Weekly Roundup 26/11/10

Economic Snapshot
The British Bankers Association revealed that just 30766 mortgages were approved in October, the lowest level since March 2009, while the total amount lent was £7.6 billion, the lowest level since February 2001. A CBI survey reported a rise in retail expectations for the Xmas period, but predicably a falling off thereafter, in anticipation of January's VAT increase.

Cheers
In the US, revised figures for GDP growth in the July-September quarter show an increase from 2% to 2.5% whilst consumer spending grew by 0.4% in October.

Jeers
The Irish problem continues to dominate the news with the international loan likely to be around €90 billion at 5%. A direct loan of about £7 billion from Britain seems likely. On paper this should be a good deal for the UK with a margin of around 2.5%. In Japan, deflation continues as consumer prices fell at an annualised rate of 0.6% in October. As a result of the Eurozone problems, markets around the world have been edgy. Kim Jong-Il and Angela Merkel did their bit too, bless 'em.

On the week, Sterling rose to €1.1796 but fell to $1.5620. UK Treasury 2020 rose slightly to give a gross redemption yield of 3.36%. The FTSE100 fell from 5732.83 to 5668.70 and the FTSE250 fell slightly from 10827.11 to 10809.43. Gold rose slightly from $1342.50 to $1355.00 per ounce. Brent Crude rose from $84.15 to $85.67 per barrel and copper fell from $8675 to 8227.50 per tonne. These fluctuations were really quite mild given the continued Eurozone problems.

Equity Portfolio (-1.5% on week, +16.19% ytd)
I made two small share purchases this week. Lloyds Banking Group at 64p and Hiscox at 352p. The former is obviously subject to various risks whereas the latter will, I hope, prove to be rather a dull holding. My Lloyds purchase is a contrarian punt and is based on the likelihood of dividend resumption in 2012 and the 72p floor price of the UKFI purchase. Hiscox, a speciality insurer, complements my recent purchase of Catlin. It operates in the Lloyd's market (no connection) as well as handling reinsurance and retail. A well covered dividend currently offers a yield of 4.4%.