Gosh, is that the time? Must have dozed off - sorry. I don't know about you good folks, but this time of year is not my favourite - the fishing is rubbish, and nothing much happens in the markets, whatever mood they might be in - ie bullish, bearish, or simply "can't make up their mind". You can only spend so long on the sunlounger after all. And the (somewhat unexpected) effect of the French smoking ban is that sitting at a pavement café watching the world go by is no longer a pleasure, due to the disgusting stench of all the fags being consumed outside. Must find a decent hobby. And please don't suggest I could watch the Olympics. That poor wee singer with the uneven teeth who was replaced by someone miming her song says it all about that particular setting, at least for this guy.

Anyway, it really is the "same old" at the moment. The same old leaking out of bad news for banks, hoping you won't really notice (nor indeed care by this stage - it's all so old hat). UBS (huge Swiss bank) admitted to another $10bn writedown during the week, so their running total is now $42bn and they're currently in the bronze medal position. And the UK's FSA fined another Swiss bank (Crédit Suisse) a measly £5.6m for having "mispriced" some of its toxic waste a wee while ago. Pennies, compared to the amounts involved of course. Oh yes, and it (FSA) has closed down another mortgage broker for having obtained his own mortgage via fraudulent accounts - methinks an awful lot of loans will have been obtained on that particular basis. Across the pond, the State of New York's municipal debt has increased over the past ninety days. By $1.4 BILLION. That's a lot of dosh in only ninety days, eh? Places like that are bust, basically - they just can't bring themselves to admit it yet. And still in the USA, Realtytrac reports that 17% of all houses currently on the market are repossession properties. Another 77000 were taken back by the lenders in July alone - and 272000 repossession notices were sent out to distressed "homeowners" over the same period. I know I have banged on about this before, but while people have a mortgage, they are NOT homeowners. The BANK is the homeowner!

The other scary story in the USA is the number of pension funds - the likes of the Texas Teacher Retirement System for example - that having lost a fortune by buying toxic waste over the past few years, are now trying to make up their massive deficits by buying into commodity funds. I really don't think anyone has any idea just how many people who currently believe they will be retiring on a decent pension, are going to get a terrible shock.

And this side of the water, according to the EU Statistics office, the Eurozone economy is "shrinking overall for the first time".

Students of history will understand the reference when I suggest we're meantime in a bit of a "phoney war" phase - although I'm referring to the world economy of course. What do I mean? Well, given stuff like the above snippets, markets really ought to be collapsing, but they aren't yet - because people still believe everything is going to be fine and that "They" will sort things out - there's still an overwhelming belief in the power of the SEF that I've mentioned a few times in these ramblings. (Use the search engine!) And in most years, August tends to be extremely "flat" - no doubt because so many people take their holidays then - so the world is just sitting on its hands, waiting and watching, and hoping that everything is going to turn out OK after all. Will everything be "OK"? Depends on what you mean I guess! Will inflation peak and fall back? Absolutely! By the end of this year - or maybe early 2009 - prices overall will have dropped back quite a lot. We're already seen the start of the coming deflation of course - oil prices are well back on the road to $100 if not even lower, and commodities overall are dropping like a stone - gratifying to someone who has been predicting that for quite a while now! Houses of course are tanking. And to all you "gold bugs" who take issue with the IW prediction thereon - we're all entitled to think what we want, but I'll stick with "$600 or so within a year" for now. You know of course that the governor of the Bank of England has suggested inflation will soon peak, so IW is hardly a lone voice in the wilderness here. Will it be "good news" when overall prices begin to fall? Doubtful in the extreme! Interest rates will drop, that is certain, as central bankers try to revive ailing economies, but will your mortgage payments fall? Very unlikely! As mentioned before in these ramblings, banks are desperately trying to rebuild their balance sheets and they won't be passing on much by way of a reduction - at least not in the immediate future. Credit availability, as of course you know, is contracting, not expanding - the "credit bubble" of the past ten or so years is well and truly burst. "Stuff" in general will get cheaper because people won't have the money to buy it. You see that effect most clearly in the motor industry at the moment, especially in the realm of big cars. Nobody wants them, it's that simple. And of course we see it equally clearly with property, which has a very long way further to fall. But we'll see the "nae spare cash" effect right across the board as the year draws to a close, and prices for just about everything will slowly but steadily leak away. Is that good news? In the longer run, absolutely yes! But in the next four or five years, "no" would have to be the answer for many people. An awful lot of businesses won't survive a major economic downturn, and an awful lot of people are going to lose their jobs. Government tax revenues will fall, and services will suffer as a result - taxation levels will certainly go up to try to compensate, making taxpayers all the poorer - so they'll have even less to spend, and thus prices will fall even further....and so it goes on. The prudent people who have saved money for retirement will suffer badly from falling interest rates. As mentioned last weekend, does this wee rant mean IW is a total pessimist? Not in the least! The opportunities for traders are all around us and will continue to be so. And nothing is more certain than the fact that Gordon Brown and his ilk were utterly and completely wrong in suggesting they had somehow manufactured "the end of boom and bust". Whenever there is a boom (a major one of which of course has just ended) then the ONLY possible outcome is a bust. But then guess what happens next? Not another boom, surely? Oh yes. It was ever thus and that ain't gonna change! And if YOU have positioned yourself with good ol'fashioned hard cash in your pocket when boom time comes around again.....? OK - I realise this is all a gross oversimplification of economics but hey, it's a rainy August Sunday and I needed to find something with which to get you to share my boredom........seriously though, if you're interested in the "whys and wherefores" then type "Ludwig von Mises" and/or "Friedrich Hayek" into Google and take things from there if you have a year or two to spare. Unlike Keynes (Google that too if you are truly a masochist) the Austrians knew a thing or two.

Moving along and lightening the mood a wee bit, it seems an elderly Yank went into a car showroom last week and bought a new Chevy Silverado pickup truck - he paid half in coins and wrote a cheque for the balance. It took the staff about three hours to count the dosh - I'll bet they were pleased to have had something to do to while away a weary afternoon. The interesting thing is that the total cost of the truck (and it's not a tiny vehicle) was $16000 - roughly £8500 or €10700. What would you get this side of the pond for that kind of money I wonder? Apparently the buyer mistrusts banks and paper money - not the worst position to take methinks.

Next, bad timing. I refer to Scotgold, a company that wants to re-open a mine in the Trossachs National Park. Very bad timing. But there again, if loadsamoney is raised from "investors" who believe gold can only rise in price, would the directors benefit anyway? Hmmm.

The other thing that caught this cynical eye was the England/Wales/posher Scottish - based schools' A - level results. Seemingly there have never been so many straight "A" grades. Why trouble pupils with all that needless worry? Just take the whole scam to its logical conclusion and give 'em all straight "A"s for turning up, for goodness' sake.

And then there's the "running out of cash" by British Land anent the "Cheesegrater" abomination in London. I bet Charlie Windsor is having a good chuckle about that. And still on the subject of "architecture" it seems Rome's deputy mayor is planning a kind of "Eurodisney ruin" theme park. Ho ho ho. That one will do really well in recession then. And some inflatable "dog poo sculpture" by a clearly deranged Yank, blew away at a Swiss exhibition and took down some power lines. Does any normal person actually go to see such cr......oops - "art"?

Still in the realm of the monumentally stupid, it appears that some guy in the UK is claiming that "it's all the lender's fault". Seemingly he had a mortgage for £200000 and a very bad credit record. Last year, when of course lenders were still clambering over each other to package up toxic waste and move it on, he managed to borrow a further £100000 to "help pay the bills" (his own words.) Now he and his family have been evicted and it's all the fault of the mortgage company for having engaged in "irresponsible lending." That fact is not in doubt - but what about the "irresponsible borrowing" bit? What a numpty.

Anyway, time to move on to a chart or two.

First tonight we'll take a look at Berkeley Group, just to note how most chart formations occur at different degrees of scale - here there are two counter trend channels that demonstrate that fact very clearly. Then we'll update Autonomy from WICS of July 6th this year, and look at a moving average pairing that might well be appropriate now that the triangle has been well and truly broken to the upside. Finally there are a couple of indices - a wee update on the IBEX where the bottom line of the triangle we examined last weekend, is now possibly providing rolling resistance, and then we'll see some clear rolling support on the S&P500.

And that's the lot for this weekend - time to saw some logs in the barn, to keep out of the rain - oops - just looked out of the window and the sun is shining, so the logs will have to take second place yet again! Mr Sun comes first for this fella, that's for sure.

All the best till next weekend then.

Ian.

PS - take a wee look at the chart of ITE Group. Maybe nothing to see, or maybe a bit of a triangle forming? A bit near 200 to look at a lower buy - but if it gets near 200 again, could something be brewing? No emails about it please - just keep it on the watch list

'IMPORTANT NOTICE: These WICS charts are for EDUCATIONAL PURPOSES ONLY. They represent only MY understanding of what is happening in the market for any particular share, stock, commodity or index. In NO circumstances should they be construed as recommendations to trade. If I choose to trade what I see, that is MY decision. YOU must, in turn, come to YOUR OWN conclusions about what action, if any, YOU might choose to take'.