The week started quietly since the US was on holiday celebrating Presidents' Day. Obviously there was a lot of jocose commentary regarding the feelings of the current incumbent who, while trying to downplay the celebratory nature of his get-out-of-jail-free card, must still have felt like rolling a few cigars . . . or perhaps one of his pledges of sorrow and repentance has been to give up cigars for ever. There was a comment in one of the Sunday newspapers that Monica Lewinsky had besmirched the president's name forever. It occurs to me that it was actually Bill Clinton who besmirched the president's name, but I guess Monica will be forever up there with Eve as the woman who tempted a weak man.
Bond markets opened Presidents' Day by carrying forward much of last week's weakness which had nothing to do with Bill Clinton (the markets had tired of this story an awful lot quicker than the media and the rest of the world) and much to do with the trials and tribulations of the Japanese economy.
While Korea basked in the news that Moody's has finally upgraded the coun try's debt to investment quality, the Japanese floundered around gloomily despite Friday's rate cut by the Bank of Japan. For those of us who think the euro zone has ushered in a whole new low level of interbank rates (whatever about retail rates!) we still have a bit of catching up to do before we reach Japanese levels. The cut announced by the Bank of Japan was from 0.25 per cent to 0.15 per cent. Which, let's face it, is a massive cut but hardly likely to do an awful lot for the economy. After all, if 0.25 per cent didn't stimulate growth and spending, do they really think that 0.15 per cent will?
The Bank of Japan is also wrestling with political suggestions that it buy Japanese government bonds in order to bring long-term rates lower. Despite the falling cash rates, longer dated bond yields have all but tripled since last year. And though you might think that rates around 2 per cent are particularly low, they're not in comparison to last year's 0.80 per cent levels. And, with the government set to supply the market with more bonds in an attempt to spend its way out of trouble, yields can go higher still. With a nominal 71 trillion yen (€550 billion) due this year, it won't be difficult to pick up Japanese bonds. The experts are still worried. They're not sure that the cut in short-term rates will actually force long-term rates lower. Last November, Moody's downgraded Japan's foreign currency debt to AA+ because of concerns about the increasing fiscal deficit. It's still not a pretty picture.
In the whole Latin America scenario, Ecuador doesn't usually raise an eyebrow, but the delightfully named sucre was the latest victim in currency chaos as the central bank stopped defending the trading bands which existed and allowed the currency to float. Float, in these circumstances, actually means sink, and the sucre fell by 16 per cent. The finance minister, Fidel Jaramillo, resigned. Again, there is concern about Ecuador's foreign debt, since reserves have fallen by around 11 per cent to a mere $1.4 billion (€1.25 billion). Unfortunately for Ecuador, its debt servicing obligations for this year total about $1.1 billion.
Meanwhile, at home, nirvana continues unabated. Consumer prices fell by 0.8 per cent in January which left us with an annual rate of 1.5 per cent.
Clothing was down 11.7 per cent, but obviously that's the impact of the winter sales. Actually, when you think about it, 11.7 per cent isn't an awful lot when you consider the hype that surrounds the sales. I'm the kind of person that likes to see prices slashed! If you're spending a hundred quid on something, the fact that there's just over a tenner off isn't likely to sway you one way or the other. Sales are the great triumph of hope over experience as the absolutely wonderful bargain must-have piece hangs, unworn, in the wardrobe for the rest of the year. (Though, to be fair, last year's musthave suede jacket which I practically ripped off another woman's back has seen sterling service!)
A much more interesting offsetting factor was the fact that the cost of services and related expenditure rose - this was due to increases in the cost of dancing and TV hire. Which presumably means that you were frozen to the core waiting to pay more to get into some club over Christmas and then, when you couldn't, had to find a TV instead.
Despite lower inflation rates, I haven't really noticed things getting any cheaper in the supermarket. As regular readers know, my local is a Tesco store, and it has begun to replace lots of stock with own-brand products so that prices are difficult to compare. But the overall bill certainly doesn't seem to have got any cheaper.
Because of a crowded calendar these last couple of weeks, I've taken to supermarket shopping on Sundays. I don't like shopping in a supermarket on a Sunday since I've always associated this mind-numbing activity with Fridays or Saturdays and therefore Sunday shopping makes me think that I've still another day off at least! However, it's certainly less stressful in terms of the number of people wandering around the shop, although more stressful in terms of finding the goods that you want to buy. Vegetables, for example, are in short supply unless you're buying pre-packed. I had the choice of buying a huge container of mushrooms (I'm only shopping for two!) or else a smaller container of mushrooms past their best-before date. Nor were there any tins of baked beans! (Well, again not in the size I buy.) I can understand the fresh vegetables, but tins of beans! Maybe we're all big bean eaters on the northside!
It wasn't any less stressful getting to the supermarket though. Despite the fact that the Quality Bus Corridor (and cycle lane) has only been in place for a few months, roadworks abound along the Malahide Road. This has caused huge chunks of the Bus Corridor to be dug up while - well, who knows what's going on? And why it couldn't have gone on before the neat little red coloured tarmac was laid? Sometimes I think that my naivete is quite touching.
Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers.
