Monday 21 January 2013

Snow Joke for a triple dip

I knew it would not take long. The FTSE rally has been very strong this year, as it often is in January as people get optimistic that the coming year will be better than the last. Well here we are 2 weeks in and it is all unwinding quite quickly.

The heavy snowfall in the UK will depress economic activity in Q1 enough that the likely slight fall in Q4 will be repeated and so we will have a triple dip. Having said that, it does not matter too much as the -0.1 readings are hardly like a repeat of the 7% falls of 2008!

But the vibe is not good and no doubt he markets will start to reflect this again in the next month or two.Whilst long-term the switch from Bonds to Equities will underpin a good boost for shares overall, the loo-out for the immidieate future is back to 6000 or less on the FTSE.

The Prime Minister dragging up Europe as a topic is not really helping matters either - that is an issue to be dealt with at key moments when th epublic is focused, not to raise all the time to appease your own headbangers. Oh well, long ago has Cameron shot his bolt. 


andrew said...

The thing is that the FTSE yields ~3.6%.

If the index ends up at the end of the year at ~6250, you have had about an 8.8% return.

Unless nominal (?) GDP goes up by about the same amount, financial gravity will be re-asserted at some point.

We are at 6160 right now and on a smooth progression (which does not happen) that is all the gains to ~July.

Ignoring retail, I feel an air of quiet optimism in the air - for the first time in since ~2005 we might be recruiting.

On retail, I think some German said "You cannot survive by cutting each other's hair" and thanks to the Internet this looks to be coming true for shops
- but there is still a good demand for Barbers.

DtP said...

COT but may be of interest in their assessment of energy restraint - Chapter 5.

Electro-Kevin said...

'Headbangers' Oh dear. Not a very nice way to treat people with a legitimate point of view in a democracy.

Unless, of course, you meant them banging their heads against a brick wall.

A Labour win at the next general election it is then.

Blue Eyes said...

It's funny, when the same headbangers object to gay marriage they argue that there are more pressing issues such as the economy. Suddenly an as-yet non-existent treaty negotiation is more important than doing things to fix the economy.

A huge number of Tory MPs seem to want to return to opposition as soon as possible. Maybe they are finding real life as difficult as the Lib Dems.

asquith said...

I went to work on foot (4 miles) only to find the place locked. I had to ring my manager, whereupon I was told that they weren't planning to open and were going through people telling them! Thankfully I like walking, so I didn't actually mind, and my day is better than it would have been.

It's quite interesting to speculate, in workplaces which are open but where a significant number of people don't turn in, whether it's (on aggregate, of course individuals will be exceptions) those who get in are the more productive.

I find it likely that we will be plunged into recession thanks to snow and struggle to get out in spring. The thing is, I consider the "prosperity" which existed before 2008 to be fake, so I've resigned myself to the idea that growth on that scale is unlikely ever to resume. I also think we've reached the limits of the state, so in broad-brush terms I won't be slagging off the coalition, as I think they have done several things (most recently this new pension) to make the state smarter, not bigger...

... that said, I also think high unemployment is here to stay, and for this reason I don't hate people on benefits, even though I'm actually close to a textbook illustration of the "striver" life. (Except that I don't have a family but nobody's perfect). Osborne can rest assured he hasn't won me round and he just strikes me as petty and failing to acknowledge that blameless people might be out of work.

Lastly I do think it's time for an in/out referendum and the date should be set far enough into the future for an informed debate and some good manly arguments on the issue. One way or the other, it would get rid of the issue. Things have changed out of all recognition since 1975, haven't they?

asquith said...

I wouldn't hazard a guess on what the outcome of a referendum would be. Kippers assume they'll win but it wouldn't surprise me if they ended up losing. They'd look like tits then, wouldn't they!?

CityUnslicker said...

Asquith, they are almost bound to lost any refendum where one answer is 'no change.'

I like your those who make the effort approach too. I live on a hill in Kent, snow is always plentiful, but I get to work so people never even ask if I am in. I note many colleagues who also live in Kent, on hills, yet the transport system always defeats - as you say, it is somewhat instructive.

James Higham said...

Poor snow - it always gets such a bad press.

David C said...

I always take these figures with a pinch of salt (pardon the weather related pun).

If a week of snow throws us back into recession, then we were recession bound anyway if you ask me.

If its not the snow the retailers are blaming the weather of some sort (Too hot, so clothes sales are down. Too wet, so beachwear sales are down etc etc).

Bill Quango MP said...

David c: Not quite.
A lost days trading can be caught up. But two days can't, unless it suddenly becomes mega busy,which it won't, in January.
Internet is affected too. People don't order as much if they think it might not arrive.

So one day, maybe two, total retail sales will be lost, which might just tip a pretty dismal GDP down.

As you say though, if a days snow does us in, we aren't in great shape anyway.

Blue Eyes said...

Agree with Asquith et al. it's always the same people brought down by transport issues or the "something going around" or whatever.

For example one of my colleagues is hit by a "delayed" train every single effing day. Heaven forbid he gets an earlier one and arrives on time...

It's an attitude thing. I hope there is some economic karma along the line somewhere.

Timbo614 said...

@DtP - thanks for the link - Not cheerful is it :(

Anonymous said...

Royal Mail business services seems to have taken half the week off, but posties themselves are working fine.

Similarly, nobody at home at the council since Thursday.

Online sales for us are always good during bad weather that keeps people inside, but I feel like I have little to work on when half my business contacts can't be bothered to get into work.

Anonymous said...

"Royal Mail business services" = their accounts service that sits in an office all day. I don't mean their business delivery services.