Forex and Stock Investment

In New York the main shares indexes are closed Wednesday higher. After a lower startup as a result of inflation fear the market knew himself during the day to fix. Higher then expected quarter results of Hewlett-packard cared about optimism under the technology values and the petroleum related shares knew to profit from the persistent increase of the oil price.

The Dow Jones-index ended 0,7% higher 12,427.26 points. The wide S&p won 500 0,8% 1,360.03 points and the technology climbed heavy Nasdaq 0,9% 2,327.10 points.

The oil price finished in New York for the second day on file above the USD100. The price for a barrel scabrid petroleum for shipment in March lifted with 0,7% to USD 100.74, after previously still an interim record to have found on USD 101,32

The Fed in the protocol of the latest interest gathering prepared to are confirmed the interest further to reduce to support the economics, but warned there well that the upwards inflation can lead to hard-wearing interest increases in case the economics improves again.

The American Central Bank growth expectation reduced besides for 2008 and the inflation expectation adjusted up. The Fed provides now an economic growth with 1,3%-2, 0%, against an earlier expectation of 1,8%-2, 5%. The inflation, exclusive nourishment and energy, will result as expected this year 2,0%-2, 2%, compared to an earlier expectation of 1,7%-1, 9%.

Previously on the day was announced already that the American consumer prices in January on month grassroots with 0,4% are lifted, light above the expectation of economists, that expected an increase of 0,3%. The consumer prices exclusive food and energy - the so called core CPI - increased in January with 0,3%, as well 0,1 percentage point above the expectation of economists.

The ten-year-old wrote down American T-association 1/32 bearings on 102-23/32 in a return of 3,91%. The euro fell 0,1% with respect to the dollar to USD 1,4710.

The Dow knew 22 climbers and eight descendants. Hewlett-packard biggest climber with a profit was by far of 7,9% on higher then expected quarterly figures and good prospects. Rival IBM was with a plus of 2,7% the second biggest climber in the Dow. Telecommunication company AT&T was the biggest descendant with a loss of 4,3%. General motors followed with a nurse of 1,8%.

Kellogg closes 1,1% bearing. ‘S Worldly biggest producer of breakfast grains the expectation for a profit per share in an ordinal has of USD 2,92-2, 97 for 2008 repeated. Analysts will mediate from of a profit per share in 2008 of USD 2,99.

Also Pepsico reconfirmed the expectation for 2008 of a profit per share of at least USD 3, 72. Analysts reckon for 2008 on a profit per share of USD 3, 73. The soft drink manufacturer intends to purchase in 2008 for USD 4.3 billion on own shares. The share ended unaltered with USD 71,12.

Garmin finished 7,5% bearing. The rival of tom tom reported a higher then expected profit over the fourth quarter. Exclusive fragments resulted the profit per share on USD 1.31, whereas analysts USD had expected 1.11. For 2008 Garmin expects a sale of more than USD 4.5 billion and a profit of USD 4.40 per share.

Optimists draw courage from the fact that the indices above the low points of January remained.  That will the beginning its of and trial of bottom formation and the chance on a recession reduce.  But the macro-economic facts point otherwise out. 

The mostly in the eye jumping was the trusting of entrepreneurs in the services sector.  This wanted to see in January the largest drop ever.  The level of the index is scarcely higher than after the attacks of 11 September.  There becomes sleepiness said that this index a less good predicting value has then that of the industry, but because the problems in the economy self this time especially in the house market and in the financial sector show, will that this sometimes otherwise want to can be.  Also other trust indicators sketch a town gloomier image, as the trusting under small entrepreneurs and the consumers confidence.  No improvement house market De house market want to see no single improvement.  On the contrary, the valleys of the sales and the prices its largest in the recent history.  The number of houses that is built is back on the level of beginning years ninety, but really stand it still too much houses for sale.  Overdue payments go up further.  It is even so that some buyers their house normally leave and the transferring at the bank.  In contrast till what in our country customary is, can tell the bank a possible rest debt not on the buyers.  With that are saddled banks thus with extra losses.  It is then also no wondrous that banks the mortgage conditions always further tighten up.  Credit crisis worsens appeared the conditions Banks for all loans at too edges.  But loans for commercial real estate stretch the crown.  More than 80% of all banks sharpens the conditions for these loans on.  This is alarming, since investments in commercial real estate supported in the third and fourth quarter of last year yet robust alleys and with that the growth.  Moreover here also (to) many money has been loaned against (to) favorable conditions.  If this collapses thus, what the high extent implies, then falls there prevent a pillar under the growth away.  Banks sharpen their conditions a few reasons on.  Firstly they do goes this always as the economic more badly.  The risk that loans are not refunded becomes after all larger.  Further banks have to provide now long not always sufficient capital new loans.  Many banks have to take Advantage of the past years special constructions opgezet the higher output on mortgage related bonds.  These constructions were held outside the balance.  Only now that mortgage related bonds many of their value have lost,
become love forced banks or more to take they still on the balance.  If they do not do will this, will that large reputation damage yield.  Also all loans that they have provides take-over purchases to finance and that actual had must become resold, stand yet on the balances of the banks.  This takes all possession of the capital of the banks, through which they provide can less new loans.  The credit crisis limits self thus not longer till the house sector.  Generous or heavy Or the recession there comes is already almost no question more.  A more important question is or will become one generous then well a heavy recession.  The model of credit facts growth appears to have had its longest time.  As humans self forced see their debts strongly to decrease, then can that easy lead till a heavy recession.  In that case step jumble each other restorative mechanisms in working.  The credit crisis turns then vigorously self away and drags the whole acabadabra of MBS-and, CDO, CDS-and, SIV et cetera with self with.  Profits come to stand under pressure and purses fall further away.   follow and that move the consumption prevent further under pressure.  Only so far it is not yet long.  I draw yet hope from the fact that heavy recessions or depressions in it lately always paired went with monetary authorities that too late or been wrong reacted.  What that the Fed all hesitance has concerned let sail.  Further supply adaptations played often a large role in heavy recessions.  On this moment low in proportions are the supplies till the sales. 

I recently saw a lot of stories in the news about so called Sharia banking. I knew it is banking under Muslim rules but I just looked up some more info today. So I stumbled across the a press release from the British Financial Services Authority. I think they sum it up for us non-experts :

Background and key principles

Under Islamic principles, Sharia law (prescribed in the Koran) defines the framework within which Muslims should conduct their lives.

The overarching principle of Islamic finance and banking products is that all forms of interest are forbidden. The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits or losses between them. In addition, investments should only support practices that are not forbidden – trades in alcohol, betting and pornography are not allowed. Moreover, an Islamic banking institution is not permitted to lend to other banks at interest.

This we knew already

But why in Britain?

How Islamic banks fit into the current UK regulatory system

The FSA operates under a single piece of legislation that applies to all sectors, the Financial Services and Markets Act 2000.

The FSA’s policy towards Islamic banks, and indeed any new or innovative financial services company, can be summed up simply as "no obstacles, no special favours". We are keen to promote a level playing field between conventional and Islamic providers. One thing we are clear about is that we are a financial, not a religious, regulator.

One of the most important issues for the FSA is that of Islamic deposits. The UK legal definition of a deposit is: “a sum of money paid on terms under which it will be repaid either on demand or in circumstances agreed by the parties". In other words, money placed on deposit must be capital certain. For a simple non-interest bearing account there is no problem. The bank safeguards the customer’s money and returns it when the terms of the account require it to do so. However with a savings account there is a potential conflict between UK law, which requires capital certainty, and Sharia law, which requires the customer to accept the risk of a loss in order to have the possibility of a return.

Islamic banks resolve this problem by offering full repayment of the investment but informing the customer how much should be repayable to comply with the risk-sharing formulation. This allows customers to choose not to accept full repayment if their religious convictions dictate otherwise.

How can Muslim or non-Muslim benefit then?

Typical Islamic products

Some of the principal Islamic banking products are:

Commodity Murabaha - Islamic banks use this product to replace conventional inter-bank deposits. It involves the sale and subsequent re-purchase of a commodity (normally a base metal which is traded on a major exchange such as the London Metal Exchange). It is structured in such a way that it is essentially similar to a loan granted by the seller to the buyer. The difference in the sale and re-purchase price earns the seller a return which is broadly equivalent to interest.

Ijara – A leasing agreement in which the bank buys and then leases an asset (for example consumer durables or a property) to its customer for a specified rental over a specified period of time. The bank may have the right to adjust the rental charge in line with changes in the cost of finance. This method can be used for home buying purposes ("Islamic mortgages"). This usually entails the customer making capital payments in addition to the rental charge. The customer’s ownership in the property increases and the bank’s decreases by a similar amount with each such payment. Once all payments have been made, ownership of the property passes to the customer.

Murabaha - A form of credit that enables customers to make purchases without taking an interest bearing loan. The bank buys the goods for the customer and re-sells them to the customer on a deferred basis, adding an agreed profit margin. The customer then pays the sale price for the goods over installments, effectively obtaining credit without paying interest.

So what do you guys think? Leave a comment.