UK retail sales fall suggesting that the recovery is more fragile than many analysts suggest

Sep 20 • Morning Roll Call • 2430 Views • Comments Off on UK retail sales fall suggesting that the recovery is more fragile than many analysts suggest

whale-tailWe’re not sure if our readers have noticed but there’s always an excuse prepared for failing economic information. The weather is the favourite excuse, particularly were retail data is concerned. If retail sales figures are up it’ll be the sun shining, down and it’s the rain, snow or gales, or the heat wave which has lasted too long and consumers just can’t bear to shop, they’re staying at home huddled around the air conditioning units. It’d be quite refreshing if market analysts and commentators simply stated;

“well that was a shock, we didn’t see that coming, we expected a 0.4% increase, but a 0.9% fall is shocking. And I tell you what, with October and November around the corner we can see folk keeping their hands in their pockets to pay for Xmas. And what about the fall in food sales, 2.7% down, on essentials? Blimey, and 500,000 UK citizens regularly use charity hand outs at food banks..this recovery isn’t what it seems..”

Well if the mainstream press won’t do it we’ve just done it for them..

Good news came in the form of slightly reduced unemployment figures for Greece, or so we thought. Then you look at the details and it’s quite frankly depressing to contemplate the wasted generation that may suffer the austerity measures for years to come. The jobless figure fell from 27.4% to 27.1%, but in the age range 15-24 the unemployment is 60%. If the participation rate was 60% it’d be poor, but 60% unemployment, at a time when the youth of Greece should be giddy with excitement at the opportunities in front of them, is incredibly disappointing.

And then we read of the ‘whale’ trader in JPMorgan, who lost $6.3 billion, yes billion; they get fines totaling $1 billion and shrug it off. Given that they made $6,5 billion in the second quarter of 2013 they’ll just shake the money tree at the bottom of their garden, where no doubt other bodies are buried, and carry on regardless…


Market overview

The DJIA closed down 0.26%, the SPX down 0.18% and the NASDAQ closed up 0.5%. European indices enjoyed a rally, STOXX closing up 0.94%, UK FTSE up 1.01%, CAC up 0.85%, DAX up 0.67%. The Athens exchange closed up 2.19% and the Istanbul exchange closed up a spectacular 6.44%.

ICE WTI crude finished the day down 1.32% at $105.86 per barrel, NYMEX natural finished the day down 0.11% at $3.71 per therm. COMEX gold closed the day at $1367, whilst silver on COMEX was at $23.16 per ounce.

Looking towards the equity index futures the FTSE is up 1.1%, CAC up 0.79%, DAX up 0.67% and the Istanbul exchange equity index future is up 7.49%


Forex focus

The yen dropped 1.6 percent to 134.56 per euro late in the New York session, after touching the weakest level seen since Nov 12th 2009. The Japanese currency slid 1.5 percent to 99.45 per dollar after appreciating to 97.76 yesterday, the strongest level since Aug 29th. The U.S. currency slipped 0.1 percent to $1.3530 per euro after reaching $1.3569, the weakest since Feb 7th.

The yen slumped to the weakest level in four years versus the euro, as the Federal Reserve retained a monetary policy that prompts investors to borrow in low-interest-rate currencies to buy higher-yielding assets, known as the carry trade.

New Zealand’s dollar was little changed after rallying as much as 0.8 percent, a government report revealed that gross domestic product grew 2.5 percent in the three months through to June 30th from a year earlier, beating the median forecast of 2.3 percent in Bloomberg’s survey. The kiwi traded at 83.74 U.S. cents, after reaching the highest since May 9th.

Sterling weakened from an eight-month high versus the dollar after data showed U.K. retail sales including fuel declined 0.9 percent from July. The median forecast was for a 0.4 percent gain. The pound declined 0.7 percent to $1.6032 after climbing to $1.6163 yesterday, the most since Jan 11th. It fell 0.8 percent to 84.40 pence per euro.

The dollar has declined 1.8 percent in the past week, the worst performer amongst the 10 developed-nation currencies tracked by Bloomberg’s Correlation-Weighted Indices. The yen lost 1.9 percent and the euro gained 0.2 percent.


Fundamental policy decisions and high impact news events for September 20th

Friday is a relatively quiet day for high impact news events, the UK will produce its public sector net borrowing figures, predicted to come in at £11.9 bn from falling to -£1.5 bn the previous month. The German Bundesbank president Weidmann will speak with investors looking for indications of the central banks forward guidance for the German economy outside of the central planning delivered by the ECB. Consumer confidence figures will be produced for Europe in the afternoon trading session.

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