Indeed many of the countries within the euro area are actually experiencing overall deflation in their economies. Deflation has also returned in Japan. Falling prices are caused by falling demand and for as long as inflation rates depreciate, it means demand is ebbing away and that the economy is essentially getting smaller. This is hardly a cause for optimism.

8) The stimulation packages launched in each of the major economies has done little to stimulate growth as of yet. This is deeply worrying because it means the actual extent of the problem is much worse than what the figures appear to be telling us. The US economy shrank by over 6% in both quarter 4 and quarter 1, despite the hundreds of billions of dollars of extra money thrown at it. The stimulus packages launched elsewhere have had the same lack of success.

9) Lack of consensus on what the solution should be. The US and the European Unions have adopted largely contradictory policies for taking us out of the mess. Germany, and by way of proxy - the ECB, do not (thus far) believe in quantitative easing to solve the economic crisis, while the US Federal Reserve is prepared to cut down a countryload of forests to print and helicopter whatever level of cash it might take to remedy (or temporarily bandage?) the crisis. While Germany does have resources to pour its own 'earned' capital into the German economy, a little euro minnow like Ireland believes it can grow its economy by wholesale cuts in spending and imposing higher taxes (i.e. shrinking the economy even further).

While the Irish may not be at the races at all, the other protagonists remain a long way away from the checkered tape. The UK has a US mindset, but rather fewer friends (investors) to believe in it.

I could go on, but it's getting laboured....

May could be the month to short the markets.

Seb

Edited by Sebastian
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If you bought in the last 2 months I would exit now and reap the gains. May is traditionally a selling month for stocks and there is plenty of reasons to heed that tradition now.

Sell in May and go away .....

That has been a creed that has worked for years : no real reason to expect things to be different this time.

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Markets follow the money. If you buy stock when its falling, you loose immediately, if you buy stock that is rising, you win immediately. A lot of people buy and sell on the strength of what other people are doing. That means that we could see a big 10% off day some time this year as everyone seeks to take profits at the same time.

Personally, I do not tend to buy just because others are buying, I try do it the other way around, but I lost out on RBS when it droped to 50p and then 10p about 3 days later. Others would buy at 20p when they saw it was up 100%.

I hold some Xstrata shares from 290p (now 600p) still after i sold my Kaz (now 525) shares at 255p when I bought at 179p. CFM was up again today, take a look at that share if anyone is interested. They claim to have a billion worth of assets, little or no debt and market cap is only £300m. I bought it as low as £60m so it has gone up from 1.97 to 12p a share, but perhaps more room to go - DYOR.

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Well regarded may be.... but many a well regarded CEO's of failed banks have lost their jobs, many a well regarded bankers have found themselves unemployed.

Personally I am all in on equities at the minute and have been since October (I played with UK financials and bailed days ago missing some sweet gains today on Lloyds, I am heavy on comods/miners, Only UK retail I have a position in are budget ones).

I think China is gearing up for a big move from export led to self sufficient, they own a part of everything and still have $$$'s to lose before they are inflated to oblivion.

Do not under estimate how self sufficient China could be and the education/infrastructure/mind set are being put in place.

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Markets follow the money. If you buy stock when its falling, you loose immediately, if you buy stock that is rising, you win immediately. A lot of people buy and sell on the strength of what other people are doing. That means that we could see a big 10% off day some time this year as everyone seeks to take profits at the same time.

Personally, I do not tend to buy just because others are buying, I try do it the other way around, but I lost out on RBS when it droped to 50p and then 10p about 3 days later. Others would buy at 20p when they saw it was up 100%.

I hold some Xstrata shares from 290p (now 600p) still after i sold my Kaz (now 525) shares at 255p when I bought at 179p. CFM was up again today, take a look at that share if anyone is interested. They claim to have a billion worth of assets, little or no debt and market cap is only £300m. I bought it as low as £60m so it has gone up from 1.97 to 12p a share, but perhaps more room to go - DYOR.

I agree. I had never delt in shares before when I went STR in Aug 2007. By April 08 I had invested £8k (less than 10% of my pot) into equities via ISA's, £4k direct in shares and £4k into UT funds.

At low point just before the first USA £700 billion bail out in Sept 08 the whole pot was only worth £2800ish, about 65% down in less than 12 months. My UT funds were in Gold Funds and Emerging Market funds, and collectively they kept the losses up as they never went below 45% down. But the shares were heavily weighted into banks and retailers, with a few miners and a smidge of other sectors. Being a good HPCer I completely avaoided housebuilers and property stocks as this is where I thought the big drops where going to be. I did not see the great falls in banks and retail, not many did I reckon.

Anyway, days after the USA £700b approval I gambled and put £1k in split between the only to UK banks I did not hold, Lloyds and Barclays. Disaster loomed. I put more into Lloyds at even cheaper prices when they took over HBOs, as I held HBOS shares from 07. Still they dropped. In November I ploughed £600 into Taylor Wimpey, in December I ploughed another £800 into what I called the 85% club, stocks in companies I mostly new of well but had dropped 85% or more form peak all accross the FTSE 100 to 350 to AIM. These were banks, retailers, car dealers, housebuilders, miners etc.

By March 09, just before when went back as OO I had put and extra £3.5k into shares mostly this 85% club along with some others from share tips I picked up from all over. This month I put about £1k into a few FTSE 100 defensive stocks that where down a fair bit from March, BP. Nat Grid, GSK, HSBC, Rexam etc.

Finally today at close was celibration time. The total value of my equitie investments just went positive again by 1.89% today. Total invested Sept 07 to April 09 £12.8k , value @ close today £13.08k.

Sure my UT funds are still about 22% down, my initial £4k stocks ISA is still down 52%, but the £3.5k from Sept 08 to March 09 hit £7k today, a 100% gain and my defensive stocks are collectively up 10% on the month.

I hope it stays, I took some risks, didn't bottle it and sell up at a loss, and as others where selling up at a loss in Q4 08 and Q1 09 I was constantly dipping in at ever lower prices.

Best buys I still hold. Taylor Wimpey @ 11.44p , RBS @ 13.4p , Lloyds @ 42.85p, Debenhams @ 23.92p , DSG @ 10.23p , Pendragon @ 2.42p , Petroceltic Int @ 3.42p , Kalahari Minerals @ 41.35p, Invesco Property Inc @ 1p!! , Barretts @ 56.19p , Barclays @ 96.9p.

My only one blow out was New Star asset Management @ 1.96p with was taken over by Hendersons i think and closed. Still I only put £20 in as a laugh but got £15 back from the takeover. Innion is looking dodgy too now they are delisting but I have only put £60 into them.

Any constructive comments welcome.

M

Edited by markyh
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Anthony Bolton is probably the most regarded fundmanager for UK equities in the country. He knows what he's talking about.

Sheepmegabubble time for stocks?

"He favors financials, consumer cyclical, technology and “value stocks,” such as retailers, automakers and construction-related shares."

A brave man will invest in these stocks as there are bankruptcies coming in this ector-I find this advice hard to understand

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“All the things are in place for the bear market to have ended,” Mr Bolton said in a Bloomberg Television interview.

Complete and utter drivel.

Take a look at the quotes from 1929-1930s for more examples of this sort of rubbish.

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Complete and utter drivel.

Take a look at the quotes from 1929-1930s for more examples of this sort of rubbish.

This is how I feel half the time...other half I feel like jumping in again!

I am in a huge quandary about all this. Invested regularly over ~8 years, made so-so gains until about 18 months ago, and stopped my regular investment 8 months ago. This is all in equity ISAs to pay off a mortgage in 2021!

The dire state of the economy and the big rise in the FTSE don't make any sense to me (togethr I mean). Should I sell now, or buy back in? I am paralaysed with indecision. Have been overpaying mortgage with the investment money, but that's effectively only giving me 1.88% return as that's my mortgage rate right now. Cash ISAs maxed out (well not this year I guess).

I don't understand the FTSE rise, so I am too chicken to buy back in. There MUST be another leg down right?! :blink: I have equities worth about £25K (was nearly £40K :( ) and similar in cash.

My IFA advised me against getting out of commercial property about 18 months ago...Thanks for that <_< so I'm not that keen on seeing her again, guess I should though :ph34r::(

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This is how I feel half the time...other half I feel like jumping in again!

I am in a huge quandary about all this. Invested regularly over ~8 years, made so-so gains until about 18 months ago, and stopped my regular investment 8 months ago. This is all in equity ISAs to pay off a mortgage in 2021!

The dire state of the economy and the big rise in the FTSE don't make any sense to me (togethr I mean). Should I sell now, or buy back in? I am paralaysed with indecision. Have been overpaying mortgage with the investment money, but that's effectively only giving me 1.88% return as that's my mortgage rate right now. Cash ISAs maxed out (well not this year I guess).

I don't understand the FTSE rise, so I am too chicken to buy back in. There MUST be another leg down right?! :blink: I have equities worth about £25K (was nearly £40K :( ) and similar in cash.

My IFA advised me against getting out of commercial property about 18 months ago...Thanks for that <_< so I'm not that keen on seeing her again, guess I should though :ph34r::(

Dude, get a grip. You've put a lot of thought into your wealth.

Get a grip and make your own decisions. You know best, not some IFA, who gets paid anyway.

Or, if you're looking for someone to make the decisions for you, I'll be happy to invest your money for you.

Edited by Mixle
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This is how I feel half the time...other half I feel like jumping in again!

I am in a huge quandary about all this. Invested regularly over ~8 years, made so-so gains until about 18 months ago, and stopped my regular investment 8 months ago. This is all in equity ISAs to pay off a mortgage in 2021!

The dire state of the economy and the big rise in the FTSE don't make any sense to me (togethr I mean). Should I sell now, or buy back in? I am paralaysed with indecision. Have been overpaying mortgage with the investment money, but that's effectively only giving me 1.88% return as that's my mortgage rate right now. Cash ISAs maxed out (well not this year I guess).

I don't understand the FTSE rise, so I am too chicken to buy back in. There MUST be another leg down right?! :blink: I have equities worth about £25K (was nearly £40K :( ) and similar in cash.

My IFA advised me against getting out of commercial property about 18 months ago...Thanks for that <_< so I'm not that keen on seeing her again, guess I should though :ph34r::(

You may only be getting a return of 1.88 on paying your mortgage off just now, but think of the return when the rates go up as im sure you are aware they will. paying off your debt is always nice anyway. Its easy and stress free. Thats what I would do. 2021 is a long long way off and christ knows what might happen before then. No debt asap would be my move. But i dont know sh1t.

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Dude, get a grip. You've put a lot of thought into your wealth.

Get a grip and make your own decisions. You know best, not some IFA, who gets paid anyway.

Or, if you're looking for someone to make the decisions for you, I'll be happy to invest your money for you.

:lol:

I'd be fine with a time machine and another 50 grand...

Where's that chart comparing prices now with 1929-31? As I recall we're following the line again, including some significant upticks.

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Stock markets will start to be more bullish way before the signs of a recovery are clear, thats a common factor.... But is this rally the start of that process or a false dawn , thats the difficult thing... I suspect prices have already broadly seen their lows, but thats not to say they won't back from current highs.

By the by I am dribbling money back into the stock market and have been for two or three months now... nothing serious ... but just backing my hunch that we have seen or are seeing the low point and things will get better over time from here.

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This topic is meaningless - it depends on the timescale.

Stocks go up, stocks go down. That won't ever change.

For what it's worth I've been short term trading and putting the profits into my long term investments of equity income funds, Asia funds and gold.

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As always, the news starts in the debt markets...

http://www.bloomberg.com/apps/news?pid=206...id=aVGhdWg8VN0k

May 1 (Bloomberg) -- France Telecom SA and Atlantia SpA, Europe’s largest toll-road operator, led 23 billion euros ($31 billion) of bond issues this week, capping a record four months as more companies tapped investor demand for corporate debt.

:

The yield spread between investment-grade company debt in euros plunged 21 basis points this week to 3.71 percentage points more than government debt, the lowest since October, according to Merrill Lynch’s Euro Corporates bond index. The gap is still more than twice the difference a year ago.

http://www.bloomberg.com/apps/news?pid=206...id=a5MQxSOuarBY

May 1 (Bloomberg) -- The London interbank offered rate that financial companies charge each other for three-month dollar loans fell to within a basis point of 1 percent as central banks and governments unlock credit markets.

Libor declined one basis point to 1.01 percent today, according to the British Bankers’ Association. The Libor-OIS spread, a gauge of banks’ reluctance to lend, narrowed to 81 basis points, the lowest level since Sept. 4. Libor hasn’t been at 1 percent since June 2003. Citigroup Inc. submitted the lowest rate, at 0.96 percent, while UBS AG and Bank of Tokyo- Mitsubishi UFJ Ltd. quoted the highest, at 1.05 percent.

... combined with yesterday's news...

http://www.bloomberg.com/apps/news?pid=206...id=a.x7GagbHhgE

Figures for March indicate the recession is easing. Factory production rose 1.6 percent from February, the first gain in six months, the Trade Ministry said today. Companies plan to boost output again in April and May as they replenish inventories, the report showed.

... I'm now happy enough personally to trade the destocking/ resumption of production story and have commenced buying accordingly.

It's quite telling (for me) that spreads on debt are twice what they were - this to me is describing the shape of the so-called "recovereh" - nobody should pretend for a second that demand has bounced, all that has happened here is that stock (in the production/ trade pipeline) has been liquidated (and so pessimistically selling producers fit for a cataclysm is just as inappropriate as optimistically buying them fit for a restart in growth).

My own attitude at this time is to price and buy cashflows (and to hedge the default and inflation risk) rather than assets - jostle the market, as it were, for the highest available real yields I can lay my hands on.

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In today's Moneyweek they point out that March 2009 will be the lowest month for a long time where senior staff of corporates actually personally buy their own companies' stocks.

Usually, when senior execs see an upturn coming, they buy loads of stock. They ain't buying.

I think this says it all.

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Anthony Bolton is probably the most regarded fundmanager for UK equities in the country. He knows what he's talking about.

Sheepmegabubble time for stocks?

Bolton called the end of the bullmarket almost to the month. If he says the bear market is over it is.

The fact that the market is rallying despite all the bad news still coming through is a classic sign that it can't go any lower. Most people simply don't understand this - D'oh.

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Bolton called the end of the bullmarket almost to the month. If he says the bear market is over it is.

The fact that the market is rallying despite all the bad news still coming through is a classic sign that it can't go any lower. Most people simply don't understand this - D'oh.

I thought Bolton was a contrarian - he made his reputation like Buffet by buying against trends? Surely, by definition, he should be bearish during this rally?

Bolton saying this is a bull start actually worries me.

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Pessimistic title in the article, but scratch URL to reveal hidden prize...

http://www.bloomberg.com/apps/news?pid=206...id=aj3fvCyUwFqU

Bond sales will likely increase again as investors, out of “crisis mode,” take advantage of rising prices for corporate debt and a lack of supply, said Tom Murphy, a portfolio manager at RiverSource Investments LLC in Minneapolis, which has $100 billion in assets under management. Investment-grade companies have sold $456 billion of securities this year, 30 percent ahead of the same period in 2007 when they issued the most ever.

‘Flipped the Switch’

“This is the quarter over the last six months where people finally flipped the switch and said, ‘I want to buy corporates,’” Murphy said in a telephone interview.

The average yield investors demand to own investment-grade bonds instead of Treasuries has fallen 19 percent from this year’s high on Jan. 2, according to Merrill Lynch & Co.’s U.S. Corporate Master index. So-called spreads fell 29 basis points this week to 487 basis points as of yesterday. Yields fell 0.2 percentage point to 7.31 percent. A basis point is 0.01 percentage point.

Investment-grade borrowers sold $21.1 billion of debt this week, compared with $10.3 billion in the previous week, Bloomberg data show.

“There’s still a fair amount of refinancing to be done. I think treasurers are very interested in getting that done,” said Edward Liebert, chairman of the National Association of Corporate Treasurers, based in Reston, Virginia. “A significant amount of issuance is probably coming.”

:

High-yield companies sold $2.1 billion of bonds this week, the same as the week before, Bloomberg data show. Supervalu Inc., the second-biggest U.S. supermarket chain, sold $1 billion of senior unsecured notes due 2016. The Eden Prairie, Minnesota- based company’s 8 percent notes priced at a 587 basis point spread. Supervalu had earlier marketed $500 million of debt.

Nike in Pipeline

Yields over benchmark rates on speculative-grade debt fell 1.42 percentage point this week to 13.45 percentage points as of yesterday, according to Merrill Lynch & Co.’s U.S. High Yield Master II index. Yield fell 1.16 percentage point to 15.6 percent.

Junk-rated bonds returned 11.5 percent last month, the best since at least 1987, according to Merrill data.

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Bolton called the end of the bullmarket almost to the month. If he says the bear market is over it is.

The fact that the market is rallying despite all the bad news still coming through is a classic sign that it can't go any lower. Most people simply don't understand this - D'oh.

Bolton has called the bottom every month since July. Best of all he strongly recommended buying banks during June 08.

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If it's all nearly over why are lots of High Streets full of boarded up retail outlets with for sale boards, even major outlets and household names.

Wouldn't they just wait a few more weeks until it's all over.

The green shoots spin is all just a load of cobblers.

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  • 440 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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