ALL this talk about ‘plastic Brits’ representing Team GB at the Olympics got me thinking the other day.
When I first started working in the City, it was all about pinstriped suits and the proverbial stiff upper lip but it now seems that Britain’s fortunes are firmly linked to the wider international community.
The UK economy is expected to avoid slipping back into recession during the first quarter of the year, despite a forecast from the OECD suggesting the opposite. The latest data for the first three months of the year point to minimal growth, with respected think-tanks estimating that the UK economy grew by 0.1pc in the first quarter.
This is nothing to write home about, of course, but it’s better than a double-dip. We’ll have to wait until April 25 for the official estimate, but my economist friends are reasonably bullish about the first quarter and more uncertain about the rest of the year. This is likely to be affected by the extra bank holiday for the Queen’s Diamond Jubilee and the Olympics, two factors likely to distort GDP data.
Despite this, the Prime Minister seems to be doing his bit to boost UK exports by leading a business delegation to Japan and south-east Asia. Insiders say an improvement in our trade position could be the key to longer-term growth. In the short to medium-term however, the threat of an oil price spike threatens to overtake the European debt crisis as the biggest risk to the UK economy.
In terms of commodities, the price of gold has fallen as the prospect of more quantitative easing in the USA appeared to be kicked into touch. However, I don’t buy this – more money printing is likely… equity markets look like they could be running out of steam, unemployment is high (just look at the latest US jobs figures) and the oil price is scaring economists and strategists alike, which of course is good for gold and other commodities.
In agri markets, corn is not proving popular with investors. Because of high prices, US farmers said they are going to plant the most acres since 1937. In contrast, Soybean planting looks tighter, so this is likely to support higer prices. However, funds have been reducing their bullish futures and options positions across the agricultural sector.
I’m heading over to China next week, so will have a better idea whether the world’s second largest economy is going to slow or not. This week also sees the first quarter earnings season kicking off in the US. We’ll get a good look at how trade is in financials, with JP Morgan Chase and Wells Fargo on Friday.
Finally, I must recount a conversation I had with a fund manager at one of the City’s best known financial institutions last week.
“Surely, a global recovery is now as likely as Usain Bolt winning the 100m finals,” he said – sipping a glass of port.
“Maybe … but we all know what happened to the great man in the World Championships last year,” I replied.
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.
by City Insider
All calm on the home front as Cameron heads east
Apr 11, 2012 at 4:40 pm in Market Commentary by City Insider
ALL this talk about ‘plastic Brits’ representing Team GB at the Olympics got me thinking the other day.
When I first started working in the City, it was all about pinstriped suits and the proverbial stiff upper lip but it now seems that Britain’s fortunes are firmly linked to the wider international community.
The UK economy is expected to avoid slipping back into recession during the first quarter of the year, despite a forecast from the OECD suggesting the opposite. The latest data for the first three months of the year point to minimal growth, with respected think-tanks estimating that the UK economy grew by 0.1pc in the first quarter.
This is nothing to write home about, of course, but it’s better than a double-dip. We’ll have to wait until April 25 for the official estimate, but my economist friends are reasonably bullish about the first quarter and more uncertain about the rest of the year. This is likely to be affected by the extra bank holiday for the Queen’s Diamond Jubilee and the Olympics, two factors likely to distort GDP data.
Despite this, the Prime Minister seems to be doing his bit to boost UK exports by leading a business delegation to Japan and south-east Asia. Insiders say an improvement in our trade position could be the key to longer-term growth. In the short to medium-term however, the threat of an oil price spike threatens to overtake the European debt crisis as the biggest risk to the UK economy.
In terms of commodities, the price of gold has fallen as the prospect of more quantitative easing in the USA appeared to be kicked into touch. However, I don’t buy this – more money printing is likely… equity markets look like they could be running out of steam, unemployment is high (just look at the latest US jobs figures) and the oil price is scaring economists and strategists alike, which of course is good for gold and other commodities.
In agri markets, corn is not proving popular with investors. Because of high prices, US farmers said they are going to plant the most acres since 1937. In contrast, Soybean planting looks tighter, so this is likely to support higer prices. However, funds have been reducing their bullish futures and options positions across the agricultural sector.
I’m heading over to China next week, so will have a better idea whether the world’s second largest economy is going to slow or not. This week also sees the first quarter earnings season kicking off in the US. We’ll get a good look at how trade is in financials, with JP Morgan Chase and Wells Fargo on Friday.
Finally, I must recount a conversation I had with a fund manager at one of the City’s best known financial institutions last week.
“Surely, a global recovery is now as likely as Usain Bolt winning the 100m finals,” he said – sipping a glass of port.
“Maybe … but we all know what happened to the great man in the World Championships last year,” I replied.
Until next time…
To give our clients a different and uniquely informed perspective on the financial markets, Capital Spreads introduces “The City Insider”, a fortnightly view from a City expert, with a senior network of influential bankers, investors, economists and analysts. The identity of the Insider is anonymous – and a closely guarded secret – in order to allow our expert to express forthright, personal views and to protect the identity of the City figures upon whose opinions the Insider draws.