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benjamin

Surprise Dip In

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Guest d23

http://www.dailyfx.com/story/currency/gbp_...keyword=article

The British pound extended yesterday’s weakness despite the lack of economic data. Although some of the selling can certainly be attributed to broad dollar strength, today’s price action also suggests that traders may be expecting a weaker retail sales number tomorrow. Recent inflation data has already made many traders skeptical about further interest rate hikes, particularly in June. Prior to the May rate hike, the market was pricing in two back to back doses of tightening. If consumer spending does come out weak, then the Bank of England has no reason to lift interest rates again in the second quarter. Judging from the BRC retail sales report, the outlook for spending is not promising. In the month of April, according to the BRC, total sales decreased from 6.2 percent to 4.7 percent while same store sales fell from 3.9 to 2.4 percent. The BRC retail sales report tends to be a good directional indicator of how retail sales will fare for the same month.
Edited by d23

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Guest grumpy-old-man
fall of 0.1% whoopy fu**ing do!

ah yes, but from an expected .5% rise

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QUOTE
The British pound extended yesterday’s weakness despite the lack of economic data. Although some of the selling can certainly be attributed to broad dollar strength, today’s price action also suggests that traders may be expecting a weaker retail sales number tomorrow. Recent inflation data has already made many traders skeptical about further interest rate hikes, particularly in June.
Prior to the May rate hike, the market was pricing in two back to back doses of tightening. If consumer spending does come out weak, then the Bank of England has no reason to lift interest rates again in the second quarter.
Judging from the BRC retail sales report, the outlook for spending is not promising. In the month of April, according to the BRC, total sales decreased from 6.2 percent to 4.7 percent while same store sales fell from 3.9 to 2.4 percent. The BRC retail sales report tends to be a good directional indicator of how retail sales will fare for the same month.

Yup--good news for you guys (Neithers and Bulls) on this one. However, the BoE will not be able to sustain HPI much longer through accommodative IR policy alone. They will have to reverse the credit tightening trend and that will be much more difficult in the present financial climate and growing default risk.

On the other hand:

http://uk.biz.yahoo.com/18052007/325/retai...prise-fall.html

LONDON (Reuters) - Retail sales unexpectedly fell in April as shops marked up prices at their fastest rate in more than eight years, official data showed on Friday.

There is always hyper-inflation for Merv to consider.

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Guest grumpy-old-man
Arrrrghhhh. I'm having a mental meldown of late. Remind me, is this good or bad news for us bears?

very funny. :D

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very funny. :D

Oh dear, I think I've missed something dead obvious and made a tit out of myself. :o It was a genuine question at the time, but I think I've sort of understood it.

Sales up = People borrowing more money

Sales down = People not borrowing more money

But, how do they work out who's spending their savings and who's borrowing or is it just that the economy is slowing?

Gah!!! I think I'll stick to the less complicated threads. :lol::lol::lol:

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I would have thought this was the best of both worlds for the bears?

A dip in consumer demand means that interest rates ARE biting even before the latest increase. A crash is not going to happen while consumer confidence is high.

Even though demand is weakening pricing presures are still extremely strong. The implied deflator jumped 1% and so companies are raising prices regardless of weakening demand.

Therefore the BoE still has to act to combat inflation even though demand has gone into reverse?

Happy to be stood corrected if I am wrong?

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Guest grumpy-old-man
Oh dear, I think I've missed something dead obvious and made a tit out of myself. :o It was a genuine question at the time, but I think I've sort of understood it.

Sales up = People borrowing more money

Sales down = People not borrowing more money

But, how do they work out who's spending their savings and who's borrowing or is it just that the economy is slowing?

Gah!!! I think I'll stick to the less complicated threads. :lol::lol::lol:

yes, i thought you were being sarcastic. Some of us bears seem to state it's bad whether spending is up or down. :rolleyes: (err, not me btw)

by stating you have made a t1t out of yourself, you have done the exact opposite & let everyone know that you can laugh at yourself & that your honest.

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Arrrrghhhh. I'm having a mental meldown of late. Remind me, is this good or bad news for us bears?

Surely, the whole Bear philosophy is for there to be less money available, which will make it less easy to buy a house, which will cause it to fall in price through market forces.

That's why Bears like higher IRs - it will make house prices less affordable.

So evidence that people are spending less should presumably be seen as good news to Bears. Same with higher unemployment. Higher taxes should also be welcomed by Bears, and higher inflation, come to that, with or without IR increases.

But of course, higher unemployment and lower retail sales eases the pressure on further IR increases. And this is where Bears get confused about whether this is good or bad news!

Edited by Casual Observer

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Guest grumpy-old-man
Surely, the whole Bear philosophy is for there to be less money available, which will make it less easy to buy a house, which will cause it to fall in price through market forces.

That's why Bears like higher IRs - it will make house prices less affordable.

So evidence that people are spending less should presumably be seen as good news to Bears. Same with higher unemployment. Higher taxes should also be welcomed by Bears, and higher inflation, come to that, with or without IR increases.

But of course, higher unemployment and lower retail sales eases the pressure on further IR increases. And this is where Bears get confused about whether this is good or bad news!

so, what's your prediction for IR's then for the rest of this year & 2008 ?

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Didn't CO have them peaking at 5.25%? :lol:

Not far out was i? Pretty damn good - far better than anyone else that I acn recall, including the MPC ;)

What was your personal prediction about the level of HPI by now, regardless of whether you had the guts to declare 1 on here? :lol:

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Didn't CO have them peaking at 5.25%? :lol:

I believe the original prediction was 5%.

Maybe 1 more .25%, although I won't be surprised if we don't see it.

What's your prediction?

0.25% per quarter back up to 7%. Inflation will just not sit down and behave like the bank claim it will IMO.

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Oh dear, already 0.5% out and we are still looking at another 0.25% rise before the end of the summer. Who knows what autumn will bring ;)

Well, we're never going to get a prediction on it from you are we mate? :lol:

Of course, what you really hanker after is a HPC isn't it? IRs are what you hope are a means to an end. Still, it's nice for you to clutch at straws. I don't begrudge you one little bit.

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