I am A Buy To Let Investor.

I know, I am sorry, I have contributed to the current crisis, made sure that many young people can no longer afford to live anywhere and also made money from banks and run down areas.

For this I can only apologise.

But, I may only have two houses in my small portfolio of UK property, but in today’s current investment orientated world, I would be labelled a Buy to Let Investor. This term should traditionally imply someone with 20 houses all over the UK and possibly the world, with a combined worth of many millions.

Isn’t that what an investor is?

Well, these days no. Whether you put some money into a small portfolio of houses or you take chances on the stocks and shares, you will be classed as an investor.

According to Wikipedia, an investor is:

“An investor is any party that makes an investment.

The term has taken on a specific meaning in finance to describe the particular types of people and companies that regularly purchase equity or debt securities for financial gain in exchange for funding an expanding company. Less frequently, the term is applied to parties who purchase real estate, currency, commodity derivatives, personal property, or other assets.”

The question has to be, where do you stop becoming someone who has saved a little bit of money in an ISA, which is an investment of sorts, to becoming an investor? I do not think I am an investor, more someone who has a couple of houses in the North, looking to make a long term capital gain on their worth, which in one sense is an investment, but on the other is just a more secure bet of putting surplus money into something that even with the doom and gloom in the media, will make some money, especially if you are taking a 5 or 10 year plan.

Investor is a word that gets applied to anybody these days, and if you were to ask most people labelled by this term, I would guess many, if not the majority, would probably not consider themselves to be an investor. The years of having to work in London, wear a suit and carry a funky leather briefcase and laptop to be classed as an investor are long gone, and now all you need is a laptop, cup of coffee and a UK Bank Account.

So what types of Investors are there?

Well, according to Wikipedia:

* Individual investors (including trusts on behalf of individuals, and umbrella companies formed for two or more to pool investment funds)
* Collectors of art, antiques, and other things of value
* Angel investors, either individually or in groups
* Venture capital funds, which serve as investment collectives on behalf of individuals, companies, pension plans, insurance reserves, or other funds.
* Investment banks
* Businesses that make investments, either directly or via a captive fund
* Investment trusts, including real estate investment trusts
* Mutual funds, hedge funds, and other funds, ownership of which may or may not be publicly traded (these funds typically pool money raised from their owner-subscribers to invest in securities)
* Sovereign wealth funds

The question I would raise is even if you own your own house, you are an investor. You are investing in the house being worth more than you paid for it and if you are on a repayment mortgage, you are looking to slowly chip away at your repayments to eventually own something that has to be considered an investment.

The walls and barriers have come down. Buy a couple of houses, you are an investor, buy some of the Discover And Invest Stamps, you are an investor, put some money into the Discover And Invest ambulance trading, you are an investor.

These days, we are all investors, for different reasons, purposes and methods yes, but deep down, everyone is an investor.

OK so the property markets are down, we all know that. However the reversal in supply/demand will never reach the point where nothing will be bought or sold at all. There are still people out there looking to buy property and accordingly sell, and there are also people looking at new development opportunities without really knowing what precautions they should take. This was brought further to my attention during the Christmas break and a conversation with a friend of my uncles due to retire this year. He himself is looking to purchase both in France and the UK and his choice of options here in blighty included off-plan new builds. His request for advice did not go ignored!

Over the last year or so I have heard some horror stories emanating from UK off-plans and have even met a few to have fallen victim to this. However on the flip side I can also bear testimony to a success story of someone who purchased on behalf of his university bound daughter. There are certainly no blueprints for dealing with developers but it’s fair to say that the more due diligence you can do the better. Many potential purchasers of property often feel they don’t know the right questions to ask to make that informed decision.  A useful analogy is taking your car in for an MOT.   Most of us don’t have the knowledge and therefore always feel anxious about stated problems and solutions.  It is always advantageous to be informed!

There are some respected businesses out there that have impressive track records & strong testimonials; but how do you differentiate them from those less scrupulous who will willingly over value and mislead? Well the following forms the basis of a first stage due diligence that I would look to do on anything under consideration. There is of course so much more that would need to be done should one wish to progress to potential purchase, but this for me serves as a way to gain confidence with a developer, or of course the complete opposite.

First and foremost I would find out about exactly who they are. Running checks on the directors individually as well as the company itself, not just on Google but also investment forums such as Singing Pig & Blagger for example, are vital. Also query every single claim in their pitch & promotional literature. If they are slow in responding at this early stage, I would consider discontinuing with them.

Furthermore with the company itself, I’d ask how long they have been in business for and how many completed projects they have under their belt, particularly recently. I’d also dig a bit more about the company’s financials in terms of turnover and current liquidity as if these are healthy then they will have no problem with providing it. If this is side-stepped or refused then I would quite frankly consider utilising the nearest exit point with no plans to return!

It’s also worth looking into the area itself and conducting some basic research on what other projects are also planned for the area, whether or not any projects are under construction and also if any have been recently completed; and if so, draw comparables between size & prices. Property web portals are a good starting point for this as they will have a selection of new builds for each given region which will go a long way to providing an idea of the state of play.

As previously mentioned there are so many more factors to delve into such as additional costs, local infrastructure, house price comparables etc, but that comes next. The above is the advice I gave and it was gratefully received. Of course this is the opinion of one person so I would welcome any comments from those reading this. What would you do or more importantly, what do you do? What have you done? How successful have you been?

GDP figures this morning show a 0.6% contraction in the UK economy for the third quarter and new mortgage approval figures have declined to 17.773k for November. US equity markets have weakened after the S&P index labelled General Motors with a ‘high likelihood’ of bankruptcy.

Pound Sterling - UK Markets

Sterling is relatively unchanged overnight, trading at 1.48 versus the US Dollar and 1.06 against the Euro but could decline throughout the day as markets react to economic data released this morning.

ONS figures show the UK economy contracted 0.6% in the third quarter, revising annual forecasts to 0.3% growth. BBA mortgage approval figures show a deepening of the property slump with the number of new mortgages declining significantly since October. The UK entered recession in mid 2008 and the negative economic outlook combined with aggressive interest rate cuts and high budget deficits continue to fuel the decline of Sterling. With a raft of important data out in the UK and US today, combined with traders jostling for end of year position, we could see some significant market volatility in the coming days.

US Dollar - US Markets

The US Dollar weakened throughout the day yesterday as equity markets turned negative in reflection of general unease over the economic situation.

Yesterday General Motors stocks tumbled the most in a month, erasing the 23% gains made following the provision of Federal funds to the company. The S&P labelled GM with a ‘high likelihood’ of bankruptcy and investors replaced their initial confidence with concerns over long term viability of the company. Toyota is also due to reduce their North American payroll after the announcement of profit losses yesterday. Oil declined to $41 a barrel as negative equity markets and the record contraction of Japanese exports highlighted concerns over global growth. While surging demand from developing nations fuelled the price rises earlier in the year, economic contraction is driving the price lower at present. OPEC has announced plans to cut production by 5%. A barrage of top tier economic data is released in the US today including personal consumption and GDP figures.

Euro - European Markets

The Euro remains strong internationally, gaining against the Dollar for the second day in a row amid speculation that the US recession is deepening. Against the Pound the drive towards parity seems to have stalled for the moment, but is likely to resume with further interest rate reductions from the Bank of England in January.

Figures this morning show the EMU current account has narrowed beyond expectations with a €6.4 billion deficit in October, down from €8.8 billion in September. Official figures released in Germany show a 2.7% economic contraction is expected in 2009 as it appears the Eurozone will not be immune from a long and protracted recession. Today is light for Eurozone data and the Euro could strengthen further as market data is likely to batter the US and UK.

Other Currencies - Highlights

The Australian Dollar gained a boost against the US overnight and reached 3 months highs against the Pound, supported by higher commodity prices internationally. In New Zealand third quarter GDP figures revealed the economy has shrunk by 0.4% for the third consecutive quarter making this the longest recession in 10 years. The figures are likely to prompt a further interest rate reduction to record levels which could devalue the New Zealand Dollar internationally.

The Japanese Central Bank slashed interest rates to 0.1% yesterday and the Pound slid further towards parity, hitting 1.0464 against the Euro as official figures revealed the extent of government budget deficits in the UK.

Pound Sterling - UK Markets

Despite trading at low levels internationally, the Pound has strengthened overnight to bounce back from another all time low against the Euro. Sitting just above 1.5 this morning against the US Dollar, the Pound is at 1.06 versus the Euro.

Sterling suffered another round of selling yesterday following news that government borrowing had reached record levels. The ONS showed government debt rose to £16 billion in November, £5 billion more than this time last year. The GFK consumer confidence survey released this morning has shown sentiment has improved in recent weeks and a 0.3% rise in retail sales for November support this case. It appears heavy discounting and a reduction in VAT may be working to stimulate consumer spending in the run-up to Christmas although concerns still exist for the new year. Trend-wise, Sterling remains bearish and some analysts claim the widening interest rate differential between the ECB and Bank of England is fuelling the depreciation of Sterling. The reduction of the UK base rate to 2% has inverted the normal rules of the Sterling/Euro relationship and this, combined with negative economic data, is channelling the currencies towards parity. With the prospect of further rate cuts in January almost certain, we are likely to see Sterling remain in very low ranges in early 2009. There is no further data from the UK today.

US Dollar - US Markets

The US Dollar has strengthened overnight against its major currency partners, up 1% against the Euro although it has slid against the Japanese Yen as interest rate cuts have failed to lower the appeal of the Yen internationally.

Yesterday the Federal Reserve slashed rates for overnight lending in a move that was widely expected by markets and designed to improve liquidity in the financial sector. The Philadelphia Fed manufacturing survey showed further contraction in the manufacturing sector, comparable to levels experienced in the 1981-1982 recession. Combined with the news that China has revised growth forecasts to 5% for 2009, this led oil prices to slide, reaching $44 a barrel amid uncertainty over the future of Asian and US growth. There is no data from the US today although GDP and Personal Consumption figures on Tuesday could induce some Dollar volatility.

Euro - European Markets

The Euro has weakened slightly overnight, losing 1% against the US Dollar and Pound but remains trading at the upper limits of its ranges against its major currency partners.

German Producer Price index figures yesterday showed the largest monthly decline since 1949, dropping by 1.5% from October to November. This was larger than predicted by economists and as the Eurozone’s largest economy, proved to be a source of weakness for the Euro yesterday. The Euro is still benefiting from the lack of sharp interest rate reductions by the ECB and severely weak data coming out of the UK and US. There is no major data from the Eurozone today.

Other Currencies

The Japanese Central Bank has slashed interest rates overnight to 0.1%. The Bank reported fiscal conditions had ‘deteriorated sharply’ as the Yen has reached 13 year highs against the Dollar recently, causing problems for Japan’s export based economy. The Bank also revised growth forecasts to 0% for the 2009 financial year. The rate cut has failed to counter the rise of the Yen which continues to strengthen internationally this morning.

The Australian and New Zealand Dollars have slid back from their strong position early in the week as further negative economic data has dampened risk appetite internationally. The Australian Dollar reached 3 month highs against the Pound as expectations of further interest rate cuts continue to mount with Bank of England deputy governor Charles Bean stating UK interest rates could reach zero early next year. There is no data from Australia today and New Zealand’s GDP and consumer confidence figures are due early next week.

Sterling continued its decline against the Euro yesterday after the MPC minutes revealed a 9-0 vote in favour of a 1% base rate reduction. Labour market data in the UK revealed a 0.2% rise in the official unemployment rate, taking it to 6% for October and the Pound continued to plunge towards parity with the Euro.

Pound Sterling - UK Markets

Yesterday was another black day for the Pound as labour market data and the release of the MPC minutes sent Sterling plunging towards parity with the Euro. This morning Sterling has reached another record low against the single currency of 1.06. The Pound also depreciated against the US Dollar, falling away to 1.53 and lost ground against its other international currency partners overnight.

The MPC minutes showing a unanimous vote for a 1% reduction was interpreted by markets as an indication of further rate cuts to come and this sent Sterling into a freefall. The Pound is yet to find a bottom against the Euro and is rapidly approaching parity. Weak labour market data also showed the official unemployment rate rose to 6% in October and this is expected to continue to rise as more companies are forced into redundancies by the credit crunch. Yesterday David Blanchflower predicted unemployment could top 3 million. This morning retail sales figures showed an unexpected rise in November taking year on year growth to 1.5%. On the positive side, there is the view that the very weak Pound is preventing the manufacturing and export sectors of the British economy from further downturn. With no further data in the UK today Sterling is expected to remain under pressure.

US Dollar - US Markets

There have been mixed results for the US Dollar overnight. Gaining nearly 1% against the battered Pound, the Dollar has lost ground against its other major partners as 0.25% interest rates in the US have boosted investment in the higher yielding currencies.

The price of crude declined yesterday following the OPEC announcement to cut production by 2.2 million barrels a day. This morning oil is trading back at the $45 level, as threats to supply were mitigated by IMF statistics which revised global growth predictions downwards. The Philadelphia Fed Manufacturing Survey, regarded as a reliable snapshot of the manufacturing industry, is out today.

Euro - European Markets

The Euro continues its bullish run on the Dollar and Pound, gaining nearly half a percentage point this morning on the Dollar and 1.3% on the Pound to trade at a new record high of 0.94.

Yesterday’s figures showed German business confidence fell to its lowest level since 1982 as recession takes its toll on the Eurozone’s largest economy. German manufacturing figures have been in decline for five consecutive months and exports have contracted by 0.5% as global demand grinds to a halt. The ECB meets today and may announce measures to facilitate greater interbank lending which is still regarded as one of the greatest barriers to economic recovery. The EMU trade balance is also out today.

Other Currencies

The Australian and New Zealand Dollar have gained for the fourth consecutive day against the US Dollar as widening interest rate discrepancies lead investors to favour the higher yielding currencies.

Benchmark interest rates are 4.25% in Australia and 5% in New Zealand compared with 0.3% in Japan and 0.25% in the US and this large discrepancy has supported the Aussie and Kiwi Dollars recently. The Japanese Central Bank meets today amid pressure to lower the value of the Yen which reached a 13 year high against the US Dollar this week. The Bank of Japan’s interest rate decision is due tomorrow.

The Federal Reserve slashed interest rates to an unprecedented 0.25% yesterday, making the current base rate the lowest in US history. The decisive reduction was announced amid further ‘quantitative easing’ measures to stimulate the economy and ward off deepening recession. The US Dollar depreciated following the news and global equities climbed.

Pound Sterling - UK Markets

Sterling has recovered substantially against a broadly weaker US Dollar, currently trading at the 1.55 level. Against the Euro the Pound continues to slide, reaching a new low yesterday and sitting at 1.103 this morning.

The Office of National Statistics announced this morning that unemployment hit 1.86 million in the three months to October. David Blanchflower, labour market expert from the Bank of England, has warned unemployment is set to reach 3 million during the current recession. The weakening labour market will continue to weigh on Sterling as employment is a key factor in consumer confidence and business sentiment. Retail and consumer price inflation figures yesterday showed inflation declined to 4.1% in November from 4.5% the previous month. The Bank of England’s inflation letter announced rates could move ‘materially’ below the official target of 2% in the second half of 2009 as lower energy prices, interest rate reductions and heavy discounting from retailers drive prices lower. Today the Bank of England Minutes are released and these could provide clues as to further rate decisions in 2009. Economists are currently predicting UK base rates could fall to 1% which is also a source of pressure for the Pound.

US Dollar - US Markets

The US Dollar depreciated internationally following the Fed’s interest rate decision. Reaching a 13 year low against the Japanese Yen yesterday, the Dollar remains low against its international partners this morning as market confidence increases risk appetite internationally.

The FOMC reduced the US base rate to 0.25% yesterday, taking interest rates to their lowest level in the history. The 0.75% reduction is essentially a zero interest rate policy and was accompanied by Federal pledges of more unorthodox measures to stimulate the property market and ward off deepening recession. Wall Street jumped 4.2% in response to the news and equities climbed around the world. The price of oil has also risen for the first time in 4 days after OPEC announced a cut in production by 2 million barrels a day. This also contributed to Dollar weakness and OPEC could find themselves in a Catch 22 as attempts to raise the price of oil potentially undermine global recovery prospects. Today is light for US data with the Philadelphia Fed Manufacturing Survey, a key indicator of manufacturing sentiment, due tomorrow.

Euro - European Markets

The Euro continues its bullish run on the Pound and US Dollar this morning, up 0.48% against the Dollar and nearly 1% against the Pound.

While interest rate cuts and inflation data in the US and UK have dominated the global headlines this week, the Euro has remained out of the spotlight and benefited from collective stability. Consumer Price Inflation rates are due from the Eurozone today and these could indicate the extent to which deflation is likely to become an issue in 2009. The ECB has signalled it will not continue to cut interest rates into 2009 and has limited scope compared to its international counterparts to do so which could affect the value of the Euro in future. The Bank of Japan’s interest rate decision is also due on Friday.

The Pound fell to another new low versus the Euro yesterday while the US Dollar weakened ahead of an expected 0.5% reduction in the base rate from the Federal Reserve. The banking sector is reeling as the extent of Bernie Madoff’s fraud emerges, with major Spanish, UK and Japanese banks all posting billions of dollars worth of losses.

Pound Sterling - UK Markets

Further volatility occurred yesterday and Sterling plunged to a new record low versus the Euro. The Pound recovered to 1.11 this morning and has gained on the US Dollar, breaking through the 1.5 level ahead of interest rate cuts to be announced later in the day.

Yesterday the Rightmove House Pricing Index showed house prices continue to decline in the UK. Annual rates show a drop of 6.3% with another 10% decline forecast for 2009 as unemployment and credit conditions remain dire. In response, the Treasury has announced the return of 100% mortgages with a host of government guarantees to stimulate the property market. Consumer and Retail price indices from the UK this morning show inflation rates are declining, largely on the back of lower energy prices. The Bank of England Inflation letter is also out today.

US Dollar - US Markets

The US Dollar has weakened ahead of the Federal interest rate decision and is lower against its Asian currency partners this morning. Global equities lost ground yesterday as banks revealed their exposure to the Madoff fraud and the Dow Jones closed down 0.8%.

A 0.5% reduction in the Federal Reserve base rate is expected this evening in an attempt to revive consumer spending in credit crunch conditions. Since the credit crisis began in August 2007, interest rates in the US have been slashed from 4.25% to 1%. Yesterday the Federal Reserve also announced industrial production has fallen by 0.6% for November, while manufacturing fell by 1.4%. These figures are expected to continue to revise annual growth rates downwards in 2009. The Madoff fraud in the US has provided another knock to market confidence which is already languishing at record lows. Although the US Dollar has weakened, its exposure remains limited due to its safe haven status when markets turn to risk aversion. Consumer Price Inflation and Housing Stats are due along with the FOMC decision in the US today.

Euro - European Markets

The Euro has remained strong overnight, having reached another high of 0.90 versus the Pound yesterday. It is currently trading at 0.89 against Sterling and 1.36 versus the US Dollar.

Despite calls of approaching parity with the Pound, the Euro is perceived as overbought by some economists and could suffer as the extent of recession in the Eurozone emerges. EMU figures for the Purchasing Managers Index for Services and Manufacturing are due today, along with the change in employment, while consumer price inflation statistics are due for the Eurozone tomorrow.

The Euro has been the major benefactor overnight as markets await a series of important data from the US and UK this week. The Dollar is broadly weaker in the run up to the Federal Reserve interest rate decision and Sterling remains low against the single currency as markets contend with more economic gloom in the UK.

Pound Sterling - UK Markets

The Pound has climbed back to the 1.5 level against the US Dollar this morning although is still sitting close to record lows against the Euro. This week is laden with important data and Sterling is likely to remain under pressure as the UK outlook remains bleak and budget deficits continue to rise.

This morning the UK government has ruled out intervention to stop the slide of the Pound, which has lost around 25% against the Euro since this time last year. As a higher yielding proxy to Sterling, the Euro is being favoured by investors at present for its perceived stability throughout the global economic crisis. This morning John Varley, the head of Barclay’s bank has admitted house prices could fall by up to 30% and the UK is only ‘halfway’ through the downturn. This is ahead of official unemployment figures on Wednesday which are expected to show a sharp increase. Lack of confidence in the UK economy is extending pressure on the Pound as it appears the recession will not be as short or shallow as initially thought. Today is light for UK data with the Bank of England inflation letter and consumer and retail price inflation figures due tomorrow. A decline in consumer and price inflation is expected as aggressive discounting and VAT reductions make goods cheaper in the run up to Christmas.

US Dollar - US Markets

The US Dollar is broadly weaker this morning ahead of the Federal Reserve interest rate decision and inflation figures due in the US this week.

A 0.5% reduction in the benchmark interest rate of 1% is expected when the FOMC meet tomorrow. The availability of liquidity is still proving a significant barrier to financial recovery and central banks are expected to keep cutting interest rates until we see and upturn in lending and more generous distribution of credit. Global stocks gained this morning as President Bush signalled the financial bail out for auto manufacturers would be swift and decisive. Lengthy or collapsed negotiations at this point could prove a hazard to market confidence and stability. Crude oil has gained, climbing to $46 a barrel ahead of production meeting on Wednesday where cuts are expected. A series of soft data is due in the US today with the consumer price index and FOMC decision likely to be the big market movers tomorrow.

Euro - European Markets

The Euro has become the ‘darling’ of currency markets and continued its ascent this morning, buoyed by market nervousness ahead of important figures from the US and UK this week. The Euro is currently trading at 0.89 versus the Pound and 1.34 versus the Dollar.

ECB President Trichet has called for financial discipline and stability this morning as Ireland has announced a €10 billion package to recapitalize the countries financial institutions. The stability of the 15 nation Euro has provided a significant degree of confidence in the currency in recent weeks and leaders have argued for continued recognition of the fiscal rules that govern the Eurozone. Producer and import prices released this morning from Switzerland show a decline for the fourth consecutive month. Today is light for data in the Eurozone with unemployment figures due tomorrow.

The Pound sunk to a record low against the Euro yesterday of 1.1385, the lowest since the Euro began, after the NISER announced an economic contraction of 1% in the 3 months to November. The OECD has reported the global recession could be longer and deeper than originally thought with the UK being one of the worst economies hit.

Pound Sterling - UK Markets

Sterling sunk to a new historic low versus the Euro yesterday and remains low this morning. Reaching 1.13 against the single currency, economists speculate that parity could be achieved over coming months as the UK enters the trough of the downturn. Sterling strengthened against the US Dollar yesterday amid expectations of reduction in the US base rate next week.

Sterling has depreciated approximately 20% against the Euro from this time last year and is 25% lower against the US Dollar than in the summer months. The Pound continues to be undermined by weak production figures and the opinion that the UK could be one of the worst economies hit by the credit crunch. Although Darling’s pre-budget report predicted a 1% contraction next year, analysts are now putting that figure at closer to 2% and growth trends are being pushed back into 2010. The prospect of further interest rate cuts is also weighing on Sterling. The CBI Industrial Trends Survey, usually a good indicator of the health of the manufacturing sector, is due today and this could lead to further Sterling weakness.

US Dollar - US Markets

The Dollar is broadly weaker overnight amid uncertainty over the extent of the Federal Reserve base rate cut next week. The Dollar is down 0.6% on the Euro and nearly 1% on the Pound.

The general consensus is for a 0.5% reduction in the benchmark interest rates by the Federal Reserve next week, taking them to 0.5%. Equity markets have been relatively neutral this week, replacing some of the recent volatility as investors have become somewhat desensitized to bad news. Stocks could take a positive swing with the announcement of a rescue package for the automobile industry. Crude remains in the region of $43 a barrel and is expected to rise in price ahead of a production meeting on December 17 when cuts are likely to be announced. Jobless claims are due in the US later today.

Euro - European Markets

The Euro reached an all time high versus the Pound yesterday and remains high this morning as weak UK data continues to pressure Sterling. The Euro also gained on the US Dollar throughout the day yesterday breaking back through the 1.3 level to trade at 1.31 this morning.

Figures yesterday showed industrial production has declined in both France and Italy but this failed to stop the ascent of the Euro as negativity plagues its major currency partners. Economists are predicting the Pound could slide more against the single currency and we may see new lows in coming weeks. The ECB release their monthly report today which will detail prevailing economic conditions in the Eurozone.

Sterling remains weak this morning after production statistics show the UK economy is contracting at the fastest rate since 1990. The Euro has strengthened overnight against the Pound and US Dollar and European Commission President Jose Manuel Barroso has called for an EU-US agreement to battle recession.

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Pound Sterling - UK Markets

Sterling remained low against the US Dollar yesterday and is holding at the 1.48 level this morning. Against the Euro the Pound is back down to the 1.14 mark, still under pressure by the weight of negativity surrounding UK economic prospects.

This morning the National Institute of Social and Economic Research announced the UK economy contracted 1% between September and November 2008. Although official fourth quarter statistics will be released in January 2009, it appears the UK economy is contracting at record levels. Industrial production figures yesterday showed a 1.8% decline in the 3 months to October. The manufacturing sector also declined by 2% dragging down annual growth figures. This decline can in part be attributed to the downturn in export markets as the EU accounts for 58% of UK exports, while the US is the single largest market. The OECD has warned economic downturn for the UK would be ‘severe’ throughout 2009. There is no further data from the UK today while the CBI Industrial Trends Survey is due tomorrow.

US Dollar - US Markets

The US Dollar is slightly weaker against the Euro and Pound this morning. The Dollar is also down against its Asian and European currency partners in the absence of positive economic sentiment and ahead of rate cut expectations next week.

Despite underlying economic negativity, global equity markets have sustained upward momentum as the continuing prospect of interest rate cuts are supporting the case for economic upturn in mid 2009. Congress may vote today on a $15 billion rescue package for the US car industry and oil is up to $43 a barrel amid reports of production cuts from Saudi Arabia. There is no major data from the US today with trade balance figures due tomorrow.

Euro - European Markets

The Euro has gained against the US Dollar and Pound this morning as the European Commission President, Jose Manuel Barroso has called for a US-EU joint stimulus package to mitigate the effects of recession.

Tomorrow the 27 European Commission member states will converge in an economic summit to formulate a plan to combat recession. German Chancellor Angela Merkel is coming under increasing pressure to adopt a more generous rescue package as Germany is Europe’s largest economy with a budget deficit close to zero. Germany also has a large manufacturing sector and would be one of the hardest hit if the recession is to be deep and long lasting. Data released this morning shows Norway’s PPI has risen 11.9% in the year to November. There is little more of note today and the ECB’s monthly report is due tomorrow.

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