Thursday, January 8, 2009

BOE Interest Rate Cut

BOE cut interest rates to 1.5%, the lowest since 1694. This underscores the vulnerability of the UK economy which is expected to be officially in recession end of this month. With this rate cut, I expect sterling to depreciate further. I forecast the UK rate will track closely the US rate at 1%. I am expecting another deep cut in 3 months time when global recession hits its peak. I think the rate cut is unavoidable as I have mention that mortgage market in UK is sensitive to interest rate movement. This is to stem the drastic fall in property prices which would pose a systemic threat to the UK financial system. BOE reported fast deteriorating situation of the British economy.

Today, the bears maul the bulls. Looks like the rally is unsustainable with the fall in CPO and oil prices. The current rally is due to the Middle East tension last week. Once situation calms down, the world would be facing a global recession and weak growth in the next 12 months. Penang and Kulim manufacturing sector is bracing for a massive retrenchment, pay cuts and shorter working hour after CNY. So all of us must enjoy our CNY. We must yam yam yam seng because we might not have an opportunity after this for a long time. The winter has set in.

Globetronics announce consolidation of their par value from 10 cent to 50 cent in its bid to reduce speculation and create long term value. I support this decision. It is long over due. But such exercise will not create value in the short term. No cash transaction will take place. Just divide your shares by 5.

Today is the examination board meeting for SBA at WOU. It was a long meeting to discuss the results of 14 courses. The meeting was held up by one course which has a low passing rate. After much deliberation, 10 marks were awarded across the board. This is done after report manipulation and pressure from management to reduce the high failure rate. I did not say a word but I feel the trend in education today is being dominated by consumer power of dollar and cent rather than quality. A high failure rate is blamed on the poor lecturer, difficult content and harder questions. Nobody blamed the students poor quality. Being in this industry of higher learning for 6 years, I think quality of students are dropping by the year. Last Friday, I opened an account with Citibank. Guess what? I was told later that the officer gave me a wrong number! Quality of new bank officers have dropped drastically. They are no longer capable to give good advice, let alone do a good job. Communication skills are poor and knowledge non existence among the new generation of bankers. And this are degree holders with good CGPA. Bah!

No comments: