Severe losses, all the European indices closed red last night especially after the Bank of England came out to release their approval on another bailout in less than three months; clearly the turbulence in the Royal lands is not over, the interventions by buying stake in the Bank of Scotland shows that losses in the fourth quarter inflamed to the extent that needed this intrusion.
The bank said that they would be converting five billion pounds of preferred stocks into common stocks taking about 70% of the banks; also the plan contains a total of 100 billion along with a purchase of company bonds, commercial paper and the organizations loans in an attempt to inject liquidity in markets.
Yet even with this bailout in a three months time span, the EU indices fell to adjoin more losses to main index, the FTSE 100 index lost halted the narrowest loses between others, falling 0.93% or 38.59 points reaching 4108.47 levels ending with a total of 7.35%, the French CAC 40 index lost 0.90% or 27.06 points reaching 2989.69 levels, and the German DAX index lost 1.15% or 50.14 points to close at 4316.14 levels.
The outlook is gloomy; financial sector is still teetering on the brink of a total destruction, the failures are not over yet and the write down episodes resume, 2008 and the current year must be called the years of interventions, government never thought that the Credit Crisis would result in all those failures, the materialization of the crisis turned out to be bad...
Not just the financial sector demand across the globe is easing which is pressuring crude prices down even when OPEC reduced their production twice last year, where the March contract is currently trading at $40.14 per barrel, alongside the February contract eased reaching a low of $33.84 per barrel.
The low crude prices will pressure OPEC to reduce their production for the third time; the OPEC countries are not satisfied with the current levels especially after their wealth enriched in the prior year when crude prices inclined to unprecedented levels reaching $147.28 per barrel in July, but the economic weakness did not help maintain those levels as we currently witness low prices.
Japanese Consumer Confidence...
High Yen, slowing domestic & international demand and slipping confidence, Japan is now facing various issues that would continue to deepen their recession. Since the beginning of the Credit Crisis the US dollar continued to weaken against the Japanese Yen which had crippled the levels of exports that they used to depend on previously, but now the contagious that cohered in the Japanese framework had eaten the confidence away.
According to the released data the Consumer Confidence eased in December to 26.7 levels from the previous 28.7 and markets projections 27.0, alongside with the Consumer Confidence households retreating heavily to 26.2 levels from the previous 28.4 in November.
The worsened economic outlook and the falling demand had obligated manufacturer to reduce their staff by terminating jobs just to ease down their expenses, in addition to narrowing down their wages due to the continuous losses seen; due to those gloomy data the Japanese Nikkei Index fell 2.3% or 191.06 points reaching 8065.79 levels
The Royal Consumer Prices...
The vast fall in Crude prices along with the weakness in the United Kingdom growth levels which pushed them in a deep recession had dragged consumer prices from the high levels records in the preceding year to now face the threat of deflation which would obligate the bank of England to use unorthodox methods in order to shield their economy from a prolonged agony.
According to markets projections consumer prices fell in December 0.9% from the previous fall of -0.1% taking the year ending December prices down to 2.6% form the previous 4.1% which is getting near the Bank of England comfort zone, also the yearly Core CPI will ease down to 1.3% from the previous 2.0%.
Also the Retail Price Index fell 1.5% on the month in December taking the early retail prices down to 0.8% from the previous 3.0%, alongside the retail prices ex mortgage payment plunged in December to 2.4% from the previous 3.9% in November.
The darkening outlook in the United Kingdom had pushed the sterling pound for the second consecutive day to face severe losses, where it's currently trading at 1.4112 levels against the US dollar which is considered to be the lowest since 2002.
From the continent of North America, we have the Canadian interest rates with expectations that they will follow the lead of the United States taking their rates currently down to 1.00% from the previous 1.50%.
Yet with all this turbulence the American citizens will enjoy the inauguration of the newly elected President, where which from today he will start ruling the world's leading economy, with hopes built upon his administration as they would be the last hope for all financial markets.