It’s not “banker bashing” at the moment, but “top earner bashing”. 

There’s no question that many people in the UK earning over £150k per annum, of which there are roughly 360k, would be tempted to consider employment elsewhere.  You don’t have to move very far to get away from the UK’s tax regime and still have your finger on the pulse.  That’s why so many firms are relocating to Ireland and the continent, others even thinking of a move to the Far East. 

For these few almost half of their total income is taken away by the treasury, but they are not all bankers, so when you have politicians saying it would be “unfair” to reduce the 50p tax rate back to its normal level you have to think, what was fair about it in the first place?  Unfortunately, much of the damage has been done and those who have relocated may not be attracted back, as the UK has become one of the most unpredictable tax regimes in the developed world.  It’s this uncertainty for both firms and individuals that is making life difficult and giving UK plc a bad name.

Optimism seems to be sweeping the markets as the Dow put in a very impressive rally overnight.  The Fed’s Beige Book didn’t exactly shine, but the buying spree was fuelled by the prospect of a growth package from President Obama when he addresses Congress later today, and also when Bernanke gives his views on the US’s economic outlook.  The punt that the bulls are having at the moment is that Bernanke will give further indication of a fresh bout of stimulus for the world’s biggest economy.

The FTSE had been called higher overnight, but the closer our quote got towards 5400 the more it looked like it was running out of steam, so once again this area is looking to be a bridge too far for the index.  The FTSE is now down on the day at the time of writing to 5300 so near term support isn’t seen until about 5180 and 5080, indicating that it could be just as easy for us to head back down to this area as it has been for us to bounce in the last couple of days, in fact just how the market has been trading in recent weeks.

The economic releases will be interest rate focused with no action expected from either the BOE or ECB, so once again it’s the language that will be most focused on.  The BOE is expected to become more dovish as is the ECB, and now people are even calling for the ECB to cuts rates, not doing much for Trichet’s credibility.

Good news for the euro yesterday after German courts assured their bailout commitments for Greece.  This spurred traders to shift into higher risk yielding assets including the euro.  The single currency spiked at one point to 1.4148 against the dollar and also ended six down days on the spin. Saying that, it’s business as usual this morning and the euro is trading down to 1.4066.  Traders should watch out later during Obama’s speech to see the how the dollar moves, but as it stands, the pair has support at 1.4010 and resistance stands at 1.4110.

The equity markets’ rally yesterday didn’t do much good for gold which plummeted some 3%, hitting a low of 1800 actually closing below its 9 and 14 day moving averages.  However at the time of writing, after the excitement has started to quell, it looks as though the hasty traders have actually realised that the uncertainty in the global economy is unlikely to disappear and gold is back up at 1840.

Black gold mirrored the equity markets again and was supported by a slumping greenback even with the hovering concerns on the health of the US economy, as many analysts started to readjust their growth forecasts to the downside.  Today sees the US department of Energy release their inventories – a day late due to the Labor Day earlier this week – and combined with Obama’s speech, traders could be in for a sizeable market reaction.

This comment is from Capital Spreads.

We do not endorse the information and analysis available in this comment and it is provided purely for information purposes only and is delivered as a personal view by the writer. Under no circumstances is the information in this comment to be used or considered as an offer to sell, or a solicitation of any offer to buy. While all reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the time of publication, we make no representation as to its accuracy or completeness and it should not be relied upon as such. The investments referred to herein may not be suitable investments for all persons accessing this page. You should carefully consider whether all or any of these are suitable investments for you and if in any doubt consult an independent adviser. We accept no liability whatsoever for any direct or consequential loss arising from use of the information on this web page. Please see our Terms and Conditions.