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Daily UK and Europe Highlights - 17 August 2009
Morning ladies and gents. Most of the so-called "high risk plays" are
currently being Roger'ed in up all orifices right
now, good and proper. The data cupboard doesn't have many items but it
does have some significant ones such as the Rightmove House Price Index
month on month figures which cause a lot of stir in the markets.
Today's Rightmove HPI figures showed a -2.2% decline
in the month-on-month figures! To borrow a phrase from our American
and Canadian cousins... AND ITS GONE! This clearly shows that sellers
could not find the volume to back up their asking prices, which have
been in constant rise since February. Though there may be demand,
mortgage lending is clearly an issue that is stifling transactions.
Meanwhile over the weekend, John Smith was busy swinging with other
John Smiths about France and Germany being out of recession and the UK
being next in line.
According to Rightmove, "Future price and transaction growth is now
controlled by the bottleneck of mortgage availability.". HSBC has
reported that its average loan-to-value (LTV) on new mortgages is 50%.
With average asking prices being approximately around 225,0000 GBP
(ex-London) that roughly translates to at least a 50,000 GBP deposit.
The biggest regional fall of -8.3% this month came from the East Anglia
region which has registered consistent and huge price increases in the
last few prints. The East Midlands region is still has the biggest
annual price decline of -9.0%. I am thankful to services like
Rightmove UK for providing the House Price Index report.
GBP/JPY is down by more than 200 points since the printing of this
report and given the gravity of this report coupled with the shit
hitting the fan in Asian markets today, I would not be surprised to see
this pair down by 3 handles or more. Pat those people in the back who
took a short position by reading the charts correctly, when the pair
reached its recent 163 Yen high. The Japanese GDP report also has part
to play.
Quick Asian update - most of the benchmark Asian indices are down by
-3.0% or more. Shanghai Composite is down -5.79%. On that note,
S&P 500 futures are also down by -19.50. Reports that Japan's GDP annualised growth in Q2 of 3.7%
(0.9% q/q vs. est 1.0% q/q) is giving some support to the Yen, however
it was less than average estimates of 3.9%, most of it driven by
exports. China's Foreign Direct Investment (FDI) numbers didn't lend much support
as they declined by -20.3% on a YTD basis, which is higher than the
previous figure of -17.9%. India is going to announce its 5-year trade
policy on 27th August, so watch out for that. FTSE 100 down by 2% as well. In other ludicrous piece of news, Moody's raised Pakistan's outlook from Negative to Stable just when border tensions are rising with neighbouring India.
It seems Skynet and HAL-9000 have now officially landed in Queens
country. According to the Telegraph, the London Stock Exchange (LSE)
has suffered the worst July on record in terms of equity trading, which has got them worried that the big boys in Canary Wharf are switching to automated trading systems. Why, you don't say Sherlock ! A tramp from Hackney could have told you that.
- Must read: House prices suffer biggest fall this year, -2.2% decline (The Independent, Rightmove HPI)
- Must read: Small Business survey buried by UK Government, say Tories (Telegraph)
- Must read: LSE trades plummet amid fears of switch to 'dark pools' (Telegraph)
- We need our big bonuses or London will suffer, say bankers (The Independent)
- Aviva's £250m fund to buy in depressed property market (The Independent)
- Must read: Experts warned dispersal of Tamiflu would do more harm than good (Guardian)
- Barclays lures US traders with $50m pay (Guardian)
- US government faces pay challenge with one of Citigroup's biggest earners (Guardian)
- Three more British soldiers killed in Afghanistan (Telegraph)
- A-levels becoming 'Mickey Mouse' exams - anyone who did these in the past 10 years knows this (Telegraph)
- Must read: Iceland: what ugly secrets are waiting to be exposed in the meltdown? (Telegraph)
- Smartphones to take '70pc of Europe's mobile market' by 2012 (Telegraph)
- Housing affordability at the highest level since 1996 - not if Mortgages are taken into account! (Telegraph)
- FSA inquiry into RBS purchase of ABN Amro - about time (Telegraph)
-
King Crushing Pound as U.K. ‘Can’t Afford’ Strength (Bloomberg)
- Swedbank Will Raise $2.1 Billion in Second Share Sale in Less Than a Year (Bloomberg)
- China Purchasing U.S. Treasuries Proves That Dollar's Demise Exaggerated (Bloomberg)
- Swift justice: Nigerian Exchange Freezes Share Prices of Five Banks After CEOs Dismissed (Bloomberg)
- Eastern European Economies Show Green Shoots as Germany, France Recover (Bloomberg)
- Bulgarian Economy Contracted 4.8% in the Second Quarter on Global Crisis (Bloomberg)
- Czech July Industrial Producer Prices Drop Record 4.9% From Year Earlier (Bloomberg)
- Czech Finance Minister Says Tax Changes Are Needed to Close Budget Deficit (Bloomberg)
- Ukrainian Retail Sales Declined 15.9% in Year to End-July on Slack Demand (Bloomberg)
- Pension Funds Paring Stocks Globally as Calstrs Ignores Economic Rebound (Bloomberg)
- Must read: Yen Gains to Two-Week High Versus Euro as Asian Stocks Extend Global Drop (Bloomberg)
- Corporate Bond Risk Increases in Europe, Credit-Default Swap Prices Show (Bloomberg)
- German New Car Registrations Increased 23% to End-May on Scrapping Premium (Bloomberg)
- Catastrophe Bonds Advance to 2009 Peak on Milder Atlantic Hurricane Season (Bloomberg)
- Fiat Signs Deal With Guangzhou Automobile in Fresh Raid on China, WSJ Says (Bloomberg)
- Italy Risks 50,000 Shop Closures This Year Amid Recession, Repubblica Says (Bloomberg)
- Michael Page Says Profit Declined 52% as Companies Continue to Cut Jobs - recruitment company (Bloomberg)
- Pork Plummeting 30% Signaled in Futures as Swine Flu Cuts Chinese Imports (Bloomberg)
- AIB leak came at a good time for both Government and bank (The Independent IE)
- Offshore trusts probe bigger than Ansbacher, say Revenue experts (The Independent IE)
- Must read: Bad loans from Baltic region and Ukraine escalate (Financial Times)
- The number of "distressed" commercial properties coming to the market rose in every region in the world in Q2 (RAN Squawk)
- RBS (RBS LN) set to sell asset management unit
- ECB says EUR 207mln borrowed using the overnight loan facility, EUR 110.812bln deposited
- ECB says Eurosystem covered bond purchase program totals EUR 7.033bln
- UK two-year Gilt yield hits new all-time low at 0.855%
- NHC says hurricane Bill forms in Atlantic, season's first (see link above for Catastrophe bonds)
- Banks can write off up to 24% of their credit portfolios in near term according to Fitch
- Reserve Bank of India (RBI) to conduct Rs.60,000 Crore Special Auction Monday
Economic Calendar:
- Swiss Retail Sales (Real) (Jun) Y/Y +0.9% vs. Prev. -1.4%
- Euro-zone Trade Balance (Jun) M/M 4.6Bln vs. Prev. 1.9Bln (Rev. to 2.1Bln)
- Czech PPI inflation edges down to -4.9% y/y in July
- Czech Foreign tourist arrivals fall by 8.7% y/y in Q1
- Czech Export Prices increased 1.5% y/y in July
- Finland Producer Prices dropped 9.6% y/y in July vs. 8.4% y/y in June
- Bulgaria Q2 GDP drops 4.9% y/y
- Russian Bulletin of Banking Statistics - July 2009
Interesting articles from other Blogs, this morning:
- Edmund Conway: The rise and rise of zombie households (Telegraph)
- Ambrose Evans-Pritchard: There's no quick fix to the global economy's excess capacity (Telegraph)
- Recession watch: which nations' GDP is still going down? (Guardian Data Blog)
- Footsie Risers - look at the graphic, it's comical to the max (FT Alphaville)
- UK banks ‘may need to shut third of branches’ (FT Alphaville)
- A Crude Correction - Izabella Kaminska on oil price changes (FT Alphaville)
- Lots of other brilliant articles at FT Alphaville today, check them out here. Busy monday morning!
- From Original Sin To The Eternal Triangle - Lessons From Central Europe (Fistful of Euros)
Make sure you to watch the RAN Squawk 'EU Morning Briefing' video and visit the RAN Squawk News page.
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- advertisements -
'Shares in Swedbank fell on Monday after the bank announced a fully underwritten SKr15bn ($2bn) rights issue to shore up a balance sheet hit hard by economic turmoil in eastern Europe.....
.....Swedbank is the biggest lender in the Baltic region after expanding aggressively in Latvia, Lithuania and Estonia following their entry into the European Union in 2004.'
nice to hear the crisis in eastern europe has bottomed.whoever it was that was tipping romanian factories and Austrian banks the other day will be pleased.
Might need a tad more than 2b.
If unemployment and lower incomes the fore they will have no choice but to seek more.
'HSBC has reported that its average loan-to-value (LTV) on new mortgages is 50%. '
never mind them being the first to offer mortgages to four individuals back in 2007 so they could get 'on the ladder'...........imagine how thsoe four will be feeling these days now the luxury flat is priced for social hosuing.
'AND ITS GONE!'......:) rightmove is a joke.when you get a down month with those b@stards you've gotta take it seriously.
as ever the haliwide and nationwide are adjusting their mortgage approvals to show rises,pumping vainly in the hope that Barratts will get their next rights issue off the ground and that they won't have to take any horrendous mark to markets this side of 2011.
of course,it's pointless.There is nothing they can do besides hyperinflating a la Mugabe to get hosue prices going.Unemployment is at 5 million if you inlcude the 2.7 millius + claiming incapacity benefit(neatly taking them off the UB figs-in contrast said claimant count in 1997 was 700,000-yep 2 million in 12 years)
was talking to a doctor friend the otehr day and she told me she'd offered on a house at 250k oop north and the bank had 'undervalued' it at 200k and wouldn't give her a mortgage even though she had 40% equity.
Heads up everyone! European vols up sharply so far - and rising fast. Something is fishy out there....
Tyler - The Rightmove data is looked on in the UK as a joke...verging on an uber-shill index. If I understand correctly, it's based on the 1st (!!!) asking price - hence their wildly understated high-to-low estimates.
Rightmove are realtors - nuff said.
morning Raymond i have a question for you. What do you think its the main cause for Kings decision to devalue the pound. Could it be that he wants to inflate housing prices and create a mirage of a recovery, and to lure foreign investors to buy up some of that inventory and make other investments
Morning Cheeky, you must be basking today re: Shanghai Composite. Anyway, I believe that King might've aided the Pound's depreciation in order to attract more foreign investment and keep the exports going. Someone has to buy merchandise from the likes of Rolls-Royce and BAE - hint hint. So yes on FI and exports, not sure on real estate.
Not sure on the inflating house prices angle. I will tell you this, if Mortgages were relatively simple to get, UK homes would sell quite well because of demand from immigrants and even locals. Many people were caught off guard with the house price crash in the UK and are now in a state of rigger mortice. So they may wait for house prices to tick up again and then get rid of their expensive piece of Ivory; which means we might see a second wave of sell off later this or next year. On that note, the data out of the UK Land Registry should provide much needed insight into the ACTUAL number of sales that occurred since they all have to be reported to them.
Another trend developing in the UK is low income people who are trying to sell their existing Terraced property right now in order to move into cheaper flats. Some of these people bought the properties quite a while ago and now have some level of equity left which they want to convert to hard cash.
In my view, if they REALLY wanted to get mortgage lending going again at pre-2008 levels, it would simply be a matter of ramping up mortgage lending at their fully nationalised building societies of Northern Rock, Bradford & Bingley. Maybe they're not doing it because they know that peoples affordability is still in the doldrums? They are not doing this because it would mean the risk would DIRECTLY be on the Government's balance sheet. Instead they are jaw boning to their partly nationalised out fits so their concern looks genuine.
Hope that helps understand my point of view. Paul Tudor Jones said it best... macro is like playing 3D chess.
im absolutely glowing about SSE and HSI. Thank you for your answer about the devaluation. Yes the assumption on house prices was a bit stretched. I came drunk after doing some dynamite-fishing and was absolutely off the chart when i saw SSE and HSI performance.
You get to be happy about SSE and HSI, while I am basking with GBP/JPY since last week. Life's good.
yes, sometimes it is.
Follow the money, it's just another way to decimate the middle class and give to the rich. The UK economy is a joke. Liquidate, liquidate, liquidate!