LONGING THE DOW + FTSE = MASSIVE RALLY AHEAD-part 6(into the new year)

you guys are far too bearish!

Top News
12/31 11:38
U.K. December Consumer Confidence Rises, Survey Shows (Update1)
By Andrew Atkinson


London, Dec. 31 (Bloomberg) -- U.K. consumer confidence rose this month to a level last seen before the Sept. 11 terrorist attacks on the U.S., according to a survey commissioned by the European Union.

Martin Hamblin GfK said its barometer of consumer optimism rose 2 points to minus 1 in December, the highest in three months.

At a time when manufacturing is shrinking, spending by consumers will make the U.K. the fastest-growing Group of Seven industrialized nation this year, the International Monetary Fund said this month. Confidence slumped following the terrorist attacks on New York and Washington.

``Consumer confidence is holding up remarkably well, given the downturn in the global economy,'' said Philip Shaw, a U.K. economist at Investec Bank U.K. Ltd. ``A sharp reversal in consumer activity will be needed to justify another cut in interest rates in the first quarter.''

Three of the five measures used to compile the index rose last month, GfK said. A measure of optimism about households' financial prospects rose 3 points to plus 12. Consumers were also less pessimistic about the overall economic outlook than at any time since July, with that index soaring 8 points over the month to minus 18.

The IMF expects the U.K. to expand 2.3 percent this year and 1.8 percent in 2002. Consumer spending, accounting for two thirds of the economy, is being spurred by falling borrowing costs.

Rate Cuts

Since the start of the year, the Bank of England has cut its benchmark interest rate by 2 percentage points to 4 percent, the lowest for almost 40 years, to ward off a slump in the U.S., Japan and Germany. Half of that reduction has come since the terrorist assaults on the U.S.

Sterling futures contracts suggest investors believe interest rates have bottomed, and that the Bank of England will raise rates by the middle of next year.

Separate figures today also suggest Britons were willing to borrow and spend in the run-up to Christmas, reinforcing anecdotal reports from retailers of buoyant sales.

Narrow M0 money supply, a guide to retail sales, rose 1.7 percent in December, the biggest increase for two years, the Bank of England said. The annual growth rate rose to 8.6 percent, the highest since September 2000.

The British Bankers' Association said major banks' mortgage lending rose to a three-month high of 10.8 billion pounds ($15.6 billion) in November. Lending to consumers was little changed, after adjusting for a surge in borrowing before Christmas, at 891 million pounds.

Employment Concerns

Still, consumers don't expect an improved economic climate will lead to lower unemployment, today's EU survey shows. Six out of ten questioned expect unemployment to rise over the next 12 months, little changed from November.

The number of people saying now is a good time to make a major purchase also fell, the poll shows.

The survey questioned 2,072 people over the age of 16 between December 1 and December 19. The confidence barometer is an aggregate index based on consumers' perceptions about the economy, their personal financial position, spending, saving and unemployment.

still bullish short term!