David Stevenson, Associate Editor at MoneyWeek, UK, offers his analysis of the current state of British Banks and the implications for the global economy for the next few years.
John Stepek (Money Week UK):
Deal making is back!
That was the general reaction from the press when US food giant Kraft launched its first bid for British confectioner Cadbury less than two months ago. Pundits spewed out potential target prices like bingo numbers – £8, no £10, no £12! – and analysts scribbled out scenarios involving white knights and rival bidders from across the globe.
There were no doubt some serious sighs of relief at the Bank of England yesterday. Finally, some good news on the inflation front – UK producer prices dropped by the most in at least 22 years in August. That’s bound to encourage hopes of interest cuts more quickly than expected.
The start of September and it’s throwing it down. Autumn’s on the way already. And come winter, for many people, it could be feeling even more like Bleak House.
Now here’s a big shock. It turns out that British taxpayers could end up shelling out even more for Northern Rock than we were all told was on the cards.
A seemingly innocuous news story in the Financial Times could spell disaster for some European banks, says David Stevenson in Money Week. The ECB is looking to clamp down on struggling European banks that have become dependent on the cheap finance made available by Brussels. David says the alarm bells will be ringing loudest in Spain, where the banking sector is falling foul of a property market slump.
The Misery Index is set to make a comeback in Britain. It’s a fair bet that only those of you who remember the 1990s recession will have much idea of what I’m talking about, because that was the last time anyone spent any time discussing it. So what is it?
Investors around the world have been waiting and praying for months for a clear sign that the money markets are finally starting to defrost –so far, to no avail. But within the last month, there’s been a big rally in US banking stocks. That’s got investors excited.
An important date in the City’s social calendar went almost unmarked this week. Tuesday, the Twelfth of August, marked the official start of the grouse shooting season. It’s easy to see why amid the war in Georgia, and fear of recession in Europe, people might have had other things on their minds.
There’s been plenty of gloomy news on the UK economy in the past month, from grim data on house prices (down 8.8% in the past year, says Halifax) to miserable surveys in manufacturing and the service sector. But how is all this grim data affecting real companies?
