The Volkswagen Fiasco

WEEKLY COMMENT 24-09-2015

By Barry Edwards

The Volkswagen Fiasco

The revelation about the intentional cheating of the emissions regulations in California by Volkswagen was a big shock for many people. The company has spent decades building up a reputation for quality and reliability, producing cars which were supposed to be energy and emission efficient. The big surprise was that the engineers decided to follow a practise that seems endemic in the auto industry to install software that was almost certainly going to be discovered at some stage by the regulators. read more

The British Labour Party

WEEKLY COMMENT 17-09-2015

By Barry Edwards

The British Labour Party

 

The outright win by Jeremy Corbyn in the Labour Party leadership vote was expected but the size of his majority at 59.5 % was a surprise for many commentators. He managed to achieve support at over twice his nearest rivals Andy Burnham and Yvette Cooper who attracted 19% and 17% of the votes. A political party leadership contest with such a decisive result after a resignation is rare. Congratulations must go to Jeremy Corbyn for his win although the future of the party is now in doubt according to many Labour supporters. read more

The 5 Presidents’ Report

WEEKLY COMMENT 10-09-2015

By Barry Edwards

The 5 Presidents’ Report

During the usual research that I do in the normal course of daily activity, I came across this paper that does not appear to have been widely publicised by the EU news services and thought it should be brought to your attention. It has been referred to as ‘The 5 Presidents’ Report’ but is actually entitled ‘Completing Europe’s Economic and Monetary Union’. I am not sure why this paper has not been discussed in depth by the media, it maybe that all the various parts of the document have been talked about at some stage during the last few years. read more

EU Refugee Plan

WEEKLY COMMENT 3-09-2015

By Barry Edwards

EU Refugee Plan

This week the news has been dominated by the refugee crisis and further thoughts about the affect China is having on the world economy. Since we discussed China last week, the subject has to be the immigrants arriving in the EU. The first point to clarify is the correct description of these people; there is a small minority that are economic migrants with the majority classified as genuine refugees fleeing from conflict in their own countries. This is the reason that their plight has to be taken seriously under international law accepted by all countries that are members of the United Nations (UN). read more

The World Economy

WEEKLY COMMENT 27-08-2015

By Barry Edwards

The World Economy

The sudden reaction to the reassessment of the Chinese economy caused the dramatic fall in all world stock markets and most emerging market currencies. We have discussed in this weekly comment that fund managers were of the opinion that Wall Street was fully valued and many were expecting a 10-15% decline over the next few months. The abrupt decline in prices on Monday took everyone by surprise since there was no indication that this immediate change in sentiment was about to happen. It appears that over the weekend many traders decided that the bad news coming from China indicted that stocks were overvalued and responded with immediate sell orders as the markets opened on Monday. read more

Emerging Markets

WEEKLY COMMENT 20-08-2015

By Barry Edwards

Emerging Markets

 

The news this week has been full of pessimism about China and the emerging markets. Stock markets have been tumbling everywhere reflecting this gloom even though the Greece bail-out deal has been confirmed and the UK and USA are still growing positively. The general opinion is that these two economies and the slowly expanding EU cannot take up the slack from the rest of the world.

As we have discussed in recent comments, many fund managers were expecting a 10-15% correction in stock markets since they believe they are currently overvalued, especially the USA. The enormous sums being realised and repatriated from the emerging markets are being invested in US dollars as interest rates are expected to rise there in the next few months. This is the main reason given for the change in investment decisions together with the lack of growth in these markets. read more

Corbyn Mania

WEEKLY COMMENT 13-08-2015

By Barry Edwards

Corbyn Mania

The main stories this week centre around China, Greece and in the UK, the amazing success of Jeremy Corbyn’s labour leadership campaign.

China has been in the news because of the decline in the value of its currency by amounts which are unusual in two days. This action unsettled markets last week affecting all major stock markets and other Asian currencies. The crisis now seems to have dissipated as the central bank (PBOC) made a statement that it was not their policy that the currency should devalue from its current level. The reason for the panic was the change of policy to allow the currency to float to gain recognition by the International Monetary Fund (IMF) to include the Renmimbi in evaluating their Special Drawing Rights (SDR) to reflect real market values of the underlying currencies. read more

BofE Inflation Report

WEEKLY COMMENT 6-08-2015

By Barry Edwards

BofE Inflation Report

The Bank of England August inflation report was published on Thursday this week. Overall, it is a positive description of the UK economy while expecting inflation to remain subdued for some time. The report is a comprehensive analysis of the UK and world economies making forecasts for the next few months and beyond. If you would like to read or look through the report, please click on the link below (it has 46 pages of script);

http://www.bankofengland.co.uk/publications/Documents/inflationreport/2015/aug.pdf read more

Slowing Growth in China

WEEKLY COMMENT 30-07-2015

By Barry Edwards

Slowing Growth in China

The gyrations of the Chinese stock markets have been the main subject for discussion by many commentators recently. The reaction of the government to the rapid falls over the last few weeks has settled the markets but then the further 8.5% fall a couple of days ago reignited concerns about the Chinese economy and the slowing growth rate. It is unlikely that there will be further large falls since the restrictions put in place still apply. Attention is moving to the possible effects of much slower growth on the world economy. read more

UK Sovereign Wealth Fund

WEEKLY COMMENT 23-07-2015

By Barry Edwards

UK Sovereign Wealth Fund

On Monday this week in the Financial Times (FT) in the FTfm section there was an article about establishing a UK sovereign wealth fund. This has been a topic that has come up on regular occasions but never really explored properly by the financial community. The ultimate purpose is to provide a mechanism to fund infrastructure in the UK. The government has tried to attract interest from pension funds and other institutional investors but the initial construction risk has been the limitation for their involvement. read more

The Greek Deal

WEEKLY COMMENT 16-07-2015

By Barry Edwards

The Greek Deal

 

Since the Greek resolution was announced last Monday there has been consistent criticism of the terms of the deal. The International Monetary Fund (IMF) has stated that there must be debt relief incorporated before it can endorse the terms of the deal, most economists and commentators have said that it will not solve the problems of the country and the German finance minister, Wolfgang Schäuble, has said it may be better for Greece to temporarily exit the Eurozone while it sorts out its problems. read more

The UK Budget

WEEKLY COMMENT 9-07-2015

By Barry Edwards

The UK Budget

The clear direction of this budget is to reduce the government’s payment of tax credits and increase the salary cost of the corporate sector. The principle that companies should bear the major portion of their salary costs is a reasonable and fair policy to implement over the period of this government. Unfortunately it will increase expenditure for some SME’s at a time when they are just beginning to recover fully from the effects of the great recession and finance is still very tight for many in this sector. read more