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March 13, 2009


Luis Enrique

how much can be explained by demand for one of the UK's biggest exports (financial services) having fallen?


If you do a chart looking at Sterling-Yen versus the MSCI World Equity Index, the correlation is startling.

It is interesting though how many commentators/analysts are starting to worry about inflation.

I rather liked the fight on CNBC between Hugh Hendry and Liam Halligan on this issue on Thursday (video on my blog).

David Heigham

Very good post. Thanks.

Worldwide Distribution

Indeed the sterling price has dropped againsed the dollar alot recently. But this gives the UK a better change at exporting there4 helping the UK manufacturing sector


This is not true. There are more complicated.


Breakeven inflation of late has been a faulty measure of participants inflation expectations.

As we all know, the BofE has launched a massive QE programme of repurchasing long term gilts. This has driven the yield of gilts lower, and since inflation protected Gilts has not been included in the programme, the BEI rate has plummeted.

Printing of money is always going to be inflationary.

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