Well, here we are, Whistler time again, and it seems that the summer has eluded us! The evenings are starting to draw in, and there is a slight chill in the night air. Yet, the trees are heavy with the fruits of autumn. Yes, there is something of the Equinox about the financial markets at the moment. Equal measure of good and bad news, those foretelling a long, cold, winter; those revelling in the joys of picking the fruit to pop in the brandy, and looking forward to Christmas!

Little by little though, economic indicators continue to improve. Despite the dark spectre of unemployment, still we have seen increased mortgage lending, and yet more (if small) increases in the major house price indices. The Bank of England Base Rate has consistently been held at 0.5%, though on the negative side, there has been another rise in the number of house repossessions (albeit smaller than predicted by many). The rally in the UK stock market, to which I referred in my last article, still has prices on a rocky sort of plateau; a situation that I still feel may well be the case for the remainder of the year, and probably the first quarter of the next. Volatility (within a certain range) has been very much a feature of world markets recently, and there will be opportunities for profits to be made, but probably not to any great degree for the smaller, long-term investors – we will probably have to wait for a while to reap our rewards. Markets are still at a reasonable level, on a long-term scale, and still worth dripping money into, but the fire sale valuations that we saw in the early part of the year, that provided us with such bargains, are gone until the next crisis scenario arrives.

Just time for an update on the mortgage market: there is still a weekly increase in the number of schemes that are available and in the percentage (slightly) of the purchase price that they will lend. Rates of interest are gradually getting less, but the profit margins made by the lenders remain high. (It seems that, in their business anyway, “the customer is not the King”). The Treasury has thrown billions at the UK’s financial institutions, but it seems to have been spent, predominantly, on bolstering up their own balance sheets, and ensuring that their executives maintain a healthy bonus.

Stop press! As I put the finishing touches to this piece, I am thinking back on a meeting that I had today with a Director of one of the country’s leading fund management companies who commented that “it feels like a Bull market again”, the Footsie 100 index is up over 40% from its recent low – to over 5000, talk of bids and mergers abound and, to cap it all, we are just starting to enjoy the first days of an Indian summer. It is easy to get lulled into a false sense of security at times like these. I, for one am packing an umbrella, just in case!

David Foot