The Daily Update: Bailey Changes Tack / Black Friday Meaning

Andrew Bailey, the Bank of England governor, seems to have taken the ‘unreliable boyfriend’ tag to heart and signalled that he is essentially abandoning forward guidance as a way of guiding markets as to the likely path of interest rates. Bailey, answering questions at Cambridge University, said there were three forms of forward guidance and the one that is currently being used is ‘not so much forward guidance as a reminder of where we are’. Bailey said the method, put in place in 8 years ago by his predecessor, ‘is pretty hazardous and more hazardous in a more uncertain world’.

Bailey had already stated a couple of days ago that he is ‘not a fan of the type of forward guidance' used by his predecessor Mark Carney (he was the first unreliable boyfriend), and that even existing explanations of the BoE's world view might be too much. Bailey made those comments whilst speaking in front of the House of Lords Economic Affairs Committee. At the meeting he stated that: ‘We will keep under review what I would call the boundary between giving the kind of signal that we gave three weeks ago - which essentially said here's our view of the world ... this is what follows from it'. Adding, ‘There is an alternative view, which is we should go meeting by meeting and not give any guidance. That is not off the table by any means. That is very well trodden ground by the MPC and I could imagine us going back to it’.

Also, yesterday was Thanksgiving in the States, which means today is Black Friday, which has routinely been the busiest shopping day of the year in the US since 2005. There are various accounts of how the day got its name. One idea is that the term ‘Black Friday’ was actually first associated with a financial crisis, and not shopping.

In 1869, Wall Street investment bankers Jay Gould and Jim Fisk, together bought a substantial amount of US gold with the hope of making a quick buck. However, on Friday 24th September 1869, in what later became referred to as ‘Black Friday’ the gold market crashed and with it the pair's dream of becoming rich.

Years later we had the Wall Street crash of 1929, when the New York Stock Exchange lost nearly 6.5% in a single day, followed by close to 13% and 11.8%on subsequent days, and so became known as Black Friday, Black Monday and Black Tuesday. It was not until later years that the post Thanksgiving Friday became associated with the name.

So how did ‘Black Friday’ previously associated with stock market crashes morph into the busiest shopping day of the year? Well, before computers, shops did all their accounting by pen and paper, red for losses and black for profits. A significant proportion were in the red until Thanksgiving, when shoppers started spending, in turn moving retailers in the black for the first time in the year.