Building momentum
Housing Uncle Sam
News from across the pond, where US house prices have recorded their fastest annual growth rate in nearly seven years, according to the S&P/Case-Shiller 20-city composite index. On a seasonally adjusted basis, prices rose by 1.1 per cent during March, representing the third month in succession that all 20 cities monitored by the index have recorded comparative annual growth. In aggregate, prices were 10.9 per cent in advance of where they were in March 2012, which compares with a slightly more modest annual rise of 7.2 per cent recently quoted by the Federal Housing Finance Agency. Either way, the US residential housing market has established some momentum as inventories of existing homes for sale have been falling steadily, which, in turn, has boosted demand for new-builds.
Down on the levy
China crisis
An environmentally-friendly trade dispute is brewing, as it has emerged that the majority of governments within the EU have voiced their opposition to plans by Brussels to levy import duties on solar panels from China. The EU has accused China's solar industry of supplying panels below cost-price to European markets, so it intends to impose duties with an average tariff of 47 per cent for a trial period from June 6, although the move might be withdrawn if mandarins from both sides reach a negotiated settlement. It might seem slightly odd that EU member states would take umbrage at a move designed to protect their domestic markets, but Chinese solar panel imports are only worth around €21bn (£18bn); small beer compared with the BMWs, Merc's and Rollers that are wending their way over to the People's Republic in ever greater numbers.
In a fix
Crude manipulation
Hard on the heels of the Libor and ISDAFix (swaps) controversies, the price-fixing scandal that threatens to engulf BP (BP), Royal Dutch Shell (RDSB) and Statoil ASA entered a new phase after reports emerged that Prime International Trading, a US commodities trader, filed a class action law-suit in a New York courthouse alleging that the oil giants intentionally manipulated the price of Brent Crude oil, and associated future contracts. Brent Crude is used as a price benchmark primarily in European and OPEC oil markets, which account for around two-thirds of global supply. The European Commission is also probing possible market abuse involving price indexes supplied by commodity specialist Platts.
Revisionist thinking
OECD warns on yields
The Organisation for Economic Co-operation & Development (OECD) has warned that a cessation of quantitative easing programmes by the world's central banks would probably cause a sharp rise in bond yields, thereby imperilling the recovery of the global economy. The Paris-based think-tank estimates that the US economy, which some believe to be on the cusp of a sustained recovery, will grow by 1.9 per cent this year (down from an earlier estimate of 2.0 per cent), increasing to 2.8 per cent through 2014. The OECD forecast for the UK economy looks rather anaemic by comparison, with growth at just 0.8 per cent for 2013, and 1.5 per cent for next year. However, this year's forecast contraction for the eurozone has been revised downwards from 0.1 per cent to 0.6 per cent.
Retail is detail
High street woes
Prospects on the UK high street are still far from assured judging by a survey published by the Confederation of British Industry (CBI). With real wages in decline, and household budgets constrained, it is little wonder that retail sales volumes are below average for this time of year, while orders have fallen more rapidly than at any point since November 2011. The survey also gave weight to the findings of a report on retail trends in April that was recently published by the Office for National Statistics. A third of the retailers surveyed said that overall volumes were down on last year, against 23 per cent who reported a comparative uplift. The consequent negative balance of 11 per cent is the lowest recorded since the beginning to 2011. Despite the gloomy numbers, retailers said they were actually feeling slightly more optimistic about the outlook.
Ombudsman overwhelmed
PPI to blame
In its annual review, the Financial Ombudsman revealed that the number of new cases it handled in 2012 came in at a record 508,881 - a 92 per cent increase on the previous year. That's in addition to over 2m enquiries and complaints over the period, a possible sign that the financial services industry has developed something of a public image problem. As ever, the banks were to blame. Around three-quarters of the Ombudsman's caseload is linked to payment protection insurance (PPI), and the number of complaints linked to PPI mis-selling more than doubled during 2012. HSBC, Barclays, Lloyds and RBS account for nearly two-thirds of all complaints. The Ombudsman is also receiving an increasing number of complaints regarding 'paid-for' current accounts, which could spell more trouble for the banks.
