Weekend Update
Special Update from World First.
There is nothing worse than speaking to a depressive on Friday afternoon. Like a friend who texts on a Friday night “Only 2 days ‘til Monday!” some things we are happy to pretend to not have seen. The 500lb elephant in the room keeps trumpeting away, however, so let’s address him. We have started to see more and more analysts and commentators pointing towards a fall off in fortunes over the Christmas period; potholes and sleeping policeman in the road to recovery if you will.
These analysts expect to see such things in the coming months:
· Equity markets to begin to fall off heavily
· Dollar strength as risk averse investors jump back into US treasury bonds and bills
· GBP weakness as banks come back under pressure from balance sheet issues.
These are not the thoughts of some crackpot holed up in their bedroom and the justifications are listed below:
· US mortgage defaults have risen to a new record high. Now over 14% of all mortgages in the US are either already in foreclosure or at least one monthly payment behind.
· The number of positions betting on US dollar strength are at the highest level since this time last year.
. US consumer confidence and spending levels are still depressed with the only industries benefiting are artificially strong due to government stimulus (Cash for Clunkers, for example)
We are still very happy with a strong sterling outlook over the balance of next year but the lessons of last winter may need to be revisited. Personally I think you could do a lot worse than hedge around these levels.
For more information, see www.worldfirst.com.