Friday 27 August 2010


Everywhere you go in the City at the moment people 'in the know' are preparing for a re-run of Sept/Oct 2008. The FTSE is going to go under 4000, the S&P in the US to 450. Doom, doom, everywhere. Suffice to say most of these people are long in US Treasury Bonds and UK Gilts whose prices have been rocketing.

But what do we find today, UK GDP revised up, US GDP revised down, but not as low as some thought. US unemployment number bad, but not getting worse.

Just sayin'....


Simon said...

Sorry, but I disagree. Plenty of people are running scenario analysis of a 're-run of Sep / Oct 2008' as an ass-covering exercise, but are reflecting on the regulatory and political response at that time when considering the likelihood and consequences of such a scenario.

CityUnslicker said...

Well I am hoping for a slow recovery and that looks ot me like what we have, it is not a great prediction. others see a huge fall, but corporate profits are holding, equities are fair value at p/E of less than 10; why the collapse.

The only muddle is what QE is going to do to everything in the medium term and the answer to that is most likely inflation.

Demetrius said...

And with a whole flock of Black Swans winging their way anything can happen.

Steven_L said...

Well I'm staying firm with 25%+ of my ISA invested in Vodaphone shares (which I rated 'outperform' at 131p when I bought them a few weeks ago :) ) and I shorted Dec gilt futures today, 29 beeps up so far.

James Higham said...

Said so.

Bill Quango MP said...

That 1.2% looks like a blip. Construction fueled to beat the 2.5% increase to VAT. Conservatories and new kitchens and the like. Expect the carpet shops to be having a bit of an up too. {FT disagrees with that and predict flat to decline on CarpetRight, but I think they are forgetting the VAT. £100 saving / £3,500. Gives the already decided an excuse to buy.}

Retail and hospitality for July was very poor with many lowering final 1/4 forecasts. August looks a little better, maybe a small plus on 2009, but its not much of a recovery.

Sackerson said...

Well, CU, what would I know? Still, here's something for you to consider:

Andrew B said...

These 'people in the know' make money out of turnover (volume).

From a quick look at yahoo finance , compared to August 09,

Volume looked to be ~ 900m in 09 and ~700m in '10.

These people have forecast 21 of the last 4 booms and busts.

Moving back to an earlier CU post on private placings, over the last 8 years (my pension fund), you would have been better off leaving your money on deposit rather than in the FT100.

What this says to me is that people with money (banks and large investment funds) have been (fairly or unfairly) able to price/sell risk better than the market as a whole.

But even these people only make money when money moves.

At the beginning of the year I said my best guess is any random number from 4800 to 5600. I will stick with that.

Perhaps it rained when they were on hols