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.

Up 9.5% over 12 months, the Liv-ex 100 Fine Wine Index (below) has clawed back some of last year’s losses, when the industry’s main benchmark index fell 14.6% in 2008. So should you be piling into the fine wine market?

Last year, China was viewed as the driver behind rising commodities prices.

Now the blame for spiraling food and oil prices is increasingly being laid at the door of Fed Chairman Ben Bernanke for cutting the fed funds rate to 2% and unleashing yet another wave of inflationary surplus liquidity.

The fallout is now being seen as India, China, the Philippines and Indonesia hike their own interest rates to rein in rising prices.

Consumer prices jumped 7.7% last month, down from 8.5% in April, but inflation there remains top of the list of economic concerns.

As the credit crisis, a weakened dollar and rising US inflation continue to favor precious metals, more and more savvy investors are considing investing in a silver ETF as a way to play the situation.

However, Ben Bernanke’s newfound concern about the strength of the US dollar this week has hit gold and silver prices, and according to Kitco Casey’s Daily Resource, prices could tread water in the coming months.

Money Week, however, remains bullish about precious metals, despite the recent slide in prices.

Sweden and Norway’s banking systems, previously untouched by the world global credit crisis, look set to be the latest victims of the credit crunch, reports Britain’s Financial Times.

Sweden’s Riksbank said the global credit crisis increased the sensitivity of banks to other shocks, adding that it had warned that growth in the Baltic states could slow down more suddenly than expected.

Dominic Frisby in Money Week reckons the spread of the global credit crisis will benefit gold and precious metals.

Japan and the US said they would use the World Trade Organization to overturn European Union tariffs on consumer technology items such as computer screens, multifunctional printers and TV set-top boxes capable of accessing the Internet.

“The EU should be working with the United States to promote new technologies, not finding protectionist gimmicks to apply new duties to these products,” US Trade Representative Susan Schwab said to Thomson Reuters.

British house prices fell in May by the most since at least 1991, according to Bloomberg:

The price of an average home dropped 2.5 percent from April to 173,583 pounds ($344,000), Britain’s fourth-biggest mortgage lender said today in a statement. That’s the largest decline since the index started in January 1991. From a year earlier, prices fell 4.4 percent.

The core US inflation rate or Producer Price Index (PPI) — a measure of the prices of goods excluding food and energy  — rose 0.4% in April, double the increase forecast by economists.

This puts the core US inflation rate up 3% in the past year, the biggest year-over-year rise since late 1991.

The PPI figures are unlikely to affect the markets which, according to a report by MarketWatch, “don’t seem to trust the government’s inflation figures that show falling energy prices in a world of record crude oil prices.”