Oh those Germans and Their Wacky Sense of Gallows Humour..
Germans struggle to make us laugh and are, according to a poll conducted in summer, the least funny nation in the world. Americans can make us laugh like drains coming top of a poll to find the funniest of 15 nationalities. The verdict on the UK, lagging in seventh place, was “you’re not as funny as you think”, certainly not as amusing as; the Spanish, Italians, Brazilians, French or Mexicans. The poll by social network site Badoo concluded that German comedians were the least amusing because they could not laugh at themselves. Their humour was often lost in translation. German stand-up Henning Wehn said people did not understand his country’s love of slapstick, adding: “An old codger falling over, or a cake in the face is always funny, even in a famine.”
Obviously Ms. Merkel and the German finance minister didn’t get the Monday memo from Christine Lagarde as in a break from ranks they leaked a few home truths which bombed the markets in the USA and Europe. Who said the Germans had no sense of humour? The most worrying aspect of the current dilemma and phenomena should be the ‘proof absolute’ that this current bear market rally is held up by nothing other than hot air and promise, one misplaced breath, whisper of contradiction, or indication that someone in authority is not reading the script and the auto correction is immediate.
U.S. Stocks suffered their worst loss in two weeks on Monday after comments from Germany’s finance minister caused investors to fear Europe’s solution to its debt crisis may not come fast enough. The S&P index had risen for two straight weeks for the first time since July, built on optimism that European leaders had a commitment to tackle a crisis that threatened financial stability and global growth. German Finance Minister Wolfgang Schaeuble, speaking of an October 23 European Union summit on the debt crisis, tempered enthusiasm, saying, “we won’t have a definitive solution this weekend”. Wolfgang Schaeuble told the conference in Duesseldorf that European governments would adopt a five-point plan at the Brussels meeting to address the turmoil that has clouded the outlook for the global economy.
Credit Suisse and Deutsche bank have also neglected to drink the required amount of Kool Aid from the corporate water coolers, CS stated last week that according to their research, as many as sixty six European banks will fail the 3rd ‘stress test’, and as a consequence will need hundreds of billions of fresh capital. Deutsche Bank is now warning that France may be put on downgrade review by the year end. The CS appraisal was totally ignored last week, similarly the ‘markets’ appear to have ignored the suggestion by the G20 and singularly the E.U. ministers that a 50% haircut may be required by holders of Greek debt as part of the overall rescue plan. In fact there were suggestions over the past weekend that it could be 60% and yet the markets took it in their stride, perhaps there’ll be a reaction if 100% write down is mentioned, in other words a total Greece default and not the orderly “get in the queue and no pushing or you go to the back of the line” to get your money back touted by the elite politicians and bankers.
Deutsche Bank; “We highlight in this note that the French corporate sector is already financially stretched, with poor profitability and large borrowing requirements. We consider that the deterioration in economic conditions is now creating a distinct risk that France could be put under “negative watch” by the rating agencies before the end of this year. We think that France has the wherewithal to react to such an outcome and could avoid an outright downgrade by taking corrective measures quickly, but this naturally would be a very sensitive political decision a few months before a major election.”
U.S. bank earnings also contributed to the market selling pressure in the NY. sessions. Wells Fargo & Co shares fell 8.4 percent to $24.42 after the U.S. lender financial results fell short of expectations. The KBW Bank index lost 3.9 percent. Shares of Citigroup fell 1.7 percent to $27.93. The bank reported higher third-quarter earnings as it set aside less money to cover bad loans.
Currency News
The euro fell against the dollar, following last week’s biggest advance in more than two years, as Germany signalled that Europe will take longer to contain the sovereign debt crisis. The dollar rose from a one-month low against the currencies of major U.S. trading partners. The euro dropped 1 percent to $1.3738 at 5 p.m. New York time after rising to $1.3914, the highest level since Sept 15th having advanced 3.8 percent last week, the most since March 2009. The Euro fell 1.5 percent to 105.55 yen after touching 107.68, the highest level since Sept 9th. The dollar slid 0.5 percent to 76.83 yen. The yen rallied from its lowest level in more than a month versus the euro and appreciated versus the dollar. Canada’s dollar fell 1.4 percent to C$1.0234 per US dollar. Oil, Canada’s biggest export, dropped. Crude decreased 1 percent to $86.29 a barrel. Australia’s currency is close to its 200-day moving average versus the U.S. dollar, a point of resistance, according to Citigroup Inc. The Aussie has risen 5.1 percent this month, having fallen 9.8 percent in September. It increased on Monday to as high as $1.0372, before dropping 1.8 percent to $1.0157.
Sterling arrested a three day gain versus the dollar after Ernst & Young’s ITEM Club cut its U.K. growth forecast and said the Bank of England should lower its main interest rate. The pound weakened 0.3 percent to $1.5778 at 4:30 p.m. London time, paring last week’s 1.7 percent advance. Sterling depreciated 0.9 percent to 121.13 yen, and strengthened 0.6 percent to 87.26 pence per euro.
Markets
The SPX closed down 1.94%, the FTSE closed down 0.54%, the CAC closed down 1.61% and the DAX down 1.81%. The ASE, (Athens stock exchange) lost another 2.97%, year on year the loss is now 51.44%. The ASE was at circa 5,300 in Jan 2008, today it languishes at 752, a decrease of circa 85.8%. The equity index future for the FTSE is currently down 0.48% the CAC and DAX down approx. 1.60%. The SPX equity future is currently down 0.37%. Other than a major positive resolution announcement to Europe’s ailments it’s difficult to see how a change of sentiment would manifest in any overnight or early morning trading.
Economic Indicators
09:30 UK – CPI September
09:30 UK – RPI September
10:00 Eurozone – ZEW Economic Sentiment October
Inflation numbers for the UK economy dominate the narrative landscape in mid morning. Despite Bloomberg’s ‘safe’ predictions the numbers do have the opportunity to shock and therefore affect sentiment. For CPI figures a Bloomberg survey of analysts showed a figure of 0.4% from 0.6% previously month on month. The ‘core’ year on year figure predicted was 3.2% from 3.1% previously. The year on year figure predicted was 4.9% from 4.5% previously. For RPI figures a Bloomberg survey of analysts predicted a figure of 237.6 from a previous figure of 236.1. The month on month change predicted was 0.5% from 0.6% previously. The year on year figure predicted was 5.4% from 5.2% previously. Excluding mortgage repayments this was expected to be 5.5% from 5.3% previously.
Source: FX Central Clearing Ltd. (FXCC BLOG)
http://blog.fxcc.com/october-17-pm/
Market Commentary by FXCC -How eBay Sniping Can Reveal the True Health of the UK’s Retail Sector
How eBay Sniping Can Reveal the True Health of the UK’s Retail Sector
Amongst the many ‘therapies’ I developed in order to keep my trigger happy trading finger less active back in the early days of my FX trading was eBay sniping for bargains. I’d have a hit list of necessary items and once hunted down I’d set alarms and countdown the days and minutes and snipe for the item right at the death, placing the bid with 2-3 seconds to go having already decided what the maximum price I was prepared to pay. As a family the savings for your growing teenagers are not to be sniffed at and as the kids got older they gradually took it upon themselves to bargain hunt and now fully indoctrinated in Dad’s obsession I feel justifiably proud that they refuse to pay ‘top dollar’ for anything. My Daughter is superbly efficient both as retailer and buyer, a great habit that will help curb her expenses through her university days.
I still ‘snipe’ on occasion and still take it personally if I don’t win. Whilst recently shopping for a pair of jeans the price on eBay looked slightly suspicious so I naturally did some..ahem…fundamental research; comparing the item with the bonafide article from reputable bricks and mortar shops, oh yes, I went that deep. It was a pair of Tommy Hilfiger Madison jeans retailing for £80 in Debenhams or John Lewis in the UK. I compared the jeans on their websites and visited the store before bidding £14.99 plus £4 P&P. Bid won with two seconds remaining, a 75% saving on retail. That’s one Xmas present bought early..
Now this article is not extolling the virtues of timing, or fundamental research vis a vis trading, or suggesting that every aspect of your being should be thorough in whatever you do, no, my attention was grabbed this morning with regards to a report that suggested UK based shoppers are becoming highly selective as opposed to impulsive. This also lead me to ponder on the suspicions that the maxim of turnover being vanity and profit being reality still looms large on the high street and any market analysts looking towards the high street for signs of a recovery to the recovery that never was may be searching for some time. Britain is becoming a nation of online bargain-hunters if new figures charting the continued spectacular growth in retail search volumes are anything to go by. We’re no longer a nation of window shoppers, we’re a nation of bargain hunting new media searchers.
Total retail search volumes grew at their fastest rate this year increasing by 35% in the third quarter compared with the same quarter a year earlier, according to the BRC/Google Online Retail Monitor. The increase was driven by a rise in mobile search volumes of 168% year-on-year. The growth of retail search volumes for multi-channel retailers (usually those using stores and the internet) reached 26% in the third quarter of 2011 compared with 71% for pure online retailers. The number of overseas consumers searching for UK retailers grew by 34% in the third quarter of 2011 compared with the same quarter a year earlier. The number of UK consumers searching for overseas retailers grew by 78% in the second quarter of 2011 compared with the same period a year earlier.
Mobile accounted for 10% of retail searches.
Stephen Robertson, British Retail Consortium Director General said:
“Mounting pressures on household budgets may be generating more online retail searches as people work harder to compare prices and track down value. While searches grew 35 per cent, their fastest this year, the BRC’s Retail Sales Monitor show growth in online spending has actually slowed to 10 per cent suggesting extra searches are a symptom of bargain hunting. Even so, online retailing is still expanding quickly compared with selling through stores and searching from mobile devices is showing the most dramatic increase. Retailers are engaging with, and encouraging, this shift in shopping behaviour by providing more and easier ways to search and shop via smartphones and tablets.”
Peter Fitzgerald, Retail Director, Google, said:
“Retail searches on desktop rose by 35% y/y in q3, with mobile growing by 168% y/y. Home and Garden saw strong growth in July, while it was back-to-school searches which fuelled the August increase, with Consumer Electronics in particular seeing phenomenal growth in ‘tablet’ searches. September also saw an uplift, as Christmas gift related searches began to appear. This is unsurprising given that many consumers are Christmas shopping earlier this year, in order to spread the cost and avoid disruption due to bad weather. International searches for UK retailers also saw a massive uplift last quarter, as countries already originating large volumes of searches such as Russia, Pakistan and Mexico saw increases of between 90% and 300% y/y.”
But whilst searches for products has grown exponentially sales and moreover profits have lagged behind as despite the increases in turnover the margins are being crushed. Retailers, whether bricks and mortar, online (or both), have to compete like never before to earn that sale. ASOS the online fashion retailer has reportedly hit the buffers, their latest set of figures begin to suggest that the fizz has finally gone out of fashion retailing. ASOS said stellar sales growth in its home market had ground to a halt, taking its chief executive by surprise and putting pressure on him to speed up overseas growth.
CEO Nick Robertson told Reuters he had underestimated the impact of the economic slowdown on his business, which targets internet-savvy 16 to 34-year-old women looking to emulate the designer looks of celebrities such as Kate Moss, Sienna Miller and Alexa Chung. As data on Wednesday showed Britain’s jobless total hitting a 17-year high, with youth unemployment its highest since records began in 1992. Shares in ASOS, had already lost a third over the past three months, lost another 3 percent on Friday. ASOS on Friday said UK retail sales growth slumped to 1 percent in the second quarter of its financial year from 15 percent in the previous three months to June.
“Even to support this kind of level of growth we are pulling levers that we didn’t think would have to be pulled,” the CEO Nick Robertson said in a telephone interview, pointing to increased promotional and marketing activity and slashing margin and ASOS were not the only retailer struggling to justify their business model recently with Supergroup, owner of the Superdry brand, appearing to have lost some of its lustre.
Supergroup could be a victim of it’s own relatively short success, attempting to sell on all platforms may have indirectly cannibalised their core business. There was a critical flaw in their strategy, they were (and still are) one of the biggest selling bricks and mortar migratory e tailers on the UK’s eBay and as such, given the propensity for folk to shop and compare on line, it was only a matter of time before they were ‘found out’. Selling the same t shirts in store for £19 and £9.99 online with free delivery was never a long term sustainable plan.
Other than the two isolated examples all is not well within the UK and European shopping addiction, the “I shop therefore I am” confirmation of ‘self’ appears to be fading amongst a populace that is shopping to survive as opposed to thrive. Whilst the Apple Fan Boys will still camp out overnight to buy the latest over-priced, over-hyped gadget and according to a recent retail report will go into further debt in order to upgrade, the fizz does appear to have finally evaporated from the retail economy.
The next retail sales figures for the UK could prove to be fascinating, in the meantime I’ve got a pair of Adidas retro trainers to buy for 65% off retail..only a few hours to go..
Source: FX Central Clearing Ltd. (FXCC BLOG)
http://blog.fxcc.com/how-ebay-sniping-can-reveal-the-true-health-of-the-uks-retail-sector/
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