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The
UK inflation forecast for 2010 is first of a three part series of in depth
analysis as part of the inflation mega-trend, with UK interest rates and GDP
growth forecast to follow in the coming week. The whole scenario and
implications of will be published as an ebook that I will make available for
FREE. Ensure you are subscribed to my always free newsletter to get the
latest analysis in your email box and check my most recent analysis on the
unfolding inflation mega-trend at http://www.walayatstreet.com.
Inflation
Forecast 2009
The
UK Inflation forecast for 2009 (30 Dec 2008 - UK CPI Inflation, RPI Deflation
Forecast 2009) proved remarkably accurate with the road map contributing
towards the generation of many accurate projections for subsequent trends
throughout 2009 and not least for UK savers that for those that followed my
cue of fixing savings at rates of above 5% for 1 - 2 years would not have
been burned by the subsequent crash in UK interest rates to pittance of as
low as 0.1% on savings accounts across the bailed out banking sector and
later for stock market investors that monetized on the stealth bull market
that began in March 2009 the genesis for which was in the preceding inflation
analysis forecast.
Conclusion
- UK Inflation Forecast 2009
The
UK is heading for real deflation during 2009 as the below graph illustrates
in that the RPI inflation measure is expected to go negative and spike lower
around June / July 2009 as the RPI is sensitive to falling mortgage interest
rates. The CPI will also continue to fall sharply into May 2009, which is
targeting a rate of just below 1%. However the more money the government
borrows as the difference between spending and tax revenues then the greater
will be the eventual resulting inflation as there is no such thing as a free
lunch, that will reverse many of the trends we have observed during the past
6 months and will continue to see during virtually all of 2009. However I am
only expecting a mild up tick in inflation late 2009 due to the deflationary
nature of economic contraction.
 
Therefore
the conclusion is for UK inflation CPI to bottom at just below 1% by July
2009 and RPI inflation to bottom at -1.2% also by July 2009.
Risks
to the Forecast - At this point the risks to the forecasts are more to the
downside than the upside, meaning that inflation could spike still lower
during mid 2009 than forecast above.
The
Inflation Mega-trend
The
UK Consumer Price Index (CPI) clearly illustrates that all we saw from mid
2008 and into early 2009 was a minor deflationary corrective wave amidst an
ocean of year on year inflation. Subsequent inflation has far surpassed the
in-consequential deflation seen during 2008 and into early 2009. Therefore
the facts are completely contrary to the headline grabbing mainstream press
and blogosphere scare mongering of price deflation.
There
has been NO SIGNIFICANT DEFLATION, despite economic contraction of more than
5% GDP, despite Unemployment soaring to above 2.5 million, despite asset
price destruction ranging from between 25% and 50% into the early 2009 lows.
In fact the deflation that we witnessed is probably mostly due to the sharp
drop in commodity prices such as Crude Oil's collapse from mid 2008 into
early 2009.
My
Inflation Mega-trend scenario analysis continues to conclude towards the
Government and the Bank of England as with other central banks around the
world mistakenly continuing to be fixated with fighting deflation whilst at
the same time stoking the fires for a surge in inflation during 2010.
UK
Retail Sales Signal Debt Fuelled Election Consumer Boom
The
mainstream press and academic economists have been surprised by the most
recent headline retail sales data that showed a decline of 0.3% against
expectations of rise of 0.4% i.e.
BBC
News 17th December - http://news.bbc.co.uk/1/hi/business/8417860.stm
UK
retail sales fell in November, according to official figures, despite
analysts' predictions of a rise.
The
figures came as a surprise to many economists, who had hoped for consumer
spending to fuel economic recovery.
However
I recognised the inaccuracy in the published retail sales data many years ago
which prompted me to generate my own retail sales data which more accurately
reflects the condition of the high street then the official data which
typically results in a highly volatile retail sales series which feeds
through into yo-yoing mainstream headlines which are in most cases contrary
to what is actually taking place on Britians high streets as the below graph
more clearly illustrates.
The
adjusted retail sales data clearly shows that UK retail sales act as a
leading indicator of economic activity and inflationary pressures of as long
as 6 months. Retail sales led the price deflation into mid 2009, and now are
again acting as a leading indicator for forward inflation and resurgent
economic activity during the first half of 2010. The trend is extremely
strong and continues to confirm the analysis of June 2009 that stated that
Britain had embarked upon a debt fuelled economic recovery into a May 2010
General Election.
Very
little of this strong retail sales trend is visible in any of the official or
academic economic data that continues to look in the rear view mirror of what
is "old news". The actual trend shows that the Labour party has succeeded
in igniting a debt fuelled election consumer boom that will increasingly
become apparent in mainstream press as we approach the May 2010 election
deadline, but it is also indicative a steep upward curve in UK inflation and
we are talking about inflation hitting the upper end of the Bank of England's
1% to 3% CPI Band during the first half of 2010 which politically suggests
the UK General Election may take place much earlier than the consensus view
for a May 2010 General Election, perhaps as early as mid February i.e. before
the release of January inflation data.
M4
Money Supply Adjusted for the Velocity of Money
Whilst
the mainstream press have been obsessed by headline M4 data throughout the
past 12 months, however as I voiced in last years inflation analysis and
forecast that the key to interpreting money supply data is to look at M4
adjusted for the velocity of money that implied imminent extreme deflation
that has come to pass -
UK
Money supply M4 (blue) has risen sharply from the 10% targeted low of mid
2008 to the current level of 16.6%, on face value this is highly inflationary
and has been taken by many economists and market commentators to suggest much
higher forward inflation. However the money supply adjusted for the velocity
of money which takes into account the state of the economy as a consequence
of the credit freeze tells a completely different story. The UK economy is
now in extreme real monetary deflation of approaching -5%. The leading
indicator of the implied money supply, is suggesting recent deep interest
rate cuts of Novembers 1.5% and Decembers further 1% cut will lift future
money supply growth out of extreme deflation, however it will still be far
from supporting the levels north of 15% which accurately forecast forward inflation
during 2008.
The
M4 Graph shows opposing trends, it shows M4 falling from an extremely high
level of near 20% that was jumped on earlier by the press to imply higher
inflation, to now nudging below 10% to imply credit contraction deflation.
However the real indicator of money supply shows the consequences of
Quantitative Easing and near zero interest rates in that Money Supply
adjusted for the velocity of money bottomed from a crash into March 2009, and
it is only now that the money supply is breaking positive.
This
suggests that the Bank of England and majority of economists remain
mistakenly fixated on the headline M4 which has nudged below 10% and
therefore continue with the policy of Zero Interest Rates and Quantitative
Easing. What is remarkable in the most recent inflation data is the surge
higher in both RPI and CPI (1.9%) despite weak money supply data, this
strongly supports the view that the UK economy has drifted into a period of
stagflation where models based on spare output capacity keeping inflation in
check will fail ! I.e. we GET Inflation WITH spare capacity i.e. high
unemployment, this is because the government is attempting to fill the output
gap by increased public spending which is uncompetitive hence inflationary.
Therefore
the expectations is for UK Money Supply adjusted for the velocity of money to
continue surging higher and supportive of a strong trend higher in the RPI
and CPI inflation indices that will leave the vast majority of the academic
economists still mistakenly fixated on deflation scratching their heads.
I
can easily see MS Implied surging higher to above 10% and M4 Adjusted passing
above zero within the first quarter of 2010 on route to pre-credit crash
levels during 2010, this also suggests a turnaround to some degree is also
imminent in the M4 headline data.
UK
Unemployment
The
UK unemployment forecast as of October 2008 (July 08 data) forecast UK
unemployment to hit 2.6 million by April 2010. The actual data to date of
2.49 million to Sept 2009 is inline with this trend, with unemployment
benefit claimant count registering a small fall from 1582 to 1569 for
November. The moderating unemployment data has surprised academic economists
as it is much milder than their economic models suggest it should be by this
point. However the data is strongly indicating to me of a strong STEALTH
Economic Recovery underway which implies headline data is near an imminent
peak and therefore should start to fall early 2010.
Academic
economists have collectively converged during 2009 into the consensus 2009
that UK unemployment would soar to between 3 and 3.2 million by the time of
the next general election (May 2010). Now with the slowdown of the
unemployment growth in the face of a strong economic turnaround in the fourth
quarter these same institutions will be busy revising forecasts for UK
unemployment much lower in the coming months.
European
Commission - May 2009 - It expects UK unemployment to rise to 9.4pc by 2010
leaving 3m workers jobless.
British
Chambers of Commerce - April 2009 - Last month, data confirmed that the total
number of people out of work surpassed the 2m mark in the three months to
January, taking the official unemployment rate to 6.5pc – the highest
since 1997. The BCC believes the total could hit 3.2m by the third quarter of
next year.
Bank
of England - Blanchflower - April 2009 - Warned unemployment was likely to
top 3 million by the end of the year and there was a 'good chance it could go
much higher still'.
CBI
- Feb 2009 - The UK’s leading business group predicts the recession,
which began in the third quarter of 2008, will last throughout 2009. The
economy is expected to contract by 3.3 per cent and unemployment will reach
close to 2.9 million by the end of the year.
I
have long questioned the accuracy and validity of the official unemployment
data which over several decades and much manipulation by successive
governments has been tweaked many hundreds of time to under report true
unemployment for political purposes. Current official unemployment stands at
2.49 million for September data release against which the total recorded as
economically inactive of working age stands at 7.99 million which in my
opinion is reflective of the true rate of unemployment as the below graphs
illustrate.
The
real unemployment trend clearly shows a sideways trend channel of between 8
million and 7.8 million, Having hit the upper channel it is now strongly
suggestive of having peaked and targeting a trend back towards the lower end
of the channel i.e. projecting towards a decline of 200,000 during 2010.
In
conclusion the headline UK unemployment rate of 2.49 million is just a stone
throw away from the 2.6 million target which suggests little upside momentum
left in the unemployment data and therefore indicative of an imminent peak
and decline unemployment statistics to be announced during Q1 2010, which
therefore confirms my view of a much stronger than expected economic recovery
and therefore has much higher inflationary implications as well as political
implications of improving Labours election prospects.
Debt
Fuelled Economic Recovery Heading for Double Dip Recession?
UK
GDP for the 3rd Quarter was revised marginally higher to minus 0.2% from the
earlier ONS estimate of minus 0.3%. The year has witnessed 'think tanks' and
academic institutions flailing in all directions as optimistic forecasts of
earlier in the year proceeded to be continuously revised lower in terms of
economic contraction and then by late summer in advance of third quarter GDP
data starting to anticipate an economic recovery in the third quarter with
consensus for a 0.3% growth which failed to materialise.
The
GDP trend for the UK economy has been accurately mapped out in the in depth
analysis and forecast of 17th February 2009 (UK Recession Watch- Britain's
Great Depression?), that both called for severe peak to trough economic
contraction of -6.3% at a time when the likes of the UK Treasury were
forecasting contraction of less than half at -3%. The analysis also concluded
in a strong debt fuelled economic recovery during 2010 to coincide with a
summer 2010 General Election. As of the revised ONS GDP data (ABMI Chain
linked at Market Prices) total peak to trough contraction is now 6.23%
virtually exactly inline with the forecast for -6.3%. Annualised contraction
for the third quarter is at -4.56% with trend on target for -4.75% for the
fourth quarter.
The
UK economy remains on track to bounce back strongly during 2010, as indicated
by June's in depth analysis, however this economic recovery is based largely
on debt as shown by the graph below, as the Labour government's strategy is
to deliver the next Conservative government a scorched earth economy.
Alistair
Darling's forecast for government net borrowing for 2009 and 2010 in November
2008 totaled just £70 billion. However, since the amount of projected
borrowing has mushroomed to £350 billion, which is set against my
November forecast of £405 billion for 2009 and 2010 alone, with
continuing subsequent large budget deficits thereafter of well above
£100 billion a year.
Whilst
many economists were surprised by Alistair Darling's April forecast that the
UK Economy would grow by 1.25% in 2010 and 3.5% in 2011. However we need to
consider the following in that 1.25% growth on the annual GDP of £1.2
trillion equates to growth of just £15 billion and for 2011; 3.5%
growth equates to just £42 billion. Therefore the government is
borrowing a net £175 billion for 2009 and £175 billion for 2010
to generate £15 billion of growth, and then a further £140
billion for 2011 for £42 billion of growth. Thus total net borrowing of
£490 billion to grow the economy by just £67 billion, (£595
billion my forecast) which shows the magnitude of the scorched earth economic
policy now implemented that literally aims to hand the next Conservative government
a bankrupted economy that will be lumbered with the consequences of
continuing huge budget deficits and therefore deep cuts in public spending.
Debt
and Liabilities
The
total liabilities as a consequence of bailing out the bankrupt banks and debt
fuelled economic recovery remains on target of £4.75 trillion by the
end of 2013/14, which confirms my view that to cope with the debt burden the
bank of England will have to keep monetizing government debt which puts
Britain on the path towards many years of stagflation, which my UK GDP
forecast will next cover in greater depth.
Meanwhile
the Bank of England remains skeptical of a UK economic recovery during 2010
as the Guardian reports on 23rd December-
The
Bank of England is leaving the door open to a new year £200bn money
expansion programme after revealing that it remains unconvinced about the
economy's ability to emerge from the deepest and longest recession on record.
"Jonathan
Loynes, chief European economist at Capital Economics, said: "We continue
to expect interest rates to remain at their current level until the end of
2010, if not considerably longer."
Whilst
I agree that the bank of England will continue to monetize debt, however my
economic analysis is concluding towards a strong bounce back and hence the
Bank of England's policy of further QE ensures that the inflation flames are
being stoked higher, which suggests above trend inflation and growth rates.
UK
Interest Rate Being Kept Artificially Low For Bank Profiteering
The
UK interest rate forecast of early December 2008 for 2009 forecast that UK
interest rates should decline to 1% (from 3%) by early 2009 and remain there
into the second half of 2009. However following the cut to 0.5% in March
2009, the Bank of England has continued to pursue an artificial banking
system by keeping interest rates at an extreme historic low of just 0.5% into
the end of 2009 so as to flood the bankrupt banks with liquidity to enable
them to rebuild their balance sheets by overcharging customers against the
base interest rate and manipulated interbank market rate of 0.66% against
rising real market interest rates which have been in a steady climb since
March 2009 which increasingly means that the base interest rate has become
irrelevant to the retail market place as explained in the article - Bailed
Out Banks Not Lending, Sitting on Tax Payers Cash.
The
artificial banking system means that the bill for low interest rates is being
paid by Savers who along with all tax payers are being forced to pay for the
bankster's crimes as tax payer bailed out banks such as HBOS pay a pittance
on instant access savings accounts of as little as 0.1% against a requirement
of 2.3% just to cover CPI inflation of 1.9% plus the 20% tax charged on
interest.
Money
is being sucked out of the pockets of savers and being deposited onto the
balance sheet of bailed out banks that have no incentive to pay a decent rate
of interest when they can borrow at 0.5% from the Bank of England and
marginally higher from other UK banks. The artificial banking system is
resulting in unprecedented huge profit margins for the banks as market
interest rates charged to retail customers continue to rise regardless of the
base rate being held at 0.5% well into 2010 which is inflationary in terms of
rising mortgage and other debt interest costs as these rising costs will show
up to varying degrees in the RPI and CPI inflation indices. I will cover the
UK interest rate forecast for 2010 in-depth in the coming week.
UK
House Prices Continue 2010 Government Debt Fuelled Election Bounce
The
UK housing market bottomed in March / April 2008 which was recognised in the
May analysis and has since continued the debt fuelled bounce as a consequence
of money printing and zero interest rates as the Labour government has
succeeded in inflation the UK economy out of recession in time for an early
2010 General Election.
As
is the case with virtually all market junctures, back in March if this year
the Telegraph and other mainstream media ran with a scare story that UK house
prices could crash by a FURTHER 55%, this was after UK house prices had
already fallen by 22% and whilst house prices had yet to bottom the Telegraph
story at the time seemed to be a completely ridiculous scare mongering purely
for the purpose of sensational headline grabbing rather than presenting
something that their readership could utilise to their advantage.
12th
March 2009 - Telegraph Runs with Improbable UK House Price Crash Forecast of
Another 55%
The
mainstream press as illustrated by The Telegraph has run with a house price
forecast by Numis Securities (NS) that states that UK house prices could fall
by a further whopping 55%, that is a rather incredible forecast to make in
light of the of 22% fall to date. NS states that a buy to let investor panic
will trigger an avalanche of further selling. I am not aware of Numis
Securities past forecasts, however analysis of the perma-bear Capital
Economics that has consistently been cropping up with bearish house price
forecasts since at least 2002 in the mainstream media illustrated the
propensity to reprint press releases with-out checking the facts as to
whether the forecast is actually probable or not.
The
Telegraph wrote: House prices 'could fall by further 55 per cent
"People
who bought buy-to-let flats are expected to “begin panic selling”
and the average home value could drop below £100,000."
“Despite
UK house prices already having fallen 21% from the peak, we do not believe
that the correction is anywhere near over.
“Our
core headline forecast is that UK property prices remain between 17% and 39%
overvalued based on fair valuation. Moreover, history has shown us that when
property…which has experienced a price bubble corrects, the price tends
to fall below fair value for a period of time, as confidence in that market
remains low. Prices could fall a further 40-55% if the over-correction was as
bad as the early 1990s in our view.”
Subsequently,
UK house prices bottomed in April / May 2009 and have embarked upon a debt
fuelled bounce into a May 2010 General Election that has already seen UK
house prices RISE by more than 5% from the April / May low rather than to
CRASH toward another 55% drop.
Whilst
many are focused on the headline unemployment data, however back in August
2009 in the analysis (UK House Prices Tracking Claimant Count Rather than
Unemployment Numbers), the conclusion was that the focus should remain on
claimant count rather then the headline unemployment rate, in this regard the
claimant count is turning positive in the most recent data and is therefore
supportive of a continuation of the trend higher in UK house prices.
The
above chart indicates that there does exist a strong relationship between
house price trends and the unemployment benefit claimant count, more so than
the unemployment data. The possible reason for this is that those made
unemployed that do not claim benefits are not in as financially distressed
state than those that have no choice but to claim benefits, therefore house
prices can and have risen in the past whilst the official rate of unemployment
rose, if at the same time the claimant count did not rise.
The
recent bounce in house prices is tracking quite closely with the
stabilisation of the unemployment claimant count numbers, which therefore
suggests that as long as those claiming unemployment benefits continues to
stabilise at the current level of 1.6 million then the outlook remains
positive for UK house prices to continue drifting higher, this is despite
official unemployment data that looks set to continue to rise towards 3 million
from 2.43 million.
My
on going research suggests that the debt fuelled economic recovery is
expected to continue into mid 2010 that could see house prices up by as much
as 10% year on year and therefore contrary to the widespread view of flat
house prices during 2010, however this warrants in depth analysis to
formulate a higher probability forecast which I aim to complete during
January 2010.
In
conclusion the trend of inflating UK house prices into mid 2010 is supportive
of the trend of inflating general prices that will play catch up during early
2010 and continue upward into the second half of 2010 due to increased
consumer spending as a consequence of some of the return of the feel good
factor amongst consumers.
UK
Producer Prices
Producer
Input and Output prices bottomed in June 2009 and have bounced strongly from
deflation back into inflation. The trends again act as a leading indicator
for consumer prices that lag by a couple of months or so. The momentum behind
the recovery in producer prices is suggestive of a trend towards extremes in
the coming months i.e. PPI Output to above 10% and PPI Input to more than 5%,
both of which suggest that the imminent spike higher to follow in retail and
consumer prices towards the upper bands will be sustained into at least mid
2010.
Stocks
Bull Market Signaling Strong Economy
The
stocks stealth bull market of 2009 has been one of the greatest bull market
rallies in history and for its duration has been explained away by academic
analysts as an aberration, a bear market rally who's demise was always
imminent that illustrates the difference between theory produced in ivory
towers for the primary purpose of gaining letters after ones name than to
actually attempt to monetize on probable trends as the consequences of being
wrong for the latter is loss of real money. The fact is simple, the stocks
bull market of 2009 is by far the strongest indicator of a strong economic
recovery than anything seen in any economic data that academic economists and
even many market analysts / mainstream press commentators pursue with a
vigour whilst ignoring the biggest indicator of all that is staring them
right in the face. The birth of the bull market right from early March has
increasingly indicated to me that we are heading for much stronger economic
activity during 2010 and therefore much higher inflation.
British
Pound to Wobble Lower During 2010
The
existing U.S. Dollar bull market scenario analysis calls for the Dollar to
rally towards a target of 84, with the initial buy trigger of 77.00 achieved
during the past few days this now sets the scene for sterling weakness
against the Dollar, which has already seen the GBP nose dive from
£/$1.68 to below £/$1.60. A U.S. Dollar index rally to 84 would
coincide with a drop in sterling to below £/$ 1.50, therefore presents
a bearish starting point for chart analysis.
Two
items stand out from the GBP chart:
1.
That sterling is targeting immediate support at £/$1.57 which implies
it may temporarily bounce from there back through £/$1.60 before the
eventual break.
2.
That a break below £/$1.57 would target a trend to below £/$1.40.
On
a longer term view, the chart is indicative of trading range between
£/$1.57 and £/$1.37, on anticipation of the eventual break of
£/$1.57. On average this implies a 10% sterling deprecation against the
trend of the preceding 6 months or so. I expect sterling to fall against
other major currencies such as the Euro where it targets a drop of 10% or so
from the current 1.12.
What
could drive sterling lower during 2010 apart form Dollar strength ?
The
obvious thing that comes to mind is the Bank of England keeping UK base
interest rates artificially low (UK interest rate forecast for 2010 will
follow in the coming week- newsletter) whilst the economy recovers, inflation
rises and the trade gap widens, therefore this WILL impact on the currency
and result in relative weakness as commodities such as crude oil are priced
in dollars and thus will result in an inflationary feed back loop. Neither is
the currency helped by open ended money printing to monetize the huge amount
of government debt issuance as a consequence of a 12%+ budget deficit.
Conclusion
and UK CPI Inflation Forecast 2010
The
sum of the above and recent analysis is for UK inflation to spike higher in
the coming months during early 2010. This is inline with my view that the
Labour government has succeeded in sparking a strong debt fuelled economic
recovery that will become clearly visible during the first quarter of 2010. I
expect UK inflation as measured by CPI to break above the Bank of England's
upper CPI target of 3% very early in the year, and stay above 3% for most of
the year only coming back below 3% late 2010 as a consequence of the next
governments attempts to bring the unsustainable budget deficit under control.
My
next analysis in this series will cover the UK economy and then UK interest
rate projections for 2010 all of which will culminate in the Inflation
Mega-trend ebook that I intend on completing and make available for free
within the next 2 weeks. Ensure you are subscribed to my always free
newsletter to get this analysis that money cannot buy in your email in box.
Risks
to the Inflation Forecast
The
obvious risk is of the collapse of another major financial institution
triggering a deflationary financial armageddon, though the risks of this are
now infinitely smaller for 2010 then they were in the lead up to the Lehman
Bankruptcy. The real risk is of countries imploding but whilst this would hit
the economies however the consequences of imploding countries is inflationary
rather than deflationary as panicking governments with citizens rioting in
the streets tend to ramp up the printing presses to full steam and similarly
induce a collective panic amongst other central bankster's to do likewise,
therefore this suggests to me that the actual risk to the forecast is more to
the upside then the downside, though yes government debt defaults will not
look pretty in the financial markets which like 2008 would induce extreme
market volatility.
Implications
of the Inflationary Surge
Greater
depth and scope of implications will be covered in the Free Ebook that I aim
to complete by the end of December. (free newsletter)
UK
General Election 2010 - Expect the public and press to be surprised during
the next few months as the UK economy bounces back strongly in the first
quarter. For all of Gordon Browns many faults, and whether or not he actually
wins what is likely is a much tighter election campaign as the polls narrow,
Gordon Brown HAS succeeded in delivering a Strong Election Bounce for the
Labour party into mid 2010. I will have to probably revise my UK election forecast
as of June 2009 during January 2010 that projected Conservatives on 343
seats, Labour 225 and Lib Dems on 40.
Inflation
/ Deflation Debate - I increasingly recognised the imminent return of
Inflation by mid November 2009 that resulted in the article Deflationists Are
WRONG, Prepare for the INFLATION Mega-Trend. I expect so will many presently
fence sitting analysts and economists during early 2010 in the face of
visibly rising inflation in the various inflation indices across the world,
which only leaves the perma-deflationist behind who will continue to
mistakenly cling on to a non existant deflationary argument as a consequence
of the deleveraging deflationary corrective wave of 2008 into early 2009
amidst an ocean of inflation as my earlier article illustrated.
UK
Interest Rates - Will the Bank of England be able to keep UK interest rates
artificially low during 2010 ? More on this in the coming week in my UK
interest rate forecast, but what I will say is that the market interest rates
WILL continue to rise, so good news for savers, but bad news for borrowers.
UK
Government Bonds - 2010 will be the year Quantitative Easing debt
monetization does Battle with the forces of Rising Inflation and Market
Interest Rates, the crunch point will culminate in a sharp drop in sterling
(10%) as the market wins as bond Investors demand higher yields for UK Junk
Government Bonds.
Stock
Market - Will the stealth bull market continue during 2010 ? I don't see why
not, at least into mid 2010 but this does demand in-depth analysis that will
follow during January as the deliciously and excruciatingly impressive 60%
gains off of the March lows on face value imply 2010 will not be such an easy
free central bank liquidity driven lunch for stocks bull market trend monetizing
investors as inept central bankers increasingly start to hit the panic
buttons in the face of rising inflation.
Source
and Add Comments Here - http://www.marketoracle.co.uk/Article16085.html
Nadeem Walayat
Market Oracle.com.uk
Nadeem Walayat is
the editor of MarketOracle.co.uk.and has over 20 years experience in trading
and investing.
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