Pluto Posted February 14, 2006 Share Posted February 14, 2006 To cheer you all up: http://today.reuters.co.uk/investing/finan...TS-UPDATE-2.XML Ask the average person in the street if they think - their - inflation is running at 1.9%. Young folk are buggered in the UK. Savings are worthless and everything else is beyond their reach - execpt DVD's and knock-off levi jeans. Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted February 14, 2006 Author Share Posted February 14, 2006 http://today.reuters.co.uk/investing/finan...ON-UPDATE-1.XML Thanks very much, my faith in ,my memory is restored. My faith in my good looks (see avatar) is still a problem though. So then, revised down for Dec from 2% to 1.9%. That puts the cat amoungst the pigeons then! It would seem to me, that if the MPC had that info, the rumour that the vote was 4/5 is more realistic than I thought. Quote Link to comment Share on other sites More sharing options...
karhu Posted February 14, 2006 Share Posted February 14, 2006 So then, revised down for Dec from 2% to 1.9%. That puts the cat amoungst the pigeons then! It would seem to me, that if the MPC had that info, the rumour that the vote was 4/5 is more realistic than I thought. Interesting that the MPC chose to hold rates after seeing what will represent the lowest inflation figures we will see this year . RPI indicates that the only way is up baby! Quote Link to comment Share on other sites More sharing options...
okonu Posted February 14, 2006 Share Posted February 14, 2006 The problem is for the "feel good factor" is that prices of discretionary purchases are dropping (DVD, furniture, toasters) while prices of required spending (fuel, heating, food, council taxes, transport) are increasing. So, yes, CPI is only up 2%. But the reason why those discretionary items are dropping is because it is all on sale, because people aren't buying them. It is exactly what you expect in a slowdown, inflation dropping as people have less to spend. Normally this reduction in spending power is caused by interest rates going up, this time it is due to higher commodity prices & (IMHO) slowdown in consumer credit. So the reason some prices are going down, is that some prices are going up. Trouble is, the prices going up are those you can't cut back on... Quote Link to comment Share on other sites More sharing options...
karhu Posted February 14, 2006 Share Posted February 14, 2006 So the reason some prices are going down, is that some prices are going up. Trouble is, the prices going up are those you can't cut back on... Therefore, they will be seen in the other inflation figures as soon as production costs increase..... There's a time lag between increases in commodity prices and them showing up in the inflation figures. Once the sales are over in a few months we'll see CPI roar. The MPC know this.... Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted February 14, 2006 Author Share Posted February 14, 2006 "A dovish inflation report... and soft retail sales on Thursday could open the door to a March rate cut," said Jonathan Loynes, chief UK economist at Capital Economics. Nice idea..... Quote Link to comment Share on other sites More sharing options...
Zzzzzzzzzzzzzzzzzzzzzzzzzz Posted February 14, 2006 Share Posted February 14, 2006 UK inflation remained unchanged at 1.9% in January, despite rising fuel costs and soaring household energy bills. The CPI figure is inside the Bank of England's 2% target. December's CPI was also revised downward by the Office for National Statistics, from 2% to 1.9%. The headline rate of retail price inflation (RPI) - which includes mortgage interest payments - rose to 2.4% from 2.2% a month earlier. The underlying rate of RPI rose to 2.3% last month from 2.0%, the ONS added. Quote Link to comment Share on other sites More sharing options...
Pluto Posted February 14, 2006 Share Posted February 14, 2006 (edited) The problem is for the "feel good factor" is that prices of discretionary purchases are dropping (DVD, furniture, toasters) while prices of required spending (fuel, heating, food, council taxes, transport) are increasing. So, yes, CPI is only up 2%. But the reason why those discretionary items are dropping is because it is all on sale, because people aren't buying them. It is exactly what you expect in a slowdown, inflation dropping as people have less to spend. Normally this reduction in spending power is caused by interest rates going up, this time it is due to higher commodity prices & (IMHO) slowdown in consumer credit. So the reason some prices are going down, is that some prices are going up. Trouble is, the prices going up are those you can't cut back on... .....and that is why I call the government inflation figures mickey mouse numbers because they don't reflect what is actually happening to folks pay checks. The figures are based on potential spending not actual spending. DVD's and cheap jeans could cost 1 penny each, that doesn't matter if you don't have any money and are tapped out on credit! Edited February 14, 2006 by Pluto Quote Link to comment Share on other sites More sharing options...
thx_1138 Posted February 14, 2006 Share Posted February 14, 2006 The CPI will probably continue to stay at around that level for a couple more months, is my guess. Look at the high street sales continuing just to keep up sales volumes. In the short term this will keep the CPI down. In the longer term, energy price inflation is pushing the profit margins which will eventually filter through to the CPI in higher prices and/or worse, unemployment as companies cut costs. Quote Link to comment Share on other sites More sharing options...
karhu Posted February 14, 2006 Share Posted February 14, 2006 (edited) The CPI will probably continue to stay at around that level for a couple more months, is my guess. Look at the high street sales continuing just to keep up sales volumes. In the short term this will keep the CPI down. In the longer term, energy price inflation is pushing the profit margins which will eventually filter through to the CPI in higher prices and/or worse, unemployment as companies cut costs. Exactly. This may support the case for a cut in the short-term, but probably not because I think the MPC can let CPI safely undershoot. CPI will pick up in the summer. Edited February 14, 2006 by karhu Quote Link to comment Share on other sites More sharing options...
FTBagain Posted February 14, 2006 Share Posted February 14, 2006 IR futures down too. This has increased the chances of a UK IR cut. This sounds like quite a quick turn around over recent trends. Does this represent a degree of uncertainty creaping into the market?? Quote Link to comment Share on other sites More sharing options...
karhu Posted February 14, 2006 Share Posted February 14, 2006 This sounds like quite a quick turn around over recent trends. Does this represent a degree of uncertainty creaping into the market?? Speculation. The consensus view is still a hold throughout 2006. Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted February 14, 2006 Author Share Posted February 14, 2006 Speculation. The consensus view is still a hold throughout 2006. What, the HPC forum consensus? Quote Link to comment Share on other sites More sharing options...
non-FTBer Posted February 14, 2006 Share Posted February 14, 2006 1.9%???? BULL TURD Quite. Quote Link to comment Share on other sites More sharing options...
FTBagain Posted February 14, 2006 Share Posted February 14, 2006 You know, may be a cut would be a good thing. Given the markets response to the inflation data today and the mere possibility of a cut, image what would happen if the IR were cut. It will be very interesting to see the markets response to the MPC minutes! We could be very close to s run on the pound. Quote Link to comment Share on other sites More sharing options...
apom Posted February 14, 2006 Share Posted February 14, 2006 What, the HPC forum consensus? Bless.. sorry I just read your other thread.. You have never read a governmental policy document in your life.. You seem to have based your entire idea on what you see on the news.. a quick soundbite here or there.. Gas suppliers are looking to increase bills by 25% and all other fuel and energy costs are raging and you believe inflation has dropped.? interesting.. and again bless you Quote Link to comment Share on other sites More sharing options...
LBoots Posted February 14, 2006 Share Posted February 14, 2006 A cut in Interest rates is on the way for the UK (IMO) It will not be justified, but I think Gordon & Tone are now just crossing their fingers & hoping things will turn out ok (which of course they won't ) There was a Economist on Bloomberg last night who reckons US rates will top out at 6%. If this actually happens (Unlikely IMO) it would be impossible to keep UK rates so low without Cable taking the mother of all bashings Quote Link to comment Share on other sites More sharing options...
Guest muttley Posted February 14, 2006 Share Posted February 14, 2006 TTRTR Why on earth are you happy with these figures? Surely rising inflation is what you need if you want to raise your rents. You do realise that if we get deflation then you will have to lower them? Quote Link to comment Share on other sites More sharing options...
Time to raise the rents. Posted February 14, 2006 Author Share Posted February 14, 2006 Bless.. sorry I just read your other thread.. You have never read a governmental policy document in your life.. You seem to have based your entire idea on what you see on the news.. a quick soundbite here or there.. Gas suppliers are looking to increase bills by 25% and all other fuel and energy costs are raging and you believe inflation has dropped.? interesting.. and again bless you Sorry I wasn't aware there was a govt policy document telling you that IR's will be on hold for 2006. Is that the consensus? And I'm here as the bull because I don't base my ideas on what I read in the papers. If I did, I fear doom & gloom all day long like you bears do. TTRTR Why on earth are you happy with these figures? Surely rising inflation is what you need if you want to raise your rents. You do realise that if we get deflation then you will have to lower them? Because I want to raise my rents & keep the money too! Rising rents & rising IR's don't have the same impact on me. Quote Link to comment Share on other sites More sharing options...
FTBagain Posted February 14, 2006 Share Posted February 14, 2006 I was looking at the fundamentals rather than the technical analysis. Fundamentals have changed. I expect the 1.73 support to be broken soon. 1.73 looks like it was broken at about 15:00. And all on the vague possibility of a rate cut! Quote Link to comment Share on other sites More sharing options...
oracle Posted February 14, 2006 Share Posted February 14, 2006 The US $ may be safer than the Euro. Why? Everyone is ignoring the deficit which may be a reflection of the fact that the US and China are too closely tied for the dollar to drop thereby undermining the value of the Chinese notes. IR are headed skyward in the US with a possibility of 5% by May. US GDP is healthy. Then there is the question as to how much of the money being "spent" on Chinese goods is finding its way back into US coffers given the amount of US owned interests in that country. not quite my thinking realist...the US $ will be safe if china plays ball and revalues. ..I think there's a bit more than economics at stake this time,I think it's more about ideaology. ....and china and russia fit slightly better with the EU model,so will probably do(covertly) what they can to subvert the anglosaxon US-UK model. from a UK perspective a shortish term punt on euro assets looks like a good bet,with a view to ploughing profits made from our currency going tits-up into either UK or US when it looks like its on its knees. Quote Link to comment Share on other sites More sharing options...
karhu Posted February 15, 2006 Share Posted February 15, 2006 Look who's laughing now....... Me..... Look who's laughing now....... Me..... He who laughs last, laughs hardest. Analysts said the report was more hawkish on inflation than expected and indicated that the Bank was in no hurry to cut interest rates. Borrowing costs have not changed since August, when the monetary policy committee lowered them to 4.5%."The immediate impression is that the inflation report is pretty neutral, and it does little to encourage the view that the MPC could trim rates in the immediate future," Howard Archer, of the consultancy Global Insight, said. Although the Bank said its central projection was for inflation to stay close to its target, the governor, Mervyn King, remained cautious. "Before any of you are tempted to get carried away with the flat profile for the central projection for inflation, let me remind you that the chance that inflation will remain so close to the target throughout the forecast period is negligible," he warned. Quote Link to comment Share on other sites More sharing options...
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