Tuesday, September 14, 2010

‘Unchanged’ means temporary is becoming permanent

UK inflation unchanged in August

The unexpectedly high rate was boosted by strong rises in airfare, clothing and food prices. Fuel prices fell. ------------------------------------------- 'Unexpected' again from the clowns who claim to know what they are doing.

Posted by estrader @ 09:58 AM (2155 views)
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37 thoughts on “‘Unchanged’ means temporary is becoming permanent

  • sibley's b'stard child says:

    However, he [King] said “there remains a significant probability that I will need to write further open letters to you in the coming months”.

    There you go then.

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  • How many letters has he written? is he to appear in the next Guinness book of world records

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  • It’s not unexpected – it’s the damn plan to inflate away the debt. next thing will be QE 2.

    The deflationists aren’t going to get a look in.

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  • hpwatcher, I never bought into the deflation argument and that is why so far my portfolio has outperformed housing, inflation and anything else the imbeciles in charge are trying to fix with their Rube Goldberg methods.

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  • my portfolio has outperformed housing, inflation and anything else the imbeciles in charge are trying to fix with their Rube Goldberg methods.

    I want the deflationists to get a look in. I want deflation – I want my pounds to be worth more – but governments don’t like it, because they can’t control it.

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  • estrader

    Does your portfolio include Basildon Bond and Quink.

    They’re sure to surge as Mervyn King announces more letter writing LOL.

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  • Hpwatcher, I want what is best for the U.K economy but I know that politicians and their economic advisers are corrupt, inept and clueless.

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  • LOL @ str 2007!

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  • str2007 @ 6 – reckon I’d go for Xerox and Tippex for the date myself hahahaha

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  • The article highlights air fares. Transport has a fairly significant weighting in CPI (16%) – any one know the weighting within that category for air fares? And how much of that airfare rise is due to government taxes, fees etc.? e.g.I’ve seen several long-haul fares where it’s much cheaper to go Dublin (or Frankfurt)-Heathrow-Cape Town and back than it is to fly Heathrow-Cape Town and back. An economy ticket of £730 from Heathrow contains £270 in taxes, fees etc.

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  • regarding flight tax would a foreign national flying on a return ticket from their home country to UK and back home pay UK taxes on their ticket?

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  • So how much of the 3.1% is actually tax rises? Surely a rise in tax-take has the opposite effect of actual monetary inflation.

    All very deflationary.

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  • I think that flying from and returning to Frankfurt or Dublin avoids some/all UK taxes, fees etc. I think other fees and charges involved in flying Heathrow to X return are much greater than the tax. Trouble is, to get to the bottom of this seems to involve paying a lot for a CD to find out.

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  • Higher inflation usual translates into rises in interest rates.

    I wouldn’t be too certain that Merv keeps his promises of low interest rates either.

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  • Extract from yeserdays fundstrategy publication http://www.fundstrategy.co.uk/opinion/patrick-collinson/less-fizz-but-bonds-may-still-go-pop/1018262.article

    “Meanwhile commodity prices are rising, and inflationary pressures are building. In the UK, Mervyn King’s obligatory writing to the Chancellor to explain the failure to keep inflation down has reached embarrassing levels. Today’s policies will inevitably lead to inflation.”

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  • Reminds me of the quote from a Futurama Episode:

    “Its either food or shelter, not both!”

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  • And today Express and Metro are reporting higher cotton price and hence higher cloth price. Mean while, Clothing factory in workers are demanding higher wages (yesterday news). These transportation price increase aren’t exactly ‘imported inflation due to sterling devaluation either’. Also, major shops, John Lewis, Debenham etc are all reporting good profit growth (if there is plenty of capacity, this shouldn’t happen).

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  • mark wadsworth says:

    Hmm. Where’s the usual ding dong between Techieman and HPWatcher? Any post mentioning “inflation” isn’t the same without it 🙁

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  • Maybe Techieman is busy buying gold?

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  • techieman and hpw are both in training as they are now on the same bill as Audley Harrison and David Haye – tickets go on sale here this coming Friday

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  • MW – have said all i have to say on this subject really. I did think we would dip under 3% on the CPI – so although that is clearly incorrect i dont see the ramping inflation predicted by the inflationists. Historically, and particularly for those of us brought up in an inflationary era, 3% looks pretty benign.

    Having said all of that, HPW did say he wasseeing rises of 25% on some goods. i dont disbelieve him. i have said though that you can look at rising prices as a good thing for HP falls, since there seems to be no labour shortage. until we get that , i cant see inflationary pressures.

    therefore, in general, although the inflation is good for debt reduction argument holds, in this case – and on a personal level – inflation only helps if your salary rises with it (not necc in a corelation of 1).

    But i see Easybetman mentions that there does seem to be some capacity constraints – which follows on from a thread a while back. personally i still think we are in a transitionary period where the reflation is still working its through, albeit not well enough for the authorities. my guess is that the BoE was expecting to see higher inflation than now if the reflation had worked, and they are both confused and scared that they arent.

    of course the longer this goes on, i will be the first to admit i will look like i have been crying wolf.

    EST – no actually the opposite, i had sold a small amount of gold for a bit of a short term punt. Also i am nursing some losses on 10% shorts on the S&Ps @ 1070. [i got rid of most of those shorts around 1047, with an additional limit order of 1035]. interesting moves :). im not one of those people that says they are doing well when they are not. Really i am still scratching my head about this move – it seems a bit of manipulation is afoot… maybe i am just one of those “weak hands” you like to talk about ! Hope things are good for you.

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  • but jack if i have to fight him, i will have to do it with one arm “tied behind my back”. i shall keep training the left hook – ‘enry weren the only with with a hammer in that glove!

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  • Hey Techie!
    I am a short term trader and use very tight stops so I can’t be hurt badly if I misjudge the market. I also use the ES as a guide to wider market movements for my long term investment strategy and so far it has proved infallible and profitable. Without bragging, I am not baffled by this move in the markets, I think I did warn you that around the 1061-1063 level was a dangerous place to go short or long 🙂

    For the record, IMO this market rally isn’t showing any signs of exhaustion yet. I would say another 10-20 point rise is easily on the cards. The banks need a great September and I think they will manage to get it. Surely all the inane ramblings by the financial TV hosts and analysts about how bad a month September usually is for stocks gave you a big clue? I could be wrong and the market could crash next week, but that is highly unlikely now that the sage of Omaha has decreed there will be no double dip in the US.

    P.S: If you do get in the ring with HP make sure you check his gloves for gold.

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  • techieman – on a more serious note I hope your recovery is coming along OK. Stock markets are a bit of a puzzle at the moment and I’m reading today that a lot of fund managers are expecting further gains (then again they pretty much all say that when they are looking to attract a bit of retail money)

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  • est thanks for your input. As discussed before there are many ways to skin a cat. personally i was doing the short term stuff on LIFFE years ago, when it was open outcry. so i cant be bothered to do that anymore.

    the gold was really just to keep a bit of interest – i still have a core long term holding – but i do think its looking toppy (i shorted today when it was 16 bucks up – i was expecting a move up but didnt expect much more follow through). As for S&Ps you may very well be right. As i said i was out 90% of the move – most @ 1047 – as 1040 didnt break on the second go, and of course the 1035 (sorry that should have been on stop as a short – not a limit order- must be age) was never hit.

    you seem to be saying that 1060 is a pivot point or the point where it should revert to. Surely it would have been good to buy there for a sale here or in the next 10-20 points and likewise it could be ok to short their to liquidate in the 40s. So in that respect i dont really see what you are getting at.

    All in all i am showing about a .002% loss of wealth on those positions – assuming i get hit on the stops. At the moment its still in profit – BUT i am the first to admit at one stage it was looking like quite a good position and good trade. Still – as they say – “thats futures” :). It always looks like its going to collapse at the lows and go to the moon on the highs, that after all is why there are stochs, RSI. Williams % R… well take yr pick!

    i am quite relaxed about being wrong – i am wrong about 60% of the time – i often take small trades if i dont feel confident but do load up when i do. Luckily? the times when i have loaded up i would say that i have been right about 60% of the time and even if wrong often manage to scratch most of it, so no hugely costly mistakes [personally if i am not right more or less straight away i will look to get out for a small spread loss or scratch – so if it moves in my favour but not initially as much as i expect i will bail – this is what i try to explain to HPW, i actually have no pride of position].

    Infact i haven had a bath since 2004 (i call a bath 6% loss of my trading account which itself represents about 25% of wealth). As you know MM is probably the most important thing and except for normally around 5-10% of a position [this is a classic example] the rest is quite strictly controlled.

    That is my philosophy and its worked ok for me – clearly you have spent time and energy working out what works for you. that is something that alot of people do wrong in my view – they dont take the time to analyse what they do and how something would work well for them and make sure it dovetails with their personality. they all want to get the latest system but dont have the personality to apply it. they then blame the system when it goes wrong. i dont use any particular system for entry and exit just use my experience, but as i say the stops and the bailout levels are enshrined when the trade goes on.

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  • HP @ 5 said
    I want the deflationists to get a look in. I want deflation – I want MY pounds to be worth more – but governments don’t like it, because they can’t control it.

    No one can – it’s like a cancer. Assuming you feel bullet-proof, because of your circumstances – to ignore the total and abject misery that that backcloth would cause to many more than a dose of inflation, smacks of the very VI mentality you profess to abhor…….in my opinion

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  • thanks Jack – yes unlike est, i have to admit i am truly surprised by how big the move up has been and am prepared to be even more surprised later this week :). the next line in the sand / target to run the stops is 1129.5 on the S&P – if we get there then i wouldnt be surprised to see a quick suck in and then reversal….. i wonder what christian will be saying tonight ?

    i must admit that 1129.5 does look like a juicy place for the market to be pushed.

    As for the shoulder – yes its just a bit annoying really especially since its the right side.

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  • BTW Techie, get well soon. (I never said it and I always forget to say it)

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  • cheers est!

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  • techieman – Christian says you gotta be patient

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  • TM hope the shoulder recovers soon. Been a mad couple of days hasn’t it! Don’t have a clue about stocks at the moment just been focussed on EUR/USD. I lost a serious amount of money yesterday being short euro (ouch learning the hard way about having tighter stops and when to bail) and then went to the dark side and was long euro most of today, so made it back again. Been some clear wave patterns to EUR/USD but can’t tell if they are complete. It has ended right on 61.80% fib retracement of the 6th Aug high and 24th low.

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  • Well MG – a reverse takes alot of guts and questioning because when someone takes a position they normally put their ego into it. So well done on that.

    Just taken a look and there is a downward trendline on the dallies for the EUR/USD – i.e. approx 150 at end of november last year, 13333 on 6/8/2010 and that now extends to the current high. So between here and that 13333 is the battleground. probably worth some toe-dipping on the short side, but then again be prepared (as always) for the piranhas to bite em off. it does look like a final blip up on the hourlies a shade above 13034 before (at least) a pullback. but as we all know nothing is certain.

    Same pattern of trendline touching on the weeklies.

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  • TM – thanks. I will try digest your technical points. About my turn around. I have till now been more comfortable short based on the view that the dollar is going higher long term. But yesterday was pretty bad and I considered closing the account down. A day like that does challenge views and make you open to other possibilities. My reason for being long was because of studying the market for weeks I have seen trends. At night there are slow moves (by bots?) that give info on stops. In the morning there are moves that reflect this and that often lead to complementary moves when the Americans wake up. I only expected the move up this afternoon to go to 1.2910, the high earlier in the day, perhaps to 1.2919 the high from 6th Sep. When we hit these targets I was about to close the position but noticed it was accelerating higher. Basically I got lucky and rode it right up.

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  • mg fwiw i did sell some @ 13020 – for the reasons outlined above. Also for those reasons – i.e. that it looks like a breath before a final onwards advance – i bought back 75% of that position just now @ 12968 – this is all based on an hourly chart. if 12912 to even breaks to the downside then likelihood is that the move up is finished, since that is now support. if that support breaks only an upside re-break of yesterdays highs invalidates the proposition that its over. all in all though – expecting new highs on the hourly, but not much higher.

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  • btw – none of that is EWI – i dont subscribe to the currency section, so i would be interested to see what they are saying!

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  • TM seems like you made a good trade there, well done. I am filled with the same uncertainty that market is showing, just sitting and waiting. Shorting next might be interesting once the rally is finished, which is I guess why you held onto 25% of your position, you give it a 25% chance it just falls from here? EWI financial update should have something to say tonight on the dollar. I found Daneric interesting yesterday on the FTSE.

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  • MG – sorry for not coming back on that. yes it was a really quick short term (and smallish) trade. the 25% was – as you say because i gave it a low chance of breaking the 12919 – but had it i wanted to have some onboard higher up. Once i got out of 75% i moved stops oco to b/even – which of course got hit. so if you like a bit of a in out take the money and run.

    Now flat. i dont see this new upmove lasting for long so will be looking for candle patterns to get short

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