Thursday 26th February 2009

The US Stock Market again leads Global equity markets lower ……

… but very little change in currency exchange rates as a result. It appears that equity traders are still concerned about the outlook for both US Financial Institutions and company dividends and despite protestations to the contrary, are still convinced that some degree of nationalisation will occur somewhere down the line. Overnight speculation that it will be AIG that will set the ball rolling via a radical restructuring by the US Government that will result in the once mighty global insurance giant losing its 90-years independence, led to renewed chat concerning Citibank. The Dollar really ought to come off on this sort of development but with the current lack of viable alternatives, is holding on to recent gains.

Sterling was weaker early on after comments from MPC member Blanchflower cemented his position as The Uber-Dove on the committee but recovered somewhat perversely on the release of the RBS results. To be the truthful, the results themselves didn’t play a big part, coming in as they did, marginally better than analysts’ predictions. The better outlook for Sterling came from details of the terms agreed between RBS and the Treasury for the former’s subscribing to the Government’s Asset Protection Plan, which were much more favourable to the Bank than had been anticipated. This led to a jump in Banking stocks and a small recovery in sterling. Of course every silver lining has a dark cloud inside it and what might be RBS’s gain looks like being the UK tax-payer’s loss. Interest will centre today on any statement from the Treasury as to how that might try and quantify the maximum exposure of UK plc to the Asset Protection Plan in order to alleviate mounting public concern over the ever-increasing risk that we are all being signed up for.

Fancy a good old fashioned scare story on the Euro? Try accessing the following link. If it wasn’t for the fact that the interview was with the distinguished ex-Head of The Bundesbank, Herr Otto Pohl, then it wouldn’t have attracted so much attention.

http://news.sky.com/skynews/Home/Business/Karl-Otto-Pohl-Former-Bundesbank-Head-Says-Euro-Under-Threat/Article/200902415229838?lid=ARTICLE_15229838_KarlOttoPohl,FormerBundesbankHead,SaysEuroUnderThreat&lpos=searchresults

No data from the UK today and little from the Eurozone. We have a couple of bits from the US but focus will be on speeches and testimonies plus the latest Government funding rounds. Finger nails will be chewed to the quick at the US Treasury ahead of their $20 billion 7-year note auction - the 1st of its type for many years. This morning sees a trio from the BoE at a question and answer (that’s the way its meant to work) session before the Treasury Select Committee - subject The Banking Crisis.

Back