31st January 2008
Interest rate decisions of an expected rate cut from the US Federal Reserve have made the Yen weaker yesterday.Investors are reacting to rates.
Carry trades are still as risky as ever. The US dollar remains pretty much unchanged against the Euro.
29th January 2008
Although not quite a recession the forecast for global growth in the economy is lower from the International Monetary Fund. Thoughts are that a global shutdown is likely,well according to the chief economist at IMF.
For the major economies which are already established growth will take place but in a weaker fashion. We need to be on the lookout for market turmoil.
28th January 2008
The US sub prime debt has certainly not had its day yet with the Belgian Bank Fortis warning that it could have losses of up to 1bn euros.($1.47 billion dollars.)
This will cause its profit report to fall from what was expected to be 4bn euros down to 3bn.
Following the statement about debt share prices for Fortis fell in excess of 10% last Friday.
25th January 2008
According to a group of economists from the World Economic Forum the US is in for a long period of recession. Nouriel Roubini a New York economist thought that the mortgage crisis in the US would soon start to spread to the consumer and indeed company loans.
Noubini had already predicted problems for tge US housing market over a year ago and indeed the effects this would have on the credit markets.
The world economic forum also predicted that China would be effected by the crisis and indeed India too.
23rd January 2008
The US Federal Reserve seemed to have opened a can of worms as European Stocks are now falling, their efforts to avoid a recession may well as said before be counter-productive.
The United Kingdom FTSE 100 has seen an index fall of 4.5% after worries that the cental banks may not follow suit with the US reduction in interest rates.
It does indeed look doubtful that the Bank of England will speed up any plans to cut interest rates because of the US decision . We need to be prepared for the index to fluctuate in the next few weeks. Each day a recession both in the UK and US is looking more and more likely.
Business earnings are likely to be effected and stock prices have already fallen across the major financial markets already. Larger corporations such as oil companies and those involved in technology have been worst effected.
Expect plenty of profit warnings over the next few months too. Investors are anxious at recent market events even in areas like Asia.
23rd January 2008
The US Federal Reserve’s shocking interest rate cut has certainly had an impact throughout the business community and on the global economy.
The Federal Reserve’s plan to lessen fears of a recession may have backfired.
Asia saw market indices gain points as investors where covering position shortfalls.Ben Bernanke’s decision to cut rates are seen by many as a sign that the economy is in a worse state than first thought.
22nd January 2008
The big wall street bank Merrill Lynch announced losses of $7.8bn for 2007. Sub-prime mortgages were once again responsible for a huge loss of investments.
Other banks such as Citigroup and JP Morgan have already announced losses due to the mortgage crisis and loan sector.
JP Morgan had earnings fall a dramatic 34% whilst Citigroup have already reported a $9.83bn loss.
22nd January 2008
The falling of the share index in Asia and Europe indicates the fear of a recession in the US is still with us.
Its is likely that the index will fall even further in the next few weeks.
The US have proposed a strategy to stimulate the market place and its proposal is approx $145bn in tax cutes which they hope would encourage spending.
17th January 2008
Federal Reserve chairman Ben Bernanke will support spending measures or tax cuts in order to give a boost to the current crisis in the economy.
Testifying a the house budget committee will see how true Bernanke is to his word.
17th January 2008
The Citigroup Bank are of course still in the picture with investments from other sources still in question. Citigroup are looking to cash-rich investors and hoping to confront the massive mortgage losses with potential offers from foreign governments.
It’s been a rocky ride for the largest banking group in the US.Charles Prince resigned earlier last year then Vikram Pandit was appointed the new Chief Executive. Now of course Citigroup report the financial loss in the last quarter of nearly ten billion dollars.
There are still thoughts from the Bank that the housing market and the wider scope of the economy has still not hit its lowest. The Citigroup plight has not helped the general anxiety about the possibility of a recession with the current mortgage crisis.
Stocks have been sold off and already taken a fall. We await the Merrill Lynch financial report which will of course add more stress to the ever growing anxiety in the economy.
If large financial institutions are restricted on loans this in turn will lead to cut backs in lending when the market needs credit the most.