Read the results of a survey on Investment Week that a majority of fund managers now think that there will be a rate rise before the election - which is now probably a consensus after recent comments by the Bank of England. However, on the same site, I note that Neil Woodford is apparently more sanguine because of the nature of the recent rise in employment (self employed and part time) and the subdued inflation outlook.
Meanwhile the always useful Nadeem Walayatt of the Market Oracle has put out a piece with his latest thoughts on the Bank of England's recent mutterings and a reiteration of his bullish views on UK Housing. You can read his whole piece and more on his site by clicking the image below.
I tend to agree with his conclusions and consequently as I mentioned last week I am still happy to run my house builders as part of a diversified income portfolio. However, of course these are just opinions and I'm sure others may disagree.
Talking of house builders we have had an update from one of my national players - Persimmon, ahead of their half year results to 30 June 2014. Unsurprisingly trading has been strong with turnover up by a third as selling prices rose 4% (mostly because of the mix) and they completed 28% more homes (6408). They opened 90 new sites in the first half of the year leaving their outlet network slightly lower at 380 active sites, having sold out a number of existing sites more swiftly due to stronger sales rates.
They plan to open approximately 100 new sites during the second half of the year. While their forward sales are up 28% with prices 3% higher and the number of houses sold forward (4000+) is up by 29%. So some on going strong momentum into the second half which should augur well for the full year numbers. They also pointed out that their land bank extends to around 82,000 plots and they have £326 million in cash after an expected £122 million cash in flow in the first half. They also confirmed that the 70 pence dividend (5.4% yield) had been approved and is due to be paid on 4 July. This leaves them on around 10x earnings with a 6 to 7% yield depending on how quickly their special dividend plans pan out, so as explained above I'm happy to run with this one for now although the market seems to have had a muted reaction to the statement today, but then they did have a good bounce last week after the B of E's likely ineffective measures aimed at slowing the current housing boom.
Finally, today we have had reports on the latest Nationwide House Price Index which highlights the on going boom, or bubble if you prefer, in the London market with prices up there by 25% (the highest since 1987) and the fastest rate of growth in national prices for nine years. Not sure this a reason for celebration (unless you happen to own a house in London perhaps) as wasn't this how we got in this mess in the first place? While building, buying and selling houses at ever increasing prices to each other helps to juice up the economy and the governments re-election prospects, I'm not sure it does much for the productivity and future prospect of the Country - hey ho there you go or as they say in France Plus ça change, plus c'est la même chose - au revoir.