Posts from — February 2009

It is not often that I have ever, or will ever, feel sorry for Fred the Shred but the desperation of politicians to try to claw back his pension is a tad disgraceful.

Gordon Brown’s assertion that he will use legal means to recoup some of the pot if possible is a very dangerous game and one that should be countered by all pension holders. In a year’s time Sir Fred will be forgotten but if a successful legal claim is made against a lawfully agreed pension then this will sit on the statute books forever.

Aside from anything else if Sir Fred can lose his pension for failure or incompetence then ‘Our Gordon’ and ‘Captain Darling’ should think very carefully indeed before going down this route.

More trading thoughts from Simon Denham >> Spread Trading.

For a look at trading RBS >> RBS Spread Betting.

Good Luck!

DB

The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.

Looking quickly at the gold market.

Gold had another poor day yesterday, finally closing at around $950 but buyers still seem confident of a return to the highs. Clients are getting ever longer of the Yellow metal as we fall in price.

With traders getting so confident in one direction it is tempting to look in the other (natural perverseness I am afraid). With indices continuing to hold above the very major support levels it is beginning to feel as though we are either in for a huge rally or the mother of all disasters. A disaster would drive Gold to the heavens a rally and we could be back around $600 to $700 dollars in very short order.

More trading thoughts from Simon Denham >> Spread Trading.

Good Luck!

DB

The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.

It must be said that President Obama seems to have run into a very, very short honeymoon period indeed. The stimulus package might work but not much of the infrastructure effort appears to be ‘new’ it mainly seems to be the bringing forward of ‘mend and refurbish’ projects.

Aside from keeping people in employment it will be difficult to estimate the long term boost or benefit to the economy. The tax cuts are likely to give some light to the retail sector but again, if the general populous is very anxious over their personal future, this windfall may just go mainly towards debt reduction. No bad result in the greater scheme of things but not what is needed just about now. His avowed intent to stop special interest projects fouling up the legislative process did not even last past the first major hurdle as Congress pushed for individual state handouts to ensure the vote.

More from Simon Denham >> Spread Trading.

Good Luck!

DB

The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.

Our Lords and Masters seem to have finally noticed that hammering banks and bankers every single day in the press is not exactly conducive to increasing business flow.

If moral is non-existent, you are pilloried by politicians (of all people) and your little annual bonus* has been banned by a populist leaning Prime Minister would you be minded to approve that new loan to what appears to you to be a failing business?

* I am not talking about the Masters of the Universe here, just the ladies and gents on the front line

It is all very well for politicians to exhort banks to lend, lend, lend but if injudicious loans turn into even more bad debt they will be the first to jump (yet again) on the incompetent bankers band wagon.

More from Simon Denham, read his daily column >> Spread Trading.

Good Luck!

DB

The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.

So Gordon Brown swans off to Europe and agrees to virtually assure the closure of Hedge Funds in London and then adds to it by stating that Banks should ‘get back to basics’.

Every utterance of this man seems to sum up his lack of knowledge of the businesses of which he talks and regulates. For Banks to ‘get back to basics’ (by which he presumably means only lend out what you have on deposit) would cripple growth in this country and across the planet.

Like it or lump it the world requires liquidity and derivatives deliver that. Yes they have gotten out of hand, aided by what appears to be fraud on a massive scale in Middle America.

The repackaging of Mortgage debt will require much more serious credit analysis but if we rein in the ability of lenders to off-load debt from their balance sheets the availability of money will be permanently impaired. Or more likely international finance will disappear off to the Middle and Far East where regulators are still in the process of building a financial sector. To gain “European Harmony” Mr Brown seems happy to sell the City down the river.

Banning 100% mortgages sounds great when making populist laws but in reality not many banks are offering them now anyway. The 100% (and more) mortgage always sounded odd but there were clear reasons for it. First time buyers just could not get a leg in the door when you considered the cost of Legal / Surveys / Furnishing the new homestead. And, yes, the governments own little slice of joy, Stamp Duty.

Banks realised that many people just loaded up their credit cards for much of this extra cost at nearly 20% borrowing rates. They reasoned that it was much better to lend the full amount at the much lower rates and longer time scales of a mortgage loan. Now they are pilloried for it as the housing market has now turned but this does not mean the reasoning was false.

There was much news in the weekend press about state intervention in a growing array of markets. While an argument can be found for some Government aid the current ‘slap it on all over’ risks a far longer term problem.

Imagine how you would feel if you had built a really strong business, low borrowing, low cost base, profitable operation etc and you are now in the situation where your more laxly run competitors are in trouble and unlikely to survive.

Suddenly these competitors receive Government aid and they start undercutting your prices on the back of it. Result, both companies are too weak when the upturn arrives to invest in new plant/development. Unfortunately, of course, letting business go bust means higher unemployment now rather than reduced growth in three or four years’ time. Politicians decry the short-termism in others but are (in my experience) the very worst proponents of the practice. They would rather spend vast sums of other people’s money than risk a bad news story.

Article by Simon Denham, read his take on today’s markets >> >> Spread Trading.

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Good Luck!

DB

The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.

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