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Realistbear

Latest On I R - Gordon Faces Crisis?

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http://www.iii.co.uk/news/?type=afxnews&ar...&action=article

LONDON (AFX) - The dollar continued to drift higher amid renewed US rate hike expectations after a batch of strong economic data and hawkish rhetoric from US rate setters.
Overnight, St Louis Fed president William Poole was reported saying that the Fed may have to
raise rates further if economic data come in higher than expected.
His comments come in the wake of a raft of strong data -- including a robust reading in the ISM snapshot of service performance last week -- and predictions of a sturdy US jobs report on Friday.
"The unexpectedly strong increase of the ISM service sector index, hawkish comments from Poole and expectations of strong employment data this Friday led to renewed rate rise expectations," said Carsten Fritsch at Commerzbank Corporates and Markets.
The market is growing increasingly confident that rates will rise to 5 pct from 4.50
pct sometime in the second quarter. At present, markets are pricing in a 60 pct possibility that this may happen as early as May. The next US Fed rate verdict will be delivered on March 31.
At the same time however, the euro too could get a lift if the run of sturdy data out of the 12-nation area continues,
strengthening the case for more European Central Bank rate hikes
.
Up for release today German manufacturing orders are expected to rebound 1.3 pct in January after falling 1.6 pct in December, with the year-on-year growth rate in orders climbing to 8.9 pct from 3.8 pct

Up up and away go the IR. With crashing retail sales, rising unemployment and already weakening property market higher IR in the UK will deal the long awaited death blow to the bloated bubble we call the "property market." "POP!"

_______________________

PS: US $ at around 1.7361 so far today.

Edited by Realistbear

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PS: US $ at around 1.7361 so far today.

Yes, there's been a bit of a break out on cable. This is the worst of all possible scenarios for the Bank of England, but you can't say they didn't see it coming.

A couple of interest rate rises soon would soften the blow later on.

We have to start heading back to neutral soon, consumer with us or not.

USD:GBP of 1.70 is a key psychological point IMO. If we break that all hell could break loose.

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Yes, there's been a bit of a break out on cable. This is the worst of all possible scenarios for the Bank of England, but you can't say they didn't see it coming.

A couple of interest rate rises soon would soften the blow later on.

We have to start heading back to neutral soon, consumer with us or not.

Will Gordon follow his mentor's example and be willing to raise the rates and allow the air out of the property bubble? Higher rates are bringing down housing in the US with severe drops in the bubble states but not much of note accross the States where prices only went up around 20-40% over past 7 years or so.

If Gordon seeks to keep HPI alive he will soon crash the entire economy. Its a BIG gamble either way but he has got to do something as the world is watching the Miracle Worker. The world markets will eventually realise that the miracle economy is nothing more than an illusion built on debt. We could go back to pre-Maggie days and "poor man of Europe" status.

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Its a BIG gamble either way but he has got to do something as the world is watching the Miracle Worker.

I think that the stakes have just got too high. The gamble hasn't paid off and payback time is fast approaching. Good job the average consumer doesn't know this or the hatches would be firmly batoned.

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I have just spoken to a mate who has a fairly good job in a big investment bank. He has let his 1 bed PPR and is currently renting a 2 bed while looking for a bigger place to buy (wife and kid in his 1 bed flat ain't pretty!)

He is absolutely adamant that interest rates will fall 0.25% this year (but probably not until the end of the year). He is the sort of person who can tell you exactly when the FED and ECB has risen rates in the last 2 years.

I'm not saying he is right, but the level of certainty on this board is astonishing, especially when plenty of others have a great deal of knowledge and are certain about their opinion the other way. Look, none of us know for sure. Have your opinions, but keep challenging them.

FF

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The whole thing just reminds me of Japan in the 90s :o .

Most expensive real estate in the world, huge personal indebtedness. Failure to rationalise....

I have just spoken to a mate who has a fairly good job in a big investment bank. He has let his 1 bed PPR and is currently renting a 2 bed while looking for a bigger place to buy (wife and kid in his 1 bed flat ain't pretty!)

He is absolutely adamant that interest rates will fall 0.25% this year (but probably not until the end of the year). He is the sort of person who can tell you exactly when the FED and ECB has risen rates in the last 2 years.

I'm not saying he is right, but the level of certainty on this board is astonishing, especially when plenty of others have a great deal of knowledge and are certain about their opinion the other way. Look, none of us know for sure. Have your opinions, but keep challenging them.

FF

That's only one opinion. The guys who trade IR futures don't agree with that opinion. Sorry.

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I have just spoken to a mate who has a fairly good job in a big investment bank. He has let his 1 bed PPR and is currently renting a 2 bed while looking for a bigger place to buy (wife and kid in his 1 bed flat ain't pretty!)

He is absolutely adamant that interest rates will fall 0.25% this year (but probably not until the end of the year). He is the sort of person who can tell you exactly when the FED and ECB has risen rates in the last 2 years.

I'm not saying he is right, but the level of certainty on this board is astonishing, especially when plenty of others have a great deal of knowledge and are certain about their opinion the other way. Look, none of us know for sure. Have your opinions, but keep challenging them.

FF

Are you saying that economy is not doing well ? It could be the reason IR will be down ?

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I have just spoken to a mate who has a fairly good job in a big investment bank. He has let his 1 bed PPR and is currently renting a 2 bed while looking for a bigger place to buy (wife and kid in his 1 bed flat ain't pretty!)

He is absolutely adamant that interest rates will fall 0.25% this year (but probably not until the end of the year). He is the sort of person who can tell you exactly when the FED and ECB has risen rates in the last 2 years.

I'm not saying he is right, but the level of certainty on this board is astonishing, especially when plenty of others have a great deal of knowledge and are certain about their opinion the other way. Look, none of us know for sure. Have your opinions, but keep challenging them.

FF

I agree. "Unpredictable" characterises markets around the world. There are too many wild cards (bird flu, Iran, Japan's economy, Mikddle East, US housing crash) out there and the spin from the media is keeping the confusion stoked up. Last week it was Japan going to raise the rates, this week is Japan may not raise the rates......

The only certainty we have is based on broad fundamentals. Debt is killing this country and HPI relies on debt. It has to stop and will and when it does the consequences will be a correction. That is all we can count on.

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CHANCES OF A FURTHER INTEREST RATE CUT FADING

The Bank of England is set to leave interest rates on hold for the rest of this year. That is the conclusion that must be drawn after the Inflation Report and the minutes of the February meeting. In spite of signs that retail sales were weak in January (later confirmed in official statistics), the MPC stuck to its view that there is no need for further monetary loosening with the economy on track for trend growth and a relatively stable inflation outlook.

http://www.westpress.co.uk/displayNode.jsp...&folderPk=75885

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Guest Charlie The Tramp

He is absolutely adamant that interest rates will fall 0.25% this year (but probably not until the end of the year). He is the sort of person who can tell you exactly when the FED and ECB has risen rates in the last 2 years.

I always find most people base their opinions on their own personal circumstances. The Investors always say up and the debtors always say down. Best to follow a neutral opinion or historical stats. ;)

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Best to follow a neutral opinion or historical stats. ;)

Charles, my old tramp, spot on, and bring it on, there is nothing worse than a vested interest, spinning the word to the sheep. B)

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I'm no expert on IRs, and wouldn't even like to guess which way they'll go.

GB is like a cornered cat... he faces problems if he raises or lowers IRs... but its all a bit unpredictable.

But either way the housing market will come down one way or the other.

But for my 2p worth, I'd put more trust in the figures being priced in by the futures market than a single city analyst.

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What's so bad about a low £? The trade balance badly needs to improve, and a bit of imported inflation wouldn't be so bad as the economy heads into the deflationary part of the cycle. Plenty of economic analysts (W Keegan of The Observer for one) have argued that the £ is ferociously overvalued at the moment.

Does anyone here know what level the £ was to the $ in May '97, as a comparison? (Rhetorical)

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Back in 04 the whole city were predicting rates would hit 5.25% to 5.5% by early 05 and they all got it wrong.

For most of the last 6 months the whole city were predicting further rates cuts by now, guess what they all got it wrong.

I've given up on them to be honest, the fact is world rates are rising and historically our rates are always 1.5% to 2.0% higher than the US, yes is has crossed the other way a couple of times but never for very long. Which draws me to the conclusion that our rates will rise and probably much more than most people think.

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I Told You So

I think the city are generally good, not necessarily at predictions of what actually happens, but what looks like the most likely outturn considering the fundamentals.

Mind you the city weren't betting on a politically compromised BOE. Two rate cuts (2003 and 2005) with no basis, we are looking at maybe an extra £100-200bn of debt because of that.

Edited by OnlyMe

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I have just spoken to a mate who has a fairly good job in a big investment bank. He has let his 1 bed PPR and is currently renting a 2 bed while looking for a bigger place to buy (wife and kid in his 1 bed flat ain't pretty!)

He is absolutely adamant that interest rates will fall 0.25% this year (but probably not until the end of the year). He is the sort of person who can tell you exactly when the FED and ECB has risen rates in the last 2 years.

I'm not saying he is right, but the level of certainty on this board is astonishing, especially when plenty of others have a great deal of knowledge and are certain about their opinion the other way. Look, none of us know for sure. Have your opinions, but keep challenging them.

FF

What does your friend do that gives him a close knowledge of interest rates? what does he base his belief on?

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What does your friend do that gives him a close knowledge of interest rates? what does he base his belief on?

I'm not saying that he is an expert. In fact I'm not 100% what he does there off the top of my head. What I can be sure of is that he knows more than lots of people who claim certainty of future IRs and less than others who claim the same.

I have just asked him why.

I do not know whether rates will rise or not. I will say that US rates are rising to a large extent due to the fact that they are much less prudent than GB and therefore need to continue to attract foreign money (even more than us). ECB rates have been very low.

Personally a HPC would have a very negative effecct on the economy therefore the BoE and GB don't want it to happen. BoE because how can they keep inflation at 2% when the country is in absolute metdown and GB because he wants his job. I don't think a cut in IRs is prudent (consumers have been spending too much as it is). And I don't think a rise is sensible given the fact it could completely destroy the economy. I hope things stay in the balance for 5 years plus, and we have a very boring, steady, low economic growth, no house price inflation (ie real falls), pay off consumer borrowing and hope for the best. It's that or a recession / house price crash etc, which is not necessarily the panacea a lot of people on here think it'll be. We'll see.

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http://uk.biz.yahoo.com/060307/214/g5s9t.html

US pre-open: Wall Street to open lower

LONDON (ShareCast) - Worries over bond yields and a poor outlook for Texas Instruments (NYSE: TXN - news) quarterly sales dragged US stock market futures
lower.
Yields on 30-year Treasuries rose to their highest for almost three months with the benchmark yield now at 4.76%, raising concerns about interest rates.

The 30 year traditionally drove US mortgage rates. Its now heading up. We could see some surprise moves upward this year and the UK has no laternative than to follow or face a sterling crisis of a considerable magnitude.

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I'm not saying that he is an expert. In fact I'm not 100% what he does there off the top of my head. What

Personally a HPC would have a very negative effecct on the economy therefore the BoE and GB don't want it to happen. BoE because how can they keep inflation at 2% when the country is in absolute metdown and GB because he wants his job. I don't think a cut in IRs is prudent (consumers have been spending too much as it is). And I don't think a rise is sensible given the fact it could completely destroy the economy. I hope things stay in the balance for 5 years plus, and we have a very boring, steady, low economic growth, no house price inflation (ie real falls), pay off consumer borrowing and hope for the best. It's that or a recession / house price crash etc, which is not necessarily the panacea a lot of people on here think it'll be. We'll see.

Personally I'm bored and want to see some economic fireworks. :D

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Personally I'm bored and want to see some economic fireworks.

Snap!

Not sure how perpetuating high houseprices helps. Stands to reason that all would happen is that more people would get sucked in at too high a price removing the respective part of their future earnings from the economy.

It's going to hurt, badly, but the sooner the nettle is grasped the better shape we'll be in to recover from it.

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What's so bad about a low £? The trade balance badly needs to improve, and a bit of imported inflation wouldn't be so bad as the economy heads into the deflationary part of the cycle. Plenty of economic analysts (W Keegan of The Observer for one) have argued that the £ is ferociously overvalued at the moment.

Does anyone here know what level the £ was to the $ in May '97, as a comparison? (Rhetorical)

you're correct in part......the thing is the low £ will not help the average guy in the street.

he buys cheap chinese dvd's.....just got more expensive

he buys petrol....based in US $.......more expensive

he feeds his family with globally grown produce.......more expensive.

FTSE 100 earns its money in stronger foreign currency and converts to £.......= more £ profit......index looks cheap.

...that's the real play on £,pity joe bloggs doesn't have enough money to invest now, as they've blown it all on dotcoms,then BTL,and now have to subsidise the tenants!!!...of course,that can easily be remedied!!!!!...and probably will be,just too late to bag the decent gains!

...however,it ain't a one way bet and hedging a bit is good strategy.

....now what's the hedge on a BTL portfolio these days????????????

Edited by oracle

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Personally I'm bored and want to see some economic fireworks.

I want to see the guilty punished, because rubbing Gordon Brown's nose in his economic turd-pile is the only way to stop this happening again for another generation or two.

Fortunately I don't see any 'good' way out of the current situation. Either he raises rates and kills the housing market, or he leaves rates low and kills the pound... which will kill the housing market anyway as outgoings inflate much faster than incomes.

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Guest Riser

Lots of News out today talking about a possible increase in global interest rates:

It mentions FTs take on Halifax's survey on Wednesday morning, is this bearish aricle a taster ?

ECB rate rises ‘threaten Europe’s housing boom’

Rising eurozone interest rates could spell the end of the “great European housing boom”, even if a property price crash is unlikely, according to a report issued on Tuesday.

This year appears likely to see a “marked reduction” in house price growth across Europe, the UK’s Royal Institution of Chartered Surveyors reported. Second homes around the Mediterranean, many bought by northern Europeans, “have the highest risk of price falls”.........

The housing market in the UK – also not in the eurozone – experienced the biggest slowdown in Europe last year, sending the country towards the bottom of the year’s European league table of house price inflation, according to the RICS.

UK house price growth slowed to 3 per cent last year against a 12 per cent rise in 2004, after the Bank of England raised its main interest rate five times between November 2003 and August 2004. The UK slid to 14th place in the league table in 2005, down from joint third with Ireland in 2004.

■ Log on to www.ft.com/uk for the FT’s take on the UK’s Halifax house price index for February on Wednesday morning.

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  • 302 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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