The Durables Goods orders data in the US today was better than expectations with a modest 1.9% improvement on the previous month, but again the data for the previous month was revised down.

Today we were presented with two trading opportunities, one in Unilever and one in British American Tobacco. With the sell off this morning it took both down to attractive levels, and the latter won the day as our chosen trade because of its more defensive characteristics. The market is starting to feel as if a sustained sell off could occur and we are going to continue to focus on trading some of the more defensive areas where the downside looks to be more limited in the event of a major correction. Our BATS were purchased at £16.77 and we sold out at £17.07 although there was a little more to be had with the shares peaking at £17.16.

The existing home sales data in the US today was broadly in line with expectations so little around today to move the market. The consumer confidence data yesterday was above expectations, but as always I think the market gets somewhat over excited at this type of data. A lot of the boost in confidence is attributable to the very significant improvement in equity markets. Everywhere else it is hard to find a reason for the recovery in this index with unemployent still increasing at a hefty rate and consumers still wilting under extreme levels of debt. Whether the recovery in confidence is sustainable is another matter. Tomorrow we have the Durable Goods orders data for April which always has the capacity to move the market. With the consensus expecting little or no change over the month what we don't want to see is a another negative figure of -1% or worse and as always there is a good chance that significant revisions will be made to the previous two months.

We managed to miss a trade in Unilever yesterday although it would have been difficult to predict the impact the consumer confidence data had on the market during the afternoon. With the stock having fallen back to £14.60 before the afternoon recovery it was well within our target range and the conditions were right for a swing trade, but a little bit too much caution prevented action and we missed it. It is still very much on our target list and we will be watching the market closely tomorrow afternoon for weakness from the US if the Durable Goods orders disappoint and this may again present another opportunity. The stock does look like it will resemble the trading pattern we saw towards the end of last year between £14.50 and £15.50 which should yield some good trades over the coming weeks.

The Week Ahead

The last week was the first time in several weeks when it felt as if we were close to the start of a market correction. The announcement from Standard and Poor that it has lowered its medium term outlook on the triple A rating on the UK’s debt to “negative” from “stable” took the market by surprise although on paper it is easy to see why. The risk of government debt becoming 100% of national income looks very real indeed and a downgrade in the future certainly looks to be a realistic prospect given the poor state of our public finances. The minutes of the FOMC meeting this week did little to help sentiment when they admitted that there is a strong possibility that any recovery when it comes may not be sustainable. This certainly put markets on the back foot on Thursday wilth falls of around 3% in all major markets. We are clearly far from a position of a sustainable recovery in world stock markets and with many high profile commentators last week suggesting that things could get worse before they get better there is a real risk that sentiment may turn very negative during the summer months and as we have been saying for some time now a pull-back still looks highly probable.

The key events of last week were the publication of the MPC meeting minutes which suggested that the Bank of England is more than willing to utilise additional quantitative easing if necessary. The suggestion was made that an additional £75bn should be used rather than the £50bn that was finally agreed and it seems likely that further QE is in the pipeline. The Committee stated that risks of stimulating demand too little far outweigh those of stimulating it too much. There is still huge uncertainty as to when a sustainable recovery will begin.
In the US the Conference Board’s Index of economic indicators rose by 1% month on month in April which was the first gain in 10 months. Undoubtedly this was in part due to an improvement in consumer expectations especially with stock prices moving ahead strongly over the month. The Philadelphia Fed Manufacturing Index rose to -22.9 in May from -24.4 in April still far below the point of expansion in this sector. With the fallout from the auto industry continuing to feed through over the coming months this index could easily deteriorate again.
In the UK, the CPI fell to 2.3% year on year in April versus 2.9% in March whilst the RPI rate fell deeper into negative territory at -1.2%. German consumer confidence rose to a 3 year high which suggests that we can expect some form of improvement in economic conditions as the year progresses.

With a short trading week we have only a few major economic announcements. Tuesday starts with further news of where UK house prices are headed with the publication of the Nationwide House Price Index for May which is very likely to show a further month on month decline. The debate rages as to where house prices are heading. With the average price still close to 6x the average wage there is still some way to go before they move back towards a longer trend of between 3 and 4 times average income. On Tuesday we also get the latest German Gfk Consumer Confidence survey which is likely to be in focus given the significant decline in German GDP during the first quarter. On the same day we get a second estimate for German Q1 GDP which is expected to remain unchanged from the first estimate of -3.8%. Also on Tuesday we get Euro-Zone Industrial Orders data for March which is expected to show another decline although most commentators believe that we are close to the bottom . In the US on Tuesday we get Conference Board Consumer Confidence data for May which is likely to show a further improvement on the April estimate of 39.2 to around 43 according to the consensus. We also get the equivalent ABC data on the same day.

On Wednesday the major data of the days comes with the US Existing Home sales for April. The markets is fixated with the state of the US housing market which is viewed as the key to any sustainable consumer driven recovery. However, the poor data for Housing Starts last week suggests that we are some way from a sustainable recovery in the US housing market. The April data for existing home sales is expected to show an improvement to an annualised rate of 4.67m from the March level of 4.57m. A decline from the March level will almost certainly unsettle the market.

On Thursday the focus is again on the US with the publication of the Durable Goods orders for April. The consensus is anticipating no change, but given more recent manufacturing data it seems likely that we will again face a negative figure. Also look out for revisions to previous monthly figures which can be quite significant. The weekly initial jobless claims which are announced every Thursday are getting more attention than usual as commentators look for signs that the Non Farm Payroll figures will show signs of improvement. More recent data suggests that the big increases in unemployment are likely to continue but should be closer to the 450-500k mark rather than 600,000+ which we saw earlier in the year. There is a risk however that with so many jobs now being lost in the auto sector that the monthly payroll losses could again be back above 600,000.

Also on Thursday in the US we get new home sales data which is expected to show a modest improvement on the March annualised rate of 356,000. Again a decline on the previous month would be viewed negatively by the market. Finally on Thursday we get Euro-Zone consumer confidence and German unemployment data.

The focus on Friday will be the second estimate of US Q1 GDP data. The first estimate was a worse than expected -6.1% quarter on quarter. Most commentators are expecting a revision to around -5.5%. Any downward revision would be taken badly by the market. Finally in the US to round off the week we get the University of Michigan Consumer confidence data for May. In Europe on Friday look out for the Euro-Zone CPI data for May which is expected to bring the year on year rate down to just 0.2%. We also get Euro-Zone unemployment for April with the unemployment rate expected to rise to 9.1% from 8.9%.

A difficult week for the market with a lot of negative comment making traders uneasy and unwilling to push the market higher. It feels as if we are at a point where it is right for the market to consolidate and that may well mean a move back towards the 4000 level.

For us trading has been light this week having closed out or long position of Unilever and we took a long position in Vodafone after the results. Our timing was not fantastic with the big market sell-off yesterday and the shares are around 4% down on our purchase price. Vodafone is an interesting story with certain brokers seeming to take the view that the company should still be viewed as a growth stock and their recommendations are very much focused from this viewpoint and ultimately they take a more negative stance. For us and a lot of other brokers it is clear that Vodafone is almost ex growth, but with such strong free cash flow they are in the perfect position to pay down debt over time and increase the dividend which is already above average. With a commanding global foot print they are also well placed to tack on smaller acquisitions. The market at the moment is focused on the group's mature European markets which have suffered during the global slowdown. Once the dust has settled we believe the shares will start to recover and at some stage will pop back over the £1.20 level.

The market has been spooked by the FOMC meeting minutes yesterday and negative comments made by some high profile commentators. Sentiment can change very rapidly and it is not impossible that the market may slide further over the coming days. There are certainly good reasons why this should happen and very few as to why the market should make further progress from here. From a trading perspective it is at these times when a good deal of caution is necessary and it usually pays to wait for the market to settle down before entering into new trades.

In the US today the leading indicators were a little better than forecast whilst the initial jobless claims were a little worse. It still seems likely that the Non Farm Payrolls are on course to lose another 500,000+ jobs this month, a figure hardly consistent with an economy that is showing signs of recovery, although unemployment is historically considered a laggard and will keep rising for sometime even after recovery has begun. Nevertheless with so many job losses from the auto industry coming it seems likely that this number will if anything deteriorate further over the coming months.

This morning we closed out our long positions in Unilever which were opened on Friday at £14.98 and closed at £15.27. Not a big profit, but a profit nevertheless.

I have copied below our normal Monday briefing:-

This week the market has been showing signs of finding a top and it will be interesting to see whether a sustained move can be made through the 4400 level or whether as is more likely we start to creep back to 4200 or lower. It is hard to see how the market can really make much more headway.

Last week we had confirmation of the bad state Europe is in with GDP falling 2.5% during the first quarter. At the same time we had data for Germany which fell by a significant 3.8% whilst France declined by 1.2% which was a little better than what most economists were expecting . The outlook remains difficult, but these readings are likely to be the worst during this recession.
In the UK the BRC retail sales figures on the face of it were strong with like for like sales up 4.6% during April. However, most of this was due to the timing of Easter which in 2008 fell in March. We believe that consumer spending will come under increasing pressure as the year wears on. The equivalent data for the US last week was quite poor with retail sales down during April by 0.4% with the figure for the previous month revised down to a drop of 1.3%.

Data for UK Industrial Production for March showed a decline of 0.6% which was a little better than what economists were expecting whilst data for Manufacturing for the same period showed a decline of -0.1% again better than the 1% decline which the consensus had pencilled in. The major news of the week in the UK was the publication of the Bank of England Quarterly Inflation report which demonstrated just how bad things have got with even Mervyn King now suggesting he cannot predict when a sustainable recovery may start. In addition their forecast for UK GDP growth during 2009 moved towards the bottom end of the consensus range with a very significant decline of -4.5% expected this year. This compares to the Chancellor’s rather optimistic forecast of a -3.5% fall in GDP.

The inflation data in the US was broadly as expected with the CPI showing no month on month change which brought the 12 month running rate down to 0.7%. Finally in the US, the Empire State Manufacturing index which measures the rate of expansion/contraction in manufacturing in New York state recovered from a figure of -14.7 to -4.6 which brings the index very close to a point at which the sector is expanding.

Next week is very quiet with little in the way of significant data to look forward to. Firstly looking at the US we get Housing Start data for April on Tuesday which is expected to show a modest improvement on the previous month bringing the annual rate up 2% to 520,000. The key element of any housing market recovery will be a reduction in the level of unsold inventory which still sits at a level consistent with falling prices. On Wednesday we get the minutes of the FOMC meeting which is unlikely to produce anything surprising. On Thursday the Leading Indicators for the US economy (a guide to future economic trends) are expected to show a modest improvement to +1% during April from -0.3% over the previous month. The Leading Indicators rarely have much market impact although a strong figure would certainly receive some attention. Also on Thursday we get the Philadelphia Fed Survey which provides an overview of manufacturing activity in the Philadelphia Federal Reserve district and this may well show an improvement over the previous month’s figure of -24.0. The equivalent figure for New York published last week showed good improvement, but still fell short of a positive figure that would indicate expansion.

In Europe on Monday we get the Euro-Zone trade balance. On Tuesday in the UK we get CPI data for April which is anticipated to show a month on month rate of 0.2% which would bring the annual rate down to 2.4% a figure that would still be above the Bank of England targeted rate of 2.0%. The rate is however expected to continue falling over the coming months. The RPI is expected to fall further into negative territory from the year on year rate of-0.4% reported last month to a figure of around -1.0%. The German ZEW economic sentiment survey due to be published on Tuesday for May will receive a good deal of focus given the awful Q1 GDP data published for Germany last week. This survey is expected to show some improvement on the previous month with most commentators now taking the view that Q1 will be the low point of this recession. On Wednesday we get preliminary data for Q1 Japan GDP data which could show a decline of more than 4%. Also on Wednesday the minutes of the latest MPC meeting are published and these will inevitably show a 9-0 vote in favour of keeping rates at the current targeted level of 0.5%. On Thursday in the UK we get more retail sales data for April with a month on month improvement of 0.5% expected. On Friday we get a second reading for UK Q1 GDP which is expected to remain unchanged at -1.9% quarter on quarter although there is a possibility in our view that this figure may well be revised upwards.

This week we will be focusing on the full year figures from Vodafone and interim figures from Marks and Spencer which are both due on Tuesday. We will be updating our National Grid and BT notes this week.

Very little going on today. The US retail sales figures yesterday have clearly set the market thinking about the possibility of a longer wait for recovery. Tomorrow should bring more volatility with some big economic data including the first estimates for Euro Q1 GDP and the US CPI and consumer sentiment. I can't help but think the market is going to find it hard to move back above 4400 and I think we could easily see a move back towards 4000 over the coming weeks. We are in no rush to put on new trades and there are several stocks close to our target entry prices.

The drop in retail sales last month in the US with a downward revison to the month before just goes to show that we are far from out of the woods yet and without a healthy consumer the US economy will struggle to go anywhere. Much the same can be said of the UK and Mervyn King in the Bank of England quarterly inflation report has been very clear that they do not know just what impact the ongoing stimulus packages are going to have and when recovery will come and in what form. Their downward revison to forecast GDP growth this year of -4.5% is significant. I think that maybe the market may now be about to have a reality check and we could see more selling after the drop in world markets today.

A good day for our trading and having opened positions in Tesco late yesterday when the shares sold off for no apparent reason they rebounded just as quickly this morning to give us a healthy profit. We also closed out long positions in GlaxoSmithkline which were taken towards the end of last week.

I am growing increasingly nervous of this market and a pull back seems inevitable to me although I suspect it will be the Autumn when things go horribly wrong. There is every chance that in the absence of any horror stories during the summer the market may well rally further, but I feel that eventually the economic data will take hold and a reality check will leave investors running for cover. In the meantime our aim is to focus on some of the more defensive stocks which are happily trading within reasonable ranges and so far it is a strategy that is working well. I think there are interesting short opportunities in some of the more cyclical stocks, but at the moment given how the market seems to be remaining so resilient it will take a brave man to short these and I think we need to see a shift in sentiment before contemplating a change in strategy.

Week Ahead

The market has again made progress over the week and clearly the number of commentators suggesting this is a bear market rally seem to be becoming part of a minority. There is still a strong argument for a bear case judging by the economic data and undoubtedly a lot of the market performance during recent weeks will have come from short covering and is arguably a technical based rally. What there is no dispute over is that the rate of contraction has clearly slowed down, but there is a big difference between a slowdown and a return to sustainable growth. Nevertheless we acknowledge that the current rally could easily roll on for some time yet.

During the last week there was eager anticipation ahead of the publication of the bank stress tests which in the main had already been leaked to the press and the announcement itself had little impact on the market. We has the ISM Non Manufacturing Index for April which was 43.7 compared to expectations of around 42, and we see this index remaining under pressure and certainly standing below the critical level of 50 for several months yet. Other key announcements of the week were the US unemployment figures which were better than expectations with the ADP Private payrolls showing a decline of 491,000 which was lower than consensus expectations of a decline of over 600,000 whilst the all important nonfarm payrolls came in with a decline of 539,000 against initial expectations of a 600,000 fall. Part of the improvement however was down to the one-off impact of the government employing people for the 10 year population census which over the month employed 60,000 people. It is hard to believe that this time last year the unemployment rate in the US was 5% and it now stands at 8.9%. We still appear to be on course for a further decline of over 500,000 in the number employed during the current month.

On Thursday of last week we had the results of the MPC and ECB interest rate meetings. Not unexpectedly the UK interest rate was maintained at 0.5%, and the Bank announced a further tranche of £50bn of quantitative easing bringing the total to £125bn which will be completed over the next 3 months. Given that this week we will see the publication of the quarterly inflation report we have to assume that they have already judged from this that further QE is necessary. Clearly with unemployment likely to continue rising for the rest of the year and with an output gap growing larger it is difficult to see any inflationary pressures near term. The ECB cut their rate by 25bp to 1% which was in line with expectations. There was no guidance on where rates are likely to go from here. Euro zone retails sales data for March was disappointing at -0.6% compared to consensus expectations of a modest 0.1% improvement.

This week is relatively quiet in terms of significant economic data. On Monday Ben Bernanke will be speaking about the stress test results although given the plethora of Fed officials talking last week we do not expect anything new that may move the market. On Monday in the UK we get the RICs house price survey and whilst activity is picking up we still expect the overall balance to show a continuing decline in house prices. On Tuesday in the UK we get the BRC retail sales results for April. Recent data has been a lot better than what most commentators have been expecting, but as the year develops we feel that consumer spending will remain under pressure. Also on Tuesday in the UK we get Industrial and manufacturing production data for March both of which are anticipated to show a month on month decline of 1%. We also get the UK trade balance on the same day. Wednesday brings the first major data of the week in the US with retails sales data for April. The consensus is expecting a modest improvement of +0.1% on the month, but we feel the risks are to the downside and a negative figure is highly probable.
The Bank of England issues its Quarterly Inflation Report on Wednesday. We can assume based on their decision to commit a further £50bn to Quantitative Easing announced last week that inflationary pressures are expected to remain subdued. Given the terrible initial Q1 GDP estimate of -1.9% quarter on quarter it seems likely that the report will contain a further downward revision to their GDP forecast for 2009 and this may well have an impact on the market. On the same day we get UK unemployment data for April and Eurozone Industrial Production data for March. On Thursday the US Producer Price Index data for April will give further insight into whether inflationary pressures are building in the supply chain. Friday is the most significant day with plenty of data to keep the market occupied. We get the first stab at Q1 GDP data for the Eurozone which is expected to show a significant quarter on quarter decline of 2.1%, with data for Germany, France and Italy due on the same day we would expect to see the worst performance from Germany which could show a hefty quarter on quarter decline of over 3%. On Friday in the US we get CPI data for April which the consensus expects to show a 0% reading month on month, but a negative figure is certainly not out of the question, plus on the same day we get Industrial Production for April and the latest University of Michigan Consumer Sentiment index. Also on Friday the latest Empire State manufacturing survey for May will be announced.

This week we will be focusing on the National Grid full year results due on Thursday and we will be updating our note on Unilever.

Sentiment and hope seem to be winning the day at the moment. Today's US unemployment numbers were better than expectations although part of the improvement was due to the Government hiring 60,000 workers for the 10 year population census. Nevertheless the ADP private payrolls also showed an improvement earlier in the week and overall it now seems clear that the economic data has improved although we still have some way to go before sustainable growth returns and unemployment looks set to continue increasing in the US and Europe for the rest of 2009 at least.

The debate as to whether this is a bear market rally is still raging although a lot of the bears seem to be becoming fewer in number and I suspect just when everyone goes quiet and a bull market phase appears to be happening the market will turn and we will have a big setback. You cannot ignore what the market appears to be saying and whilst it does get it wrong often as a trader you still have to ride the wave to keep up. We are doing so albeit in a moderate sense with one eye still on the prospect of this rally turning bad at some point soon. Our positions are very much focused on the companies that are relatively defensive simply because many of them are quite range bound and offer good short term trading opportunities whilst also providing downside protection if the market does turn.

One stock that we have not been trading for a while is Unilever although I must admit to having a position in my physical portfolio which I bought earlier in the year when the shares were out of favour. The results this week were not particularly good, but the relief that they were not as bad as some expected resulted in a strong rally yesterday. Now that sentiment towards the stock has improved I believe the shares will offer good trading opportunities and we will be focusing on Unilever over the coming days once the shares have settled down and we can see where the limits lie before entering into a trade.

An interesting day with the FTSE100 giving up a 120 point plus gain to stand slightly down at the time of writing. I do feel that we are now at a critical point where sentiment could easily turn quite negative and clearly market nerves over the results of the US bank stress tests are keeping traders on edge. After closing out our long positions in Tesco this morning at a nice profit I decided to short Pearson in my cfd portfolio which probably by luck more than judgement I caught at exactly the right level and shorted at £7.385 and closed out after the market fell at £7.19. We are sticking close to the defensive stocks at the moment which goes against the massive shift into cyclicals, but with still little sign of economic growth and a market seemingly fixated with the prospect of a strong recovery later this year the room for disappointment is high. I for one would not want to be buying some of the cyclicals which are now standing at levels that I think are hard to justify.

Week Ahead

Last week started with significant concerns over the possibility of a Swine flu pandemic, a concern that remains although the risks appear to have diminished during recent days. A pandemic even if the disease is mild would still have significant social costs and consequences for world economic growth. However, world stock markets have remained resilient in the face of these concerns and yet more disappointing economic data. It still seems that the market is anticipating a V shaped recovery to start some time during the second half. There is no doubt about the first part of the V, but we are still of the view that the other side will more likely resemble that of a long U shape. There remains real scope for disappointment which is more likely to hit home around September/October time when we believe the data will not be showing anything like the strong improvement that the market still seems to expect.

Last week began with the US Conference Board consumer confidence index which rebounded from 26.9 in March to 39.2 for April. The size of the recovery suggests confidence is improving which is probably due in part to the 20% stock market rally and may well be a precursor to an improvement in economic conditions. However, the index remains at a low level and we would like to see a further improvement next month to have confidence that a trend is being established. The UK CBI Distributive trades survey provided a glimmer of hope for high street spending. The reported sales balance improved to +3 in April from -44, which was partly due to the timing of Easter, but it does nevertheless present the possibility of a pick-up in high street activity. Consumer spending is one area where we remain very cautious given the ongoing level of consumer debt which we anticipate will fall as consumers opt to divert spend to balance sheet repair and increased savings.

We are close to the point at which economists have been expecting inflation in the major economies to turn negative. The latest figures from Germany this week bucked the trend with an increase in the CPI to 0.7% in April from 0.4% in March. The increase was primarily due to the timing of Easter with higher package holiday prices and a recovery in energy prices helping to keep the CPI in positive territory. It still seems likely that the German CPI will at some point fall into negative territory especially given the severity of the recession in Germany with increasing unemployment and a significant amount of spare capacity adding to the deflationary pressures.

The big news of the week was the Q1 US GDP data which was considerably worse than expectations with a 6.1% annualised drop. The reasons for the bigger than expected fall were a decline in government spending and a significant contraction in business inventories. On the positive side, consumption increased by 2.2% driven on by higher tax rebates. The fact that government spending fell should mean that Q2 will be boosted by an increase in government expenditure as the stimulus package starts to work, but a return to growth is still some way off.
The FOMC meeting last week provided few surprises with the key funds rate unchanged at 0% to 0.25% with further quantitative easing due to take place over the coming months.

The UK Nationwide April house price data last week demonstrated that the March rise of 0.9% was an anomaly with a 0.4% decline during April. Economic recovery is unlikely to happen until the housing market stabilises and with mortgage approvals still at very depressed levels, we are still months away from this point and house prices look set to continue falling.

Looking at the week ahead, on Monday we get data for US pending home sales and this may be in focus more than usual given the slight improvement in other housing data more recently. Tuesday brings the Institute For Supply Management Non Manufacturing Index. The consensus is anticipating a modest improvement on the March figure of 40.8 to 42.0 for April. This is unlikely to move the market, but a figure that is within striking distance of the magic 50 level would certainly provide a boost. Several Fed officials are speaking this week and all eyes will be on Ben Bernanke on Tuesday when he testifies before the Joint Economic Committee. The market always seems to warm to any bullish ‘green shoots’ comment made by senior Fed officials. On Wednesday we get Eurozone retail sales data for March which is expected to show a modest month on month improvement of +0.1% according to the consensus. Also on Wednesday the US ADP private sector payroll data is announced which is expected to show a further decline of over 600,000 in the number employed in the private sector during the month of April. On Thursday we get the Bank of England MPC interest rate decision at midday. With interest rates already expected to remain at 0.5% for the rest of the year, focus will again be on the accompanying statement and any further details of their QE policy. The European Central bank will announce their interest rate decision 45 minutes later and the consensus is anticipating a further cut to 1% from 1.25% in the ECB rate. The big data of the week comes on Friday when we get the US Non Farm Payrolls. The monthly increase in unemployment looks set to remain around the 625,000 level for April and the unemployment rate looks set to rise to 9%. These are huge numbers, but the market is now more than used to it and consequently unless there is a significant improvement this number is unlikely to have a major impact on the market. Finally, before the end of the week we will get the results of the US Treasury bank stress tests. There has been press speculation that several banks may need to raise fresh capital and this announcement may well result in some market volatility.

This week we will be updating our research notes on Aviva and Home Retail. We will be focusing on the Q1 Unilever results on Thursday.

Last week was a good one for my cfd portfolio with several day trades in Vodafone when I traded in size for a profit of 1-2p per share which can be quite profitable if your timing is good and a little bit of luck is on your side. I also traded Tesco which is looking quite interesting around current levels. I am not sure how much further the market is going to run, but whilst we have a reasonable amount of stability and a trading range it should provide good opportunities for trading over the coming weeks. I am still not of the view that we are in a bull market phase, but a bear market rally that could easily run for some time yet. With a lack of any significant improvement in the data I believe there is a good possibility that a sell-off will occur when it becomes clear that we are not about to see the start of a v shaped recovery which I think many still consider as the likely outcome before the end of 2009. I suspect the pressure will come in the autumn.