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Realistbear

Factory Orders Collapse As Order Book Well Below Expectations

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http://uk.finance.yahoo.com/news/cbi-factory-order-balance-weakens-to-lowest-since-april-reuters_molt-5a8a9a16a7f6.html?x=0

CBI factory order balance weakens to lowest since April
11:15, Tuesday 19 October 2010
LONDON (Reuters) - Factory orders fell at their sharpest pace since April this month, the CBI's October industrial trends survey showed on Tuesday.
The Confederation of British Industry survey's total order book balance
dropped to -28 this month from -17 in September, below expectations of a reading of -19.
"The recovery in the manufacturing sector is well grounded and is expected to continue, this despite the soft patch last quarter," said CBI chief economic advisor Ian McCafferty.

At least the recovereh is locked in despite the unexpected drop in orders. :D

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http://uk.finance.yahoo.com/news/cbi-factory-order-balance-weakens-to-lowest-since-april-reuters_molt-5a8a9a16a7f6.html?x=0

CBI factory order balance weakens to lowest since April
11:15, Tuesday 19 October 2010
LONDON (Reuters) - Factory orders fell at their sharpest pace since April this month, the CBI's October industrial trends survey showed on Tuesday.
The Confederation of British Industry survey's total order book balance
dropped to -28 this month from -17 in September, below expectations of a reading of -19.
"The recovery in the manufacturing sector is well grounded and is expected to continue, this despite the soft patch last quarter," said CBI chief economic advisor Ian McCafferty.

At least the recovereh is locked in despite the unexpected drop in orders. :D

Hi Bear, good find. Would you agree that a double-dip, i.e. weakening economy, will also weaken sterling?

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Hi Bear, good find. Would you agree that a double-dip, i.e. weakening economy, will also weaken sterling?

Sterling has been riding high on ever worsening news (fundamentals) which suggests the traders are playing it against the $ based on technical trades. The FOREX is pushing so much cash around second by second it is hard to get any kind of read on the direction it may take next. Last decent article I read was that the traders have moved away from Euro bashing onto the $ with the £ next in the frame. All of this regardless of the underlying weaknesses in the respective economies. In other words, the FOREX has been detaching itself from the market fundmentals to enage in stockmarket-like algorhythm trading.

It might just the case that the technicals has seen a bottom in the $ and now its the turn of the £ for some heavy selling. This is certainly the view of the Elliott Wave folks (EWM).

I do believe the double dip is on and was never off. Sovereign debt will re-emerge in the next few months IMO and we sghould see some large drops in stocks so I am standing clear. Bonds are tricky and I have already dumped half my holdings in PIMCO bond funds (which are holding around 40% cash which tells you something about what is in store).

Edited by Realistbear

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It might just the case that the technicals has seen a bottom in the $ and now its the turn of the £ for some heavy selling. This is certainly the view of the Elliott Wave folks (EWM).

I do believe the double dip is on and was never off. Sovereign debt will re-emerge in the next few months IMO and we sghould see some large drops in stocks so I am standing clear. Bonds are tricky and I have already dumped half my holdings in PIMCO bond funds (which are holding around 40% cash which tells you something about what is in store).

Seems we are in agreement. So sterling, bonds and stocks to take a kicking. Where would you perceive there to be safety for investors and savers holding sterling in this scenario?

BTW, not trying to be funny, I know you don't like gold (my perceived safe play), I'm just interested in what you see as the best safe play in this scenario, so as I might learn something.

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Seems we are in agreement. So sterling, bonds and stocks to take a kicking. Where would you perceive there to be safety for investors and savers holding sterling in this scenario?

BTW, not trying to be funny, I know you don't like gold (my perceived safe play), I'm just interested in what you see as the best safe play in this scenario, so as I might learn something.

Currency diversification. I would look at switzerland, new zealand, canada, brazil, china. You can get into all of those via money market ETFs as a bonus some of them pay a decent amount of interest (brazil around 10%, china/NZ 5% ish) so your offsetting inflation as well as a sterling drop. I concur with the general sentiment that sterling kinda feels artificially high right now.

Edited by goldbug9999

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Currency diversification. I would look at switzerland, new zealand, canada, brazil, china. You can get into all of those via money market ETFs as a bonus some of them pay a decent amount of interest (brazil around 10%, china/NZ 5% ish) so your offsetting inflation as well as a sterling drop. I concur with the general sentiment that sterling kinda feels artificially high right now.

That's one way to do it. Although I am cautious of that strategy for the following reasons:

1. ETF's are run by financial institutions and are not protected under the any form of compensation scheme (unlike savings accounts- supposedly) should the institution go broke, which is a risk in the current environment.

2. Obviously you could buy currency directly, but that incurs additional cost that will eat in to any wealth protection margin, possibly costing you money at the end of the day.

3. (and you know this is coming ;)) Personally I prefer gold (physical) for exactly the same reasons, as a currency play, but one that is no one else's liability, i.e. cannot be weakened (in fact only strengthened) by the competitive currency devaluations govt's around the world are now engaging in. It is also acting as the strongest currency in the world, as it is currently rising (on average over time) against all other currencies, as you would expect in a world of fiat currencies backed by a shaky dollar.

Just wanted to outline my reasoning, so you know I'm not just a ramper, there is reason to my rhyme.

EDIT: Just realised it was goldbug999 I was responding to, not Realist Bear. Oh well. Realist, your thoughts?

Edited by General Congreve

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That's one way to do it. Although I am cautious of that strategy for the following reasons:

1. ETF's are run by financial institutions and are not protected under the any form of compensation scheme (unlike savings accounts- supposedly) should the institution go broke, which is a risk in the current environment.

2. Obviously you could buy currency directly, but that incurs additional cost that will eat in to any wealth protection margin, possibly costing you money at the end of the day.

3. (and you know this is coming ;)) Personally I prefer gold (physical) for exactly the same reasons, as a currency play, but one that is no one else's liability, i.e. cannot be weakened (in fact only strengthened) by the competitive currency devaluations govt's around the world are now engaging in. It is also acting as the strongest currency in the world, as it is currently rising (on average over time) against all other currencies, as you would expect in a world of fiat currencies backed by a shaky dollar.

Just wanted to outline my reasoning, so you know I'm not just a ramper, there is reason to my rhyme.

EDIT: Just realised it was goldbug999 I was responding to, not Realist Bear. Oh well. Realist, your thoughts?

To add context to my remark ... I have cash well in excess of the 50K guarantee limit and about 30% of my portfolio in physical gold.

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Seems we are in agreement. So sterling, bonds and stocks to take a kicking. Where would you perceive there to be safety for investors and savers holding sterling in this scenario?

BTW, not trying to be funny, I know you don't like gold (my perceived safe play), I'm just interested in what you see as the best safe play in this scenario, so as I might learn something.

I love gold at sub £500! But as a LT bet is has a very poor track record which is why I steer clear. Too much emotion attached to it. I plucked a number out the sky a week or so ago at $1374 being the approximate top. Its tumbling today and may end up below $1320 at the close at the present rate so who knows, I may have called the top! *

I am mostly in US$ denominated assetts (primarily medium and short term bonjds) and a few selected stocks including, of all things, TESCO as an ADR (US quoted--up 5% in the last 2 days).

I see some more flight to safety coming up which should push the $ higher. Bonds may hang in for awhile longer but many say they are in a bubble. The returns have been uncomforably high (over 12% YTD) which suggest something may be about to break down.

Bottom line for me: cash, 80% in US $ and the rest in £.

* GOLD

10/19/2010

09:15

1339.40

1340.40

-30.20

-2.21%

Some investors saw a buying opportunity in November 1929. Shoulda waited until October 1945.

Edited by Realistbear

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I love gold at sub £500! But as a LT bet is has a very poor track record which is why I steer clear. Too much emotion attached to it. I plucked a number out the sky a week or so ago at $1374 being the approximate top. Its tumbling today and may end up below $1320 at the close at the present rate so who knows, I may have called the top! *

I am mostly in US$ denominated assetts (primarily medium and short term bonjds) and a few selected stocks including, of all things, TESCO as an ADR (US quoted--up 5% in the last 2 days).

I see some more flight to safety coming up which should push the $ higher. Bonds may hang in for awhile longer but many say they are in a bubble. The returns have been uncomforably high (over 12% YTD) which suggest something may be about to break down.

Bottom line for me: cash, 80% in US $ and the rest in £.

* GOLD

10/19/2010

09:15

1339.40

1340.40

-30.20

-2.21%

Some investors saw a buying opportunity in November 1929. Shoulda waited until October 1945.

Unlucky timing for me ;)

Fair enough, you're mostly in the dollar, a good day for you, seeing as China have just announced interest rate rises (since I last posted on this thread). Indeed there has been a flight to the perceived safety of the dollar as the stock markets have taken a loss against this. This is also the reason gold has taken a near vertical drop and lost the amount you quote.

I believe this is a knee jerk reaction and the beginning of consolidation around the 1340 level, as investors get used to the new lofty price level before the next leg up. The dollar is still toast at the end of the day and China raising interest rates will in no way help it. IMO.

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Currency diversification. I would look at switzerland, new zealand, canada, brazil, china. You can get into all of those via money market ETFs as a bonus some of them pay a decent amount of interest (brazil around 10%, china/NZ 5% ish) so your offsetting inflation as well as a sterling drop. I concur with the general sentiment that sterling kinda feels artificially high right now.

Artificially high you say. Sterling is hovering at multi-decade lows against all of the currencies that you list. I'm not saying that you are wrong, just that perceived sterling strength has been largely due to a period of engineered $US weakness and a modest recovery against the € because of the badly handled Greece crisis.

The market never stopped being bearish about sterling; it just got briefly more bearish about the $US and the €. How far above its lows is sterling for the 5 hedges that you list? A few percent. What is it with goldbugs and their overwhelming urge to always sell the thing that has never been cheaper, and buy the things that have never been more expensive? That's only good advice, until it isn't. Property crashes take years. Gold and currency speculation can wipe out 10% of you worth in a matter of hours or days, and then do it again. Having made one lucky currency trade followed by one equally lousy one, all I learned about currency speculation is that you will lose some money making the round trip. I am just happy to get back to where I started, a little wiser than before.

Having just returned to NZ from the UK I can make a few comments about that currency pair. £ used to trade in the 3-3.8 range for years, recently fell from 2.85 to 2.05 bounced to 2.2, now at 2.1 - so does that make 2.1 good value or does that make 2.1 historically expensive? I would say that this place is every bit as out of whack as it is in Britain: stupid property prices, crippling rents, bonkers private debt levels and arrears, terrible job security, low wages, long hours - only the govt. does better, but that's partly because it has negligible defence spending and negligible geo-influence too. Britain has far less to worry about when it comes to natural disasters and an oil spike could play havoc with the margins on exporting bulk goods across the ocean. Any bovine disease would be devastating. Selling $NZ and going long sterling was the Giant Squid's top tip for 2010, though I dare say, being evil, they expected the exact opposite.

As a geophysicist I was intrigued when the $NZ rallied after Christchurch was hit by a massive earthquake. Keynesian spending to create boomtime was theme of the post-quake economic analysis. Then I was doubly curious how the $NZ didn't flinch when big oil pulled out of the Southern Basin last week. That was formerly the great hope for future NZ prosperity - call it 20:1 odds on gaining Gulf State wealth overnight. Surely that small chance of a massive gain was previously factored into the price of $NZ? Apparently it was not and neither does the market care that NZ will now follow Britain to become a net oil and gas importer.

The reason bad news didn't matter was is that in this climate of $US ZIRP, yield commands a high price and in search of yield, bad news will be entirely ignored. In fact any news apart from IR's is almost always ignored inasmuch as the market only hears what it wants to hear, if it hears anything at all. At some point the mood will change and much more subtle negative news than these two body-blows will be quoted as as if it somehow "plainly caused" the currency to fall. In general, I rarely see any evidence that news gets in the way of the market momentum. If sterling or the US dollar rallied from here, economists would not find it difficult to come up with plausible reasons and if none were obvious they would simply claim they had been previously oversold. That either unfashionable currency could now rally and that gold could retreat may not seem likely but it is much more plausible than most on here will admit.

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  • 140 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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