It is 3.30pm – The FTSE 100 traders are reacting exclusively to the Street of Dreams’ mood. The Dow opened up 75 points, probably on the back of Goldman’s guru Abby Joseph Chen turning bullish, in complete contrast to the despondent RBS market aficionado and the deeply depressing Albert Edwards from Societe Generale. Consequently the FTSE was briefly only down 60. Then Wall Street has given up most of its gains and consequently the FTSE fell by 95 points. In the last 10 minutes the DOW has spiked up to +200 points on the back of good JP Morgan results, dragging the FTSE up by its boot laces to being just down 40 at 5930. It makes me laugh the way these gurus’ track record, who in many cases, was at best quite average, still hold so much influence and sway. Goldman’s Gavin Davies wasn’t much better. Going back 50 years Greenwell’s Gordon Pepper dined out on one really successful year. The only guru who consistently got it right was Salomon’s Henry Kauffman, who spoke every Friday about money supply and other economic issues. I cannot remember a single individual, who had more effect on the futures and cash market than this astonishingly influential economist. Salomon Bros, before being taken over by Citibank really cleaned up.
It has been a horrible two weeks with the FTSE down circa 6% in that period.
There was no press statement from the MPC. Obviously no change in rates – 0.5% for 82 months (March 2009) and no one can latch on to any reason why rates should increase in the foreseeable future. Zero inflation, poor wage inflation and a solid pound are surely NOT THE INGREDIENTS FOR HIGHER RATES. The BOE suggested that all will be revealed in the next Inflation Report on how the UK economy is fairing.