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Global Economies

In spite of all the bad news around, the markets recently put on a spurt. They are all still nursing heavy losses but it seems, any little scrap of good news is seized upon and causes a rally. A study of charts of major indexes suggests we have plenty more pain ahead. So we should not get too excited when our favourite share rises somewhat. In fact some analysts are still busily reducing target prices for many shares.

The Eurozone and UK are still trying to keep things on an even keel with a steady trimming of interest rates in prospect throughout the coming twelve months. However, it looks increasingly likely that the expected next cut for the BoE will be April leaving the possibility of another in May. In the US, measures taken look extremely drastic, very much panic driven. Bear Stearns has been a wake-up call. Their own private nationalisation with a big hand from the Fed (about $30bn). Worries now centre round the hard landing that may await their economy and ours for that matter.

Although the dollar has firmed in the period, it does not look well. The Euro is at it’s strongest ever against most key currencies including sterling although the pound has recently come back to near $2.

Last month I was recording that the FTSE 100 had regained 6000 but it did not last long. Another sign of the Bear that grips us.

Various hedge funds are showing signs of strain as investors pull back from the risky end of investments. Forced sales from any funds might soon have the FTSE down near 5000 especially now we are in the new financial year.

The FT of Sat Mar 29th was memorable for the Heathrow baggage saga and on the back page some comment about Iceland. Apparently, interest rates are still rising and have reached 15%. The krona is 20% down on the Euro and a hard landing looks inevitable. Their inflation is at 6.8% and has outpaced the central bank targets since 2004 while running a huge current account deficit, supposedly standing at 16% of GDP. A US in miniature perhaps.

UK Economy

With the credit crunch expected to be at least as ferocious here as it has been in the US many homeowners are being asked for huge increases in monthly repayments. One can only guess at the carnage that could engulf the house market. A real problem in the US has been empty houses attracting thieves who promptly steal £2500 of copper pipe to sell back to scrap merchants.

It is reported that demand for credit here over the last month or two has been extremely high but some families are also starting to rein spending in and the retailers are definitely feeling the pinch. Pollsters report from the High Street that mood worsened for the seventh month in a row while the house price index registered it’s fifth consecutive monthly fall and the annual rate of growth fell to a twelve year low. Bleak times indeed.

Last Friday(28 March) the week ended with 125 new lows recorded against 20 new highs. Aim with 67 new lows, was the worst index.

Three directors of HBOS were high profile buyers of there own company shares when the bank succumbed to a shorting spree with the publishing of evil and even criminally misleading info in an e-mail. In the same week several directors made sure to reduce their CGT liability by selling substantial quantities of shares before the year end.

Commodities

An interesting commodity problem is being exhibited by emerging economies where inflation is soaring. Huge increases in prices of staples like rice are causing hardship. So much so that China, India, Egypt and Vietnam restricted exports to boost supplies at home.

Last week saw gold pull back from the $1000 mark making a 10% retraction however demand from Asia apparently rose to take advantage of the price.

Copper remains high with stocks at two days supply. Nickel pushed up a little due to strike action at a large mine.

Speculation in oil futures is not thought to be behind recent price movements for crude. However the pipeline damage was fortunately soon repaired in Iraq which meant that the supply situation would at least deteriorate any further.

Mobius investments

Sadly, John David Group lasted just a month from purchase and Martin has suggested to the club that perhaps growth shares are suffering in this volatile environment. Perhaps some adjustment to take the bear market conditions into account should be made.

We are still heavily in cash. The only safe place to be at this time. Hopefully our other share selections will not attract notice for the wrong reasons which might necessitate a sale. JKX even took a plunge last week when the oil price weakened but it is back on song again for now.

On a personal note I took the opportunity this week (Apr 1st) to buy some Air Partner stock. I have always liked the company and the good results announced encouraged me to invest. I expect the rich to keep booking charter flights so business should remain strong even if growth is hampered.

Congratulations

Mobius Club takes pleasure in the success of the Yorkshire Meds marble team who won the World Marbles Championship at Tinsley Green in Sussex on Good Friday. All the practice obviously paid off. Mourad and Bob and the rest of the family and friends should be warmly congratulated. The question now will be 2009. Can they do a repeat? Watch this space.

Martin Longman - Acknowledgements to Daily Telegraph and FT.