Financial Betting Articles

Like a Lead Balloon - Cast your mind back to last week. After months of gloom-mongering, I called the markets off. And behold! My preternatural psychic powers were proven right. Far be it from me to gloat. I'm content to be sipping champagne cocktails in Acapulco. What's that? You didn't get on it when I told you?! For shame! Well you’ll know to listen to me in future.

I know some of you were in on it though, from the glum mugs on our trading desk. The markets were screeching round like banshees and it was an exciting time to be in the game. Will things calm down this week? My opinion is probably, but rocky times lie ahead.

Last week’s sell off was primarily due to the realisation that the spooked debt markets would mean that private equity wouldn’t be able to stoke up share prices. Banks can't shift $20 billion of debt from buy-out deals. The markets saw a frenzy of selling much more intense than the previous frenzy of buying. Wednesday alone saw the DOW slide over 300 ticks. That is one spicy meatball!

If the fact that private equity won’t be able to grab hordes of cheap debt was the only problem, then we might be right to think that this was only a temporary correction. The bubble has burst but it was only a smallish bubble. But there are other factors that may concern us. This Thursday sees the Bank of England announce interest rates. With house price inflation slowing to just 0.1% in July and inflation heading in the right direction, a rise may not come this time round, but most predict another this year. HSBC announce their half yearly results this morning - markets are braced for more sub-prime woes.

Stateside the sell off was slowed by positive GDP data. The US economy is growing at 3.4% compared to a dismal 0.9% earlier in the year. But this may provide only temporary relief as the housing market and consumer spending remain poor. The Fed is already revising down its growth expectations for the year.

So what do I see in my crystal ball? Well, errrm, it’s a mixed bag. Come on, after a stunning prediction last week you don’t expect me to risk my reputation by sticking my neck out again do you? I think the sell off will continue in a less dramatic fashion. But the fact of the matter is, despite my natural pessimism, the economic picture is not gloomy enough for a huge crash. In a sense, we have got off lightly compared to the damage that private equity could do to the economies of the UK and US. People have come to their senses – the only worry remaining is if a company that has already been bought by private equity collapses under the weight of its existing debt.

But equally, I wouldn’t expect to see the DOW in the 14,000 neighbourhood any time soon. Am I all hot air? If you’ve got a better view then get behind it at ChoiceOdds.com.

The FTSE shed 3.2% on Thursday, the largest daily percentage drop since 2002.

Thursday's drop of 309.55 on Wall Street ticks was the tenth largest one day sell of this decade.

Watch the Yen - it strengthened 3.6% against the Euro and 2.8% against the Dollar last week. See how figures and interest rates move it this week.

There are actually only 3 ways to skin a cat.

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