Bank set for battle over interest rates
Only last week most analysts were convinced that the Bank of England, which begins its two-day meeting over interest rates today (Wednesday) would keep rates at 5.75%. There was also near unanimity that they would cut in December to 5.5%.
On the face of it, this seems daft.
If you're going to cut in December, amid clear signs of a slowing house price market and wider economy, why not cut now and get it over with?
But two members of the Monetary Policy Committee spoke about inflation risks recently, even though the latest figures show the bank's measure of inflation becalmed on 1.8%, despite a month or so of rapidly rising oil prices.
Still more reason to cut now, then, and there are some signs that the committee may just do that.
Chancellor Alastair Darling has been popping up like a jack in a box recently (by his standards) on the subject of the credit crunch and he needs another bank in trouble like a hole in the head.
It emerged yesterday, in consequence of an interview with Bank of England Governor Mervyn King no less, that Darling and his boss Gordon Brown had vetoed Lloyds TSB's attempt to take over Northern Rock with a £30bn government loan.
The upshot of this disastrous decision was that the Bank of England has still had to lend Northern Rock about £20bn (with more to come no doubt) but is still looking for a buyer.
Northern Rock shareholders, many of whom are former members of the building society, will not be best pleased.
A cut in rates would mean that banks, and indeed the Bank of England, could lend to each other more cheaply.
Just what the Chancellor wants (and needs).
So don’t be too surprised if we get a "surprise" cut after all.
Oil nears $100 a barrel record
Oil was trading above $98 a barrel in the Far East overnight and may well hit a new record of $100 a barrel today.
Historians point out that, allowing for inflation, this is still quite a bit lower than its price in the 70s during the OPEC crisis.
This isn't exactly reassuring as the consequence of OPEC's cutback then was a stonking great recession that lasted for years.
But it's an ill wind, as they say. Markets in the Far East rose earlier today on the oil price simply because some of the oil companies are so huge that price rises boost their earnings and share prices, even though they're pretty disastrous for the rest of us.
The Hong Kong Hang Seng Chinese Enterprises Index of big Chinese stocks traded in Hong Kong rose a chunky 1.8%, driven by the world's first $1 trillion company, PetroChina.
Petrochina listed earlier in the week and its price promptly doubled, so it looks a bit toppy to put it mildly. Is it really worth twice as much as the former world number one company Exxon Mobil?
Oil shares may well support markets in the US, UK and France this week... just, the same way bank shares drove them down last week.
Until the next big bank hits the buffers, of course.
Everything’s coming up Rose’s
The dapper Stuart Rose of Marks & Spencer was sporting a £250 M&S suit yesterday as he announced half-year profits of £505m, leaving M&S on course to top a full year £1bn for the first time since the 80s.
I've no doubt M&S will be selling £750 suits in a couple of years’ time, if former Savile Row fan Rose has his way, and they’ll probably fly off the hangers.
Rose also said that M&S was set to expand internationally again (the company pulled in its horns during the disastrous 90s).
This retrenchment from overseas always looked a short-sighted view. I remember going into an M&S store situated at the top end of Barcelona's Ramblas a few years ago.
What a location, I thought. Why isn't there anyone else in the store?
This just about sums up the old M&S but Rose has turned things round by improving the merchandise, brightening up the stores (both obvious enough) and investing heavily in advertising, a first for M&S.
Sceptics says that he's pushing the stores too far upmarket and M&S will hit the sales buffers soon, losing out to the likes of Primark as economic conditions tighten.
But not everything at M&S is dear. If you don't want one of Stuart's suits you can buy one for £100. This may not be quite Primark prices, but it's not going to deter the heroic British shopper.
Why did non-UK taxpayer Arcadia’s Sir Philip Green get a knighthood and not Rose?
Doubtless Stuart will get his due reward soon enough.
Stephen Foster is a former news editor of 北京赛车pk10, former editor of Marketing Week and Evening Standard ad columnist. He is a partner in Editorial Partnership and writes the blog and Politics of the Media for Brand Republic.