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Durudarshan - Investment Analysis

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Britain's economy delivers very good news

Posted on October 14, 2015 at 11:25 AM Comments comments (1)
People in employment in Britain are at their highest number since collection of such data began, and the number of people out of work at the lowest in a long while.  With record number of jobs being created for women, even on a part time basis, as well as apprenticeships which are providing something purposeful for a lot of youngsters, it is all tremendous news, summing up the health of the nation economically. 

In this context, the inflation number for last month at minus 0.1 percent could be considered good news as well, reflecting the current low price of energy, especially petrol, and lower prices of food and consumer items. 

It seems like the best of both worlds, a growing economy and lower prices (apart from houses, which seem to be still on the uptrend, although I reckon this may quieten down in the near future, as the prices seem to have breached affordable levels for most people).

This seems great news, and I would guess the interest rate will not be hiked up at the next Bank of England gathering early in November....the core inflation figures are likely to be a little bit pale.


Across the pond, in America, the Federal Reserve could have hiked the rate without impacting the economy, according to Fed Chairwoman Janet Yellen's summing up.  Who's she kidding?  Of course, it would have impacted the economy, although not that greatly.  But from her summing up, one can surmise that a rate hike may be imminent, perhaps as early as November or December.  The rationale is that paradoxically, raising the rate will add to the confidence or a strong economy, which continues to create jobs in good numbers, not as many as 200,000 a month, but 140,000 is a creditable figure. 


The slowdown in China is tepid news, as in a command economy, things can and are revised and implemented within a 6-week time frame, so the hope is that under Honourable Xi Jinping's leadership and guidance, they may still produce some rabbits out of the hat.  In the past, Xi has always influenced policies that have produced impressive growth....So in this year, when he has stated China will see record achievement, I can only look for a surprise finish to this year...Commodity prices may have bottomed, giving China the opportunity to stock up and set the trails blazing again.  Let us hope for the best. (The Purchasing Managers' Index has been down, exports are down, imports - especially of luxury brands from Europe and America - are even more down.  The Yuan Bonds only sold 1percent of the lot offered in London, but these are a new offering yet.)  Hope must be there for a surge in two-way trade for the lost numbers.  Chinese goods are still very competitive, Chinese wages being a fraction of those in the advanced economies.  So a balancing measure, I suggest, would be for the luxury brands to be a little bit cheaper.  The Western nations could make their currencies a little bit cheaper, so they prove value for money for the Chinese.  That would be one solution.  Other may be to introduce gifts or prizes to go with luxury brands. 


Exciting times ahead.


Kind regards,

Duru-darshan


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