The was a mis-match of markets this week between the UK and the other leading economies with the Dow Jones moving ahead by  6.9% and the Japanese Nikkei by 8.6% and yet the FTSE 100 only gained 1.5%.

Turning to commodities gold saw a drop of 3.2% this week falling to $923.20 per ounce whereas oil remained relatively unchanged on the week. Also, the currency markets did not move a great deal in this week.

End of the week saw:
Stock exchanges:
FTSE 100: 3,899
DOW: 7,778
S&P: 815.94
Nikkei: 8,627

Currencies
UK Sterling £ to US Dollar $ 1.42670
UK Sterling £ to Euro € 1.07684
UK Sterling £ to Japanese Yen 140.515
UK Sterling £ to Aus $ 2.06798
US Dollar $ to Euro € 0.754900
US Dollar $ to Japanese Yen 98.0334
US Dollar $ to Aus $ 1.44924

Commodities
Nymex Crude oil – $52.38
Gold – $923.20

On a recent visit to Swanage in Dorset I visited a bakery for a coffee and cake and noticed that the owner had labelled the “Gingerbread Men” as “Gingerbread Persons”.

I asked the owner why he had named them this way and told me that the Trading Standards had told him he was not allowed to name them “Gingerbread Men”! What is this country coming to and shame on the people at the trading standards – They have gone one step too far in my opinion and this just shows how crazy things have got. This country wastes so much time and money on such petty things as this, rather than getting it right with the finances and letting the banking industry going into melt-down – shame on the Government too for allowing this charade to happen.

Gingerbread men will always be Gingerbread men because that is how they were first created and I urge bakers to revert to the traditions of the UK. Stand up against the time-wasting PC brigade! Businesses have much more important issues to deal with than having to comply with crazy politically correct rules set by people that have absolutely no idea and nothing else better to do!

During an economic slow down most businesses take time out to think about their cash flow and their spending budgets, or so they should.

I know from talking to other businesses that things are tough out there right now, and you only have to look down your own high street to see the all revealing closing down sales and empty shops of businesses, including some large retail chains, to know that things are very difficult.

However, this is not a time to hold back on your advertising though and for one of my businesses we, as a board of directors, have recently decided to up our advertising spend. In this case the business concerned is in the care-sector and we chose to up our marketing budget to 7% of our turnover, so that as turnover begins to increase so will the amount we spend on marketing and advertising and so on.

I know that newspapers and magazines are having a tough time too right now because businesses are not spending the same on advertising as they did 12-18 months ago, when in fact the opposite should be true! At a time when competition is high and customers are being selective about where they spend their money, you need to keep you business in the “Eye” of your customer and even more so when things are tough.

I noticed that when I looked at search terms on this subject there are some top searches not least some looking to see what other businesses spend, for example: “how much does mcdonalds spend on advertising”; “how much money do advertisers spend on advertising”; “how much do companies spend on advertising”; “how much bose spends on advertising”; “how much do business spend on advertising a year”; “how much sears spends on advertising”, were some of the top ones. What I don’t know is whether people are actioning after doing their research. If you were the one looking at how much McDonalds spends and you happen to be in a similar trade, then you should consider spending a similar amount as they do in order to keep up.

It would be easy for you to do some of your own research on what amounts other businesses are spending on advertising or companies within certain sectors, to give you an idea of what you should be spending too. I would suggest that the amount you spend be no less than 5% of turnover and possibly up to around 20%. However, one thing you need to take into consideration is your “gross profit margin” you make.

If in your industry your gross margin is let’s say 20% – there would be no point in spending 20% on advertising, as this would take up your whole gross profit and you might as well close up shop now. However, if your gross profit margin was say 60-70%, which is what the margins are like in the food trade, then you might wish to consider spending up to these levels of advertising, as you have a large amount of gross profit margin to play with.

In the example of the care business sector mentioned above, the gross margin in this particular business is 32%, so 7% of turnover will leave us with a net of 25% gross profit to go towards the other business overheads and profit for the shareholders.

For those that are not quite sure about what “Gross profit margin” is – it is the percentage you make on your sales over an above what it costs you to make those sales. So for example, if you sell televisions and you sell one for let’s say £500 and it cost you £350 to buy the television, then you gross profit in this instance is £150 or 30% (£150 divided by £500).

This week saw the Asian markets gain the most with the Nikkei gaining 5% over the end of last weeks close. Whereas the UK’s FTSE 100 gained just 2% and the New York Dow Jones 1% – what is positive though is that this is the second week the indexes have gained.

Sterling gained ground this week over the US Dollar by 4%, but this was not due to Sterling strengthening, but more to do with the US Dollar weakening. The US Dollar weakened against the Euro and the Australian Dollar by 5% this week, whereas Sterling lost 2% against the Euro and 1% against the Australian Dollar.

The price of oil jumped this week by a massive 15% ending the week at a recent high of $52.82 per barrel. Also, investors again seek safety in gold with the price per ounce rising by 3% on the week.

End of the week saw:
Stock exchanges:
FTSE 100: 3,843
DOW: 7,278
S&P: 768.54
Nikkei: 7,946

Currencies
UK Sterling £ to US Dollar $ 1.44776
UK Sterling £ to Euro € 1.06158
UK Sterling £ to Japanese Yen 138.620
UK Sterling £ to Aus $ 2.09244
US Dollar $ to Euro € 0.733372
US Dollar $ to Japanese Yen 95.7632
US Dollar $ to Aus $ 1.44600

Commodities
Nymex Crude oil – $52.82
Gold – $954.20

Sterling has taken a bit of a hit this week falling by over 3% against the Euro to under €1.08 to the Pound and to less than US $1.40! However, the stock markets were on on the week with the FTSE 100 closing 6.3% ahead at the end of the week. The Dow Jones was up by over 9% in the week showing some renewed confidence in the economy – Perhaps?

End of the week saw:
Stock exchanges:
FTSE 100: 3,754
DOW: 7,224
S&P: 756.55
Nikkei: 7,569

Currencies
UK Sterling £ to US Dollar $ 1.39570
UK Sterling £ to Euro € 1.07956
UK Sterling £ to Japanese Yen 136.737
UK Sterling £ to Aus $ 2.12377
US Dollar $ to Euro € 0.773485
US Dollar $ to Japanese Yen 97.9700
US Dollar $ to Aus $ 1.52165

Commodities
Nymex Crude oil – $45.80
Gold – $928.10

There seems to be a lot written about 3 ways to increase profit in business, but we consider there to be 7 ways to increase profits or “7 ways to grow your business“.

The 3 known ways to increase profit are:

- Increase the cost to the customer/client or in other words put up your prices.

- Increase the number of customers you cater to (and I like to add to this – of the type you want to deal with).

- Sell more often to customers you already have.

These are just three ways to increase your profits, but if you want to learn the other 4 ways and to get your hands on a great piece of “Profit Increase Software” then click this link.

When world economies are tough and during this credit crunch you need to look at every way to stay ahead of other business competition. It is “Survival of the Fittest” and for the sake of a minimal investment you could be upping your profit by tens of thousands of Pounds or Dollars, with out a huge investment.

Another week of turmoil on the financial markets with the FTSE 100 falling by another 7.8% on the week and the US Dow Jones down by 6.2%.

Also, the UK Pound lost ground this week against all currencies falling 1.3% against the US Dollar and 1.5% against the Euro which is largely due to the Bank of England’s decision to drop base rate to 0.5% this week. Not only that the UK is faced with having the need to opt for Quantative Easing too whereby up to £150 billion is to be pumped into the economy to get it going. The strong US Dollar (or weak UK Pound, which ever way you want to look at it) has helped the media group Pearson make increased profits. Profits were up to £585 in 2008 from £468 in 2007 from a company that owns The Financial Times and Penguin Books.

Despite the problems being faced by the UK, London has retained its place as the number one financial centre in the world, followed by New York and Singapore. However, the City of London Corporation has said that there are no “Safe” financial centres in the world.

This week also saw yet another UK high street bank have control be taken by the Government. The Lloyds TSB bank, which took over HBOS in January 2009, is to be owned 65% by the UK Government after putting up further cash to support it’s cash flow and a deal to insure its toxic debt to the tune of £260 billion. Lloyds TSB have agreed to commit to an extra £28 billion of lending over the next two years as part of the deal with the Government.

Things are not looking too rosy in the US with 12.5 million people now out of work which represents 8.1% having risen by a staggering 651,000 last month, making a total of 2 million jobs lost in the last three months! The knock-on effect of these job losses on the US economy will be far reaching and will prolong the economic agony.

Adding to the US wows the car industry has fallen yet further with sales of cars from General Motors falling by 53% and Ford by 48% in February 2009 over the previous February.

House prices continue to fall, despite the lowest interest rates the UK has ever seen in its history. House prices fell by a further 2.3% in February 2009 making the year-on-year fall since February 2008 17.8%. The Government is putting things into place to encourage banks to lend with what it has done with Lloyds TSB and the Bank of England pumping Quantative Easing cash into the banking and insurance institutions. However, although the banks will lend they are being extremely fussy about who they will lend to, so if the borrower has missed a credit card or phone bill payment they will likely be refused a loan.

Some good news for LDV vans with the possibility of a management buy-out being worked on. To help the deal go forward the unions and workers have seen sense by agreeing to work a three-day week and have taken a 10% pay cut together with a cancellation of all bonuses. If all goes to plan the business should see production start again on 6 April 2009 and if things go as management hope they will 850 jobs will be saved. However, if sales of the vehicles do not go well then they will need to speak with the unions again about cutting the workforce.

Oil prices have fluctuated down and then up this week starting out at $44.25 a barrel dropping to $40.15 in the week and closing higher at $45.52 at the end of the week. The 10% fall in the week was on the back of a slew of bad economic data across the world. Insurance giant AIG reported huge losses of $61.7 billion (£43.68 billion) this week and HSBC bank went to the market for £12.5 billion of additional funding, which sent markets tumbling. As a result of these huge losses they will receive a further $30 billion (£21.23 billion) from the US government as a rescue package for the business. AIG has now received the most money of all US companies in bail-out cash with this making it a total of $180 billion (£127.43 billion).

End of the week saw:
Stock exchanges:
FTSE 100: 3,531
DOW: 6,627
S&P: 683.38
Nikkei: 7,173

Currencies
UK Sterling £ to US Dollar $ 1.41254
UK Sterling £ to Euro € 1.11484
UK Sterling £ to Japanese Yen 139.001
UK Sterling £ to Aus $ 2.20393
US Dollar $ to Euro € 0.789297
US Dollar $ to Japanese Yen 98.4037
US Dollar $ to Aus $ 1.56039

Commodities
Nymex Crude oil – $45.52
Gold – $942.70

The Bank of England has today dropped the UK bank base rate to 0.5% which sets a new record low for the UK economy.

With the economy at a stand-still the Bank of England has taken further steps to stimulate the UK economy and in addition Mervyn King is about to do quantitative easing and will initially pump £75 billion into the economy and then up to a further £75 billion making a total of £150 billion!

There are two ways in which a government can get an economy going, and once interest rates have been dropped to such a point that any further cuts will have little effect then the other option is to go for quantative easing, which is simply where money is pumped into the economy.

The way this works in practice is for the central bank (and in this case the Bank of England) buys up financial assets, which includes government and corporate bonds from the large banking and insurance institutions. Once these institutions have this extra “Cash” in their accounts they can then boost the money supply, which in turn will increase the amount of money that is in circulation in order to revive the economy.

There are two ways in which quantative easing works with the first being that, with the banks having more “Cash” in their pockets they will be more willing to lend to businesses and individuals, thus putting more money into the economy. The second way that this works is that the effect of quantative easing is a downward pressure on lending rates making it cheaper for businesses and individuals to borrow.

The downside of quantative easing, as with reducing interest rates, is that it could spark off inflation as it is there to encourage spending and this is the risk that the UK government is taking by making this step to boost the UK economy. However, the opposite risk of not pumping cash into the economy in this way is for the UK economy to go into a deflationary period like Japan did some 10 years ago, which is extremely damaging for businesses, property and the economy as a whole.

Of course it could be that the banks still hold-back on lending even with the extra cash on their balance sheets, which of course would mean that there will be no effect on the economy, which is what happened in Japan – so we wait to see what happens.

How do you fancy getting cash for your old car if the UK Government go for a scheme recommended by the AA and of course backed by car manufacturers, whereby owners of cars receive a cash incentive to scrap their old car in favour of a new one.

In Germany car owners already receive €2,500 (£2,209) and France gives €1,000 (£883) to people who own cars to encourage them to buy new. There is argument that this policy is not only good to keep the car industry moving, but also is a “Green” one, as it gets the old less CO2 efficient cars off the road replacing them with up-to-date “green” cars. However, the UK Government is not convinced that this new “scrappage” system is a good one.

China is up-beat for Jaguar and Landrover with it’s business partner in China having ordered a combined 13,000 cars of Jaguar and Landrovers, which is great news for the UK and in particular where their plants mostly in the north of England.

The end of the week saw Lloyds announcing profits down by 80% year on year to £807 million and that HBOS reporting a loss of £10.8 billion, which Lloyds took over in January 2009. However, this huge loss is not as high as the record loss suffered by The Royal Bank of Scotland (RBS) earlier this week amounting to £24.1 billion!

There are some huge numbers being banned about right now with the bank bail-outs and huge corporate losses, but nothing to compare with the Obama’s $3.6 trillion (£2.52 trillion) budget for this year! Now that is one enormous amount of money and in written format it looks like this $3,600,000,000,000, which is one whole lot of zeros!

Within this budget figure Obama has set aside a further $250 billion (£175 billion) for the banks with the main aim of his budget to see the US through the financial crisis.

End of the week saw:
Stock exchanges:
FTSE 100: 3,830
DOW: 7,063
S&P: 735
Nikkei: 7,568

Currencies
UK Sterling £ to US Dollar $ 1.43105
UK Sterling £ to Euro € 1.13194
UK Sterling £ to Japanese Yen 139.544
UK Sterling £ to Aus $ 2.24409
US Dollar $ to Euro € 0.790985
US Dollar $ to Japanese Yen 97.4944

Commodities
Nymex Crude oil – $44.25
Gold – $941.60