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Blind optimism
Jan. 27th, 2010 12:23 pmA newspaper article this week citing a senior analyst at Crédit Suisse said that the recent decline in the markets often left buyers sitting on their hands, which they shouldn't do, because there was still a "20% upside" to European markets.
Which was all a bit weird, because at the beginning of December, Credit Suisse was talking of a 20% upside in the Asian markets after the recent decline:
Which was a bit sad, since the MSCI Index referred to is curerntly wandering along at 408.
The Guardian headlined Andrew Sentance (BoE Rate-Setter) as saying that there would be "no double-dip recession", which was what caught my eye in the first place.
In fact, Sentance is ratehr more circumspect, stating that "As long as the international economy continues to grow healthily, I believe we should avoid the feared 'double-dip' recession", which is, as he might say, not the same thing at all.
His comments on the housing recovery were also less bullish than The Guardian's interpretation, which said that he "pointed to signs of improving housing market activity". In fact, Sentance said in his speech to the British Property Federation that
All of which rather dents my original plan to put the boot into Sentance (and shows once again that you should never take at its word any newspaper's interpretation of what someone says, and should instead read what they actually say.
Sentance's actual comments make sense, although he is on the "sooner rather than later" side of when it will become necesary to raise interest rates.
As the recent move by the Skipton showed, "official" interest rates aren't as effective as the bank might like to think. Supply and demand still comes into play, and if institutions need to attract savers' money, they can't pay interest of 0%. Even I have given my ISA a miss this year. So, if they need to offer 4%-plus to savers, they need to charge 5%-plus to borrowers, and never mind what the headline official bank rate is. In addition (and this is a point not often mentioned by any of the parties) the disaster "caused" by the banks meant that for a decade the margins between saving rates and borrowing rates were wafer-thin. This was one more area where we, the consumer, gained tens of thousands over the decade, but then promptly spent it. Now that the gap between saving and borrowing is moving back to a more sustainable rate, the banks are accused of profiteering.
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Party is getting tougher AND tighter. As expected there's been an influx of the rakebackers from IPoker. More irritatingly there are at least two new regulars at $200 BI who are bummers to play against. Indeed, exploiting my new found lack of ego, I will actually leave the table if either of them is either immediately or nearly immediately behind me. I may well have to sit down and analyze their play carefully (all of which takes up time and thus reduces the hourly rate) so that I can glean the best lines to take against their styles. Annoying.
Another crawl-back last night. This month has been tough, but it does at least qualify as (I think) a "bad" month. Since it still looks as if it will be reasonably profitable (although not as profitable as I had hoped), I suppose this should be taken as a good sign. But it really looks as if auto-pilot winning is a thing of the past. Every session is now a struggle for money (with rare exceptions at the weekend), which means that every session is tiring.
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"When you see phases like in the last five days, private investors are more likely to head for cover. Instead of using the 5 percent fall, they are too fearful and remain on the sidelines," Credit Suisse (CSGN.VX) Global Chief Investment Officer Stefan Keitel told journalists in Zurich on Tuesday. ... While most asset classes had returned to levels seen before the collapse of U.S. investment bank Lehman Brothers in September 2008 -- seen as a pivotal moment in the acceleration of the credit crunch -- equities still had 20 percent upside, Keitel said as he presented the bank's global outlook for 2010.
Which was all a bit weird, because at the beginning of December, Credit Suisse was talking of a 20% upside in the Asian markets after the recent decline:
SINGAPORE : Investment house Credit Suisse is projecting an average of 20 per cent upside for Asian markets next year.
It is raising its target for the MSCI Asia ex Japan Index from 500 to 600 points, amid more earnings upgrades expected in 2010.
However, Credit Suisse said that the best part of the rally in some Asian markets may be over for now.
Investors looking for good returns could explore the South Korean and Indonesian markets in 2010.
In its latest report on equities, Credit Suisse said valuations of South Korean markets are currently the most attractive in the region.
(http://209.85.229.132/search?q=cache:mk0pEOWaBGsJ:www.channelnewsasia.com/stories/economicnews/view/1023166/1/.html+Suisse+%2220%25+upside%22&cd=1&hl=en&ct=clnk)
Which was a bit sad, since the MSCI Index referred to is curerntly wandering along at 408.
The Guardian headlined Andrew Sentance (BoE Rate-Setter) as saying that there would be "no double-dip recession", which was what caught my eye in the first place.
In fact, Sentance is ratehr more circumspect, stating that "As long as the international economy continues to grow healthily, I believe we should avoid the feared 'double-dip' recession", which is, as he might say, not the same thing at all.
His comments on the housing recovery were also less bullish than The Guardian's interpretation, which said that he "pointed to signs of improving housing market activity". In fact, Sentance said in his speech to the British Property Federation that
"In the short term, the problems in the banking system are likely to continue to act as a dampener on the growth of housing demand. However, if the pressures in the banking system ease over the next couple of years, there could be scope for a much stronger recovery in the housing market, especially if interest rates remain low and monetary conditions remain as relaxed as they are at present",which seems to me to be saying that the housing market is in the shit and that only a combination of not-very-likely circumstances are going to save it.
All of which rather dents my original plan to put the boot into Sentance (and shows once again that you should never take at its word any newspaper's interpretation of what someone says, and should instead read what they actually say.
Sentance's actual comments make sense, although he is on the "sooner rather than later" side of when it will become necesary to raise interest rates.
As the recent move by the Skipton showed, "official" interest rates aren't as effective as the bank might like to think. Supply and demand still comes into play, and if institutions need to attract savers' money, they can't pay interest of 0%. Even I have given my ISA a miss this year. So, if they need to offer 4%-plus to savers, they need to charge 5%-plus to borrowers, and never mind what the headline official bank rate is. In addition (and this is a point not often mentioned by any of the parties) the disaster "caused" by the banks meant that for a decade the margins between saving rates and borrowing rates were wafer-thin. This was one more area where we, the consumer, gained tens of thousands over the decade, but then promptly spent it. Now that the gap between saving and borrowing is moving back to a more sustainable rate, the banks are accused of profiteering.
++++++++++++
Party is getting tougher AND tighter. As expected there's been an influx of the rakebackers from IPoker. More irritatingly there are at least two new regulars at $200 BI who are bummers to play against. Indeed, exploiting my new found lack of ego, I will actually leave the table if either of them is either immediately or nearly immediately behind me. I may well have to sit down and analyze their play carefully (all of which takes up time and thus reduces the hourly rate) so that I can glean the best lines to take against their styles. Annoying.
Another crawl-back last night. This month has been tough, but it does at least qualify as (I think) a "bad" month. Since it still looks as if it will be reasonably profitable (although not as profitable as I had hoped), I suppose this should be taken as a good sign. But it really looks as if auto-pilot winning is a thing of the past. Every session is now a struggle for money (with rare exceptions at the weekend), which means that every session is tiring.
_______________
