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Q4 Gdp Unexpectedly Revised Down 0.6 Percent

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http://uk.finance.yahoo.com/news/Instant-View-Q4-GDP-reuters_molt-3414107872.html?x=0

Q4 GDP unexpectedly revised down 0.6 percent
9:48, Friday 25 February 2011
LONDON (Reuters) - The economy contracted even faster than previously estimated in the last three months of 2010, shrinking by 0.6 percent after downward revisions to industrial and services output, official data showed on Friday.
The figures may make Bank of England policymakers wary of raising interest rates, although there have been signs that activity picked up at the start of this year following December's snow-related disruption.

It was not unexpected as AFAIAC.

Double dip cometh and no, Merv, does not have to raise the rates.

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http://uk.finance.yahoo.com/news/Instant-View-Q4-GDP-reuters_molt-3414107872.html?x=0

Q4 GDP unexpectedly revised down 0.6 percent
9:48, Friday 25 February 2011
LONDON (Reuters) - The economy contracted even faster than previously estimated in the last three months of 2010, shrinking by 0.6 percent after downward revisions to industrial and services output, official data showed on Friday.
The figures may make Bank of England policymakers wary of raising interest rates, although there have been signs that activity picked up at the start of this year following December's snow-related disruption.

It was not unexpected as AFAIAC.

Double dip cometh and no, Merv, does not have to raise the rates.

precisely what I was thinking.

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This thread needs to be merged with the other GDP thread :angry:

That said, the "unexpected" bit in the headline was a bit of fun.

That everything these days is unexpected tells us that the "experts" are clueless or liars. Maybe they are lying fools.

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This thread needs to be merged with the other GDP thread :angry:

That said, the "unexpected" bit in the headline was a bit of fun.

That everything these days is unexpected tells us that the "experts" are clueless or liars. Maybe they are lying fools.

Maybe they should start to expect the unexpected then they won't be so surprised all the time - Do'h.

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Maybe they should start to expect the unexpected then they won't be so surprised all the time - Do'h.

"Its not that much of a shock, this is a very small revision"

Reminds me of:

"He's not the Messiah, he's a VERY naughty boy".

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This thread needs to be merged with the other GDP thread :angry:

That said, the "unexpected" bit in the headline was a bit of fun.

That everything these days is unexpected tells us that the "experts" are clueless or liars. Maybe they are lying fools.

A little like it was 'unexpected' that your thread would not be the first on the subject...

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... and the pound gets shagged again.

Who was it who posted this week hailing the strength of sterling?

I posted in utter despair that Sterling was soaring against a back drop of hideous fundamentals.

I am heavily vested in US $ (lived and worked there prior to 2005) and have been counting on a double whammy to buy a house:

1. AT LEAST one third drop in house prices

2. Sterling below $1.50

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That said, the "unexpected" bit in the headline was a bit of fun.

That everything these days is unexpected tells us that the "experts" are clueless or liars. Maybe they are lying fools.

I wan't expecting it actually. I thought it'd be revised the other way.

Perversely enough it ain't great news for HPC though. As has been pointed out this'll put the brakes on an IR rise

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I wan't expecting it actually. I thought it'd be revised the other way.

Perversely enough it ain't great news for HPC though. As has been pointed out this'll put the brakes on an IR rise

R are already rising as we have seen in recent posts on subject.

The bond markets are pricing in higher risk and IR rise accordingly. The housing market is already doomed even without a hike from the BoE.

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I posted in utter despair that Sterling was soaring against a back drop of hideous fundamentals.

I am heavily vested in US $ (lived and worked there prior to 2005) and have been counting on a double whammy to buy a house:

1. AT LEAST one third drop in house prices

2. Sterling below $1.50

I can understand you missing the other GDP thread. You must have been very excited and hardly able to see the screen for all those Yankee dollar signs in front of your eyes.

I wonder what Nadeem Walayat will make of it? Will he see it as another chance to back a truck up to buy even more glorious pounds sterling on leverage, or will his nerve start to falter?

The special reserve Rioja must be flowing at RB's house today.

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I wan't expecting it actually. I thought it'd be revised the other way.

Perversely enough it ain't great news for HPC though. As has been pointed out this'll put the brakes on an IR rise

As RB says (immediately above) - without WAGE inflation, housing becomes more and more unaffordable with rising inflation, without the BoE even needing to lift a finger.

Maybe that's their plan - they can turn around and say that they did everything they could to help the poor homeowners, whilst allowing rome to burn.

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... and the pound gets shagged again.

Who was it who posted this week hailing the strength of sterling?

As I have mentioned in many threads about interest rates/inflation recently, the performance of the economy can drive the strength of Sterling too. Those thinking that a hike in interest rates will result in a stronger pound need to think about this thoroughly, due to the affect it will have on already struggling businesses.

IMO, the only reason a rate hike is traditionally associated with a strengthening currency is because a rate hike only comes when the economy is overheating (ie. business is booming). Then, the rate rise is the effect, not the cause, of this interest in Sterling at that time. Therefore, cranking up rates and expecting the currency to strengthen, when the economy is on its knees, may be foolish. Thankfully, I think Mervyn King is well aware of this.

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I can understand you missing the other GDP thread. You must have been very excited and hardly able to see the screen for all those Yankee dollar signs in front of your eyes.

I wonder what Nadeem Walayat will make of it? Will he see it as another chance to back a truck up to buy even more glorious pounds sterling on leverage, or will his nerve start to falter?

The special reserve Rioja must be flowing at RB's house today.

I had an extra McVities! TBH, I don't see £ being badly shaken until they admit the housing market is crashing. We can withstand ANYTHING other than a full on HPC.

New Lidl moving in and they do a nice Gran Reserva Rioja for 4.99 which you might pay 8.99 for in Tescos.

1 GBP $1.60749 Euro 1.16653

Barely moved vs. the $ and down a little vs the Euro. A non-reaction IMO.

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As I have mentioned in many threads about interest rates/inflation recently, the performance of the economy can drive the strength of Sterling too. Those thinking that a hike in interest rates will result in a stronger pound need to think about this thoroughly, due to the affect it will have on already struggling businesses.

IMO, the only reason a rate hike is traditionally associated with a strengthening currency is because a rate hike only comes when the economy is overheating (ie. business is booming). Then, the rate rise is the effect, not the cause, of this interest in Sterling at that time. Therefore, cranking up rates and expecting the currency to strengthen, when the economy is on its knees, may be foolish. Thankfully, I think Mervyn King is well aware of this.

+1

Edited by Realistbear

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I had an extra McVities! TBH, I don't see £ being badly shaken until they admit the housing market is crashing. We can withstand ANYTHING other than a full on HPC.

New Lidl moving in and they do a nice Gran Reserva Rioja for 4.99 which you might pay 8.99 for in Tescos.

1 GBP $1.60749 Euro 1.16653

Barely moved vs. the $ and down a little vs the Euro. A non-reaction IMO.

Perhaps you should celebrate by taking your friends out for a meal over the weekend? Keep them happy?

Just had a Lidl warmed Pan au Chocolat, pack of 10 for £1.29

Our wine stock was replenished last week. We backed a truck up at Asda for some Hardys Classic Selection Shiraz at 3 for £10 (usual price £6.97).

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Perhaps you should celebrate by taking your friends out for a meal over the weekend? Keep them happy?

Just had a Lidl warmed Pan au Chocolat, pack of 10 for £1.29

Our wine stock was replenished last week. We backed a truck up at Asda for some Hardys Classic Selection Shiraz at 3 for £10 (usual price £6.97).

Check out Sainbury' Italian Mondelli Montepluciano 3 for $10. They say it is normally £8.99 per bottle. Very nice and well worth 3 for a tenner and 5% off if you are like me and enjoy wine more than most.

I am enjoying going austere as I have cut petrol 50% by planning trips and only buy wine at bargain prices.

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IMO, the only reason a rate hike is traditionally associated with a strengthening currency is because a rate hike only comes when the economy is overheating (ie. business is booming). Then, the rate rise is the effect, not the cause, of this interest in Sterling at that time. Therefore, cranking up rates and expecting the currency to strengthen, when the economy is on its knees, may be foolish. Thankfully, I think Mervyn King is well aware of this.

Isn't about yield and the carry trade as well? I don't really understand this, but isn't there money to be made by playing a currency with a higher interest rate against the others?

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I posted in utter despair that Sterling was soaring against a back drop of hideous fundamentals.

I am heavily vested in US $ (lived and worked there prior to 2005) and have been counting on a double whammy to buy a house:

1. AT LEAST one third drop in house prices

2. Sterling below $1.50

Quite - I've been observing the RB saga for a few years now...

This all goes to show how tricky it is to pick the currency market.

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FTSE 100 5,940.75 +20.77 +0.35% :D

Nothing like slowing growth (and presumably slowing profits that follow) to give the FTSE a boost.

Noting is going to stop the UK Plc HPI-driven juggernaut except house prices.

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Isn't about yield and the carry trade as well? I don't really understand this, but isn't there money to be made by playing a currency with a higher interest rate against the others?

I would think there are many factors, which is why I think the 'higher base rate > higher Sterling price' crowd are over simplifying a complex situation.

In terms of a carry trade, you could argue that money flooded out of Japan and into the UK during the housing bubble. Chinese investors also piled in. This lead to demand for Sterling, increasing its price. By the aforementioned simplified rational, the base rate should have been decreased if anything, to combat the high price of Sterling (which was making exports expensive and feeding the trade deficit). Of course, if they had done that, it would likely have increased further speculation in the housing market, which could have made things even worse.

Also worth considering is that the base rate affects short term (overnight) borrowing costs. If the carry trade is forcing long term rates down, then how can increasing the short term rate combat this? You could conclude that a base rate rise in the early 2000s would have done little to prevent the carry trade. Even if it did, would this also not counter the simplistic model above, with a rate rise forcing the demand (and therefore, price) of Sterling down?

If yield reflects real (not just nominal) value of the return, then you could certainly argue that GDP should have a major role in the pricing of Sterling too.

IMO, the best thing the BoE could have done, was to restrict the amount of lending done by the banks, particularly mortgage related lending. The base rate is surely ineffectual, and possibly counter productive*, when long term rates are low. It was clear that an asset bubble was forming on the back of this cheap credit though, which could have been tempered.

So what is the base rate good for? Without large capital inflows, I'm sure it does a fine job of keeping borrowing in check. However, this isn't the world we live in any more. Additionally, you could argue that while the older, more wealthy investors could lend against a growing populous in the past, this is no longer the case (ie. demographics, both nationally and globally), which must have forced long term rates down too. This is why I'm of the opinion that rates are tending to zero in the medium/long term anyway... maybe the central banks could have guided us here a little more gracefully, with better credit controls, but we are where we are and I think the base rate no longer has much use for the time being.

* Why would you want more expensive long term borrowing, if it isn't blowing bubbles, but is instead being invested wisely?

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* Why would you want more expensive long term borrowing, if it isn't blowing bubbles, but is instead being invested wisely?

Obviously you've added the caveat "wisely" in there, but isn't the argument for high interest rates that it stops malinvestment? Low rates are needed by weak economies, because everything looks risky. But strong economies need higher rates to stop people just piling into anything,

Peter.

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FTSE 100 5,976.87 +56.89 +0.96%

Weaker economy triggered pent up demand for stocks after they fixed the glitch. £ going back up too. It will take A LOT more than a crashing economy to stop the UK HPI-driven juggernaut.

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  • 312 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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