Tag Archives: FED

Other predictions for 2015

Spending a few minutes reading the headlines today can make you feel bad. It feels like the world is on fire. Ebola, ISIS, Ukraine and some extremely currency movements. In a world like that, the U.S is seen as a safe harbor and the greenbacks is the safest, most reliable currency on the planet right now.

2015b

We witnessed a fantastic corporate earnings season, which was one of the best in the last decade. It is still a lot of work on jobs and housing, but the economy is well underway. How is it gonna be in the markets next year? No one knows, but there is a lot predictions out there. I will refer from two different investors today. One is positive and one is negative. Let`s take a look at the positive first;

No doubt, there is a market shift ahead, but it isn`t what you think it is. Based on different analysis, many indicators shows us that next year will be another fantastic year in the stock market. It will be another year to make money and the bull market will continue.

The bull market will not be what we have seen so far. It`s not gonna be another broad market rally like the rally we`ve seen the last few years. Stock picking will still be important, as there is a lot of stocks you should sell in 2015.

What you should buy is high-quality stocks with great fundamentals. You should buy one type of stocks next year.

Look at the truth about the economy. It took seven years to finally rebound from the Great Recession, and here are some key reasons why some investors expect the economy to keep charging ahead next year;

Fist of all; the oil shale revolution. According to the International Energy agency, the U.S will become the world`s leading oil producer next year. The energy boom will create jobs and lowering the gas and utility costs for consumers. That`s good news for the economy next year.

In addition; there will be low-interest rates. It may rise in the next 12 months, but the Fed will manage that rise slowly, which means it will remain ultra-low by historical standards, and that`s also good news for M&A activities, stock buybacks and cheap corporate borrowing that fuels stock prices, and business expansion.

Consumers are more positive to the economy and consumer confidence soared in October. Household net worth is back above 2007 levels, and consumer spending are rising at a moderate clip.

It looks safe in the U.S compared to the rest of the world. England`s housing market is collapsing. The Euro zone is on a brink to a deflationary disaster. Germany`s economy is deteriorating, and the growth has stalled in the once-hot BRICS. The U.S economy is surging. GDP was much stronger than expected 3,5% in Q3.

Chairwoman Janet Yellen has made it clear she intends to do whatever it takes to keep the economy and job growth strong. We survived the end of the Fed`s QE program and that was just one of the weapons in her arsenal.

The other one I talked about is negative. He expect the stock market to crash any time soon. It did in 1929, 1987, 2000 and 2008. The next crash will be next year he says. The bull market we have had over the past years is one of the longest, and most generous bull markets in history.

But, no bull markets lasts forever he says, and this one has about run its course. If you look at key long-term measures, U.S stocks are about 80% overvalued he says. There have been only five times when stocks have been more than 50% overvalued, and that is 1853, 1906, 1929, 1969 and 1999.

He said that each one of those years marked the peak of a massive, once-in-a-generation stock-market bubble. Only two of those bubbles were bigger than today`s, and that was in 1929 and 1999. This is the end of the line for this bull market he says.

You have to be sceptical about everything you read and it is very important to make up your own mind. I have heard about a 1929-stock-market-crash in ten years now. Many talked about a stock market crash all months this year. Same people talked about it in 2013 and 2012, but what we saw was a strong bull market.

But I can promise you one thing; one day they will have right!

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Is this the end of QE?

Two things are important right now. Earnings and the Fed. 80% of the S&P companies that have reported earnings have beaten estimates, according to Bloomberg. The catalyst for last week`s 4% rally was the reported earnings, and will continue to be the catalyst this week for any move in the market.

Todays FOMC Statement and Fed Funds rate decision will also play a big role in the market this week. Interest rate is very important in the stock market, and the big question for investors now is when the Fed will start to raise the interest rates. Any hint or insight will likely stir the markets.

Fed Chair Janet Yellen is worried about the low inflation, and the inflation gauge has fallen short of the Fed`s 2% target. The risk of deflation may weight against raising interest rates too soon.

Prices as measured by the personal consumption expenditures index rose 1,5% from a year earlier in August, and oil prices is something Fed has no control over. As you may know, the oil prices has dropped over 20% so far this year.

Many investors expect the Fed to end its third round of asset purchases today, while others say the central bank should consider a delay in ending QE in light of the falling inflation. It is possible for the Fed to reduce the monthly purchases by $10 billion and leave the final $5 billion reduction for December.

The Fed will still hold a record $4,48 trillion balance sheet accumulated during QE 3 despite an end of QE today. That will limit the supply of securities and keep the yield lower as their borrowing cost is limited.

Market volatility and sign of slowing global growth will make the Fed to act with caution, and it`s expected to see the interest rate to near zero for a «considerable time» after bond buying ends. Fed`s benchmark rate has remained at zero to 0,25% since December 2008, but it is expected to see the rate to increase in mid-2015.

FOMC`s next meeting is in December.

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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Filed under Quantitative Easing

Cash is NOT King

The money as we know it, will disappear. All the cards we use today will also disappear. In the future, we will transfer with digital currency. Bitcoin is just the beginning. They have been on the marked for six years and many will follow. Ecuador seems to be the next.

Wallet-with-Money

But what will happen if the money disappear? Will the Federal Reserve still print money? And what is really money? It`s not what you think it is. Today`s money is a payment transfer system, known as checking.

The presumption is that money is in the bank and is transferred to someone by means of writing a check. That is where the greenback comes in, for it is presumed to be the money one is transferring. The greenback today is the Federal Reserve Note. It is the paper we carry in a wallet and call «cash». We have two kinds of money; the check that is not money and the greenback that is money.

So, what is greenback? It got its name in President Lincoln`s administration. It is a pejorative term in that it was scorned by banks, which paid only part value for it when presented by clients. History had been unkind to the paper money put out by the Continental Congress during the Revolution against England.

To downgrade something, one might say, «not worth a Continental.» The Continental Congress had no taxing authority; so, any paper money it issued could not command payment of a commodity without risk.

History text do not say that the true greenback was as good as gold, until banks persuaded the U.S Senate to strip it of its legal tender feature. The Treasury authorized issue of $150 million of legal-tender notes on February 28, 1862 for payment of all debts public and private. The vote in Congress was 93 to 59. These greenbacks never lost their value against gold coin.

The President in Ecuador, Rafael Vicente Correa Delgado want to quit the money in the Republic of Ecuador and start with digital currency. They have not yet the technical details, but say it will not be like Bitcoin.

Refael Correa was officially declaired President of Ecuador on 4 December 2006 by the country`s electoral court. He say that the socialism will continue. The Ecuadorian people voted for that. We are going to continue the fight to eliminate all forms of workplace exploitation within our socialist conviction; the supremacy of human work over capital, he says.

Correa has criticized the neoliberal policies of pervious presidents, particularly former president Mahuad`s adoption of the U.S dollar as Ecuador`s domestic currency in 2000. He has characterized dollarisation as a «technical error» which has effectively eliminated Ecuador`s ability to set its own currency and exchange policy.

Ecuador`s relationship with the United States has deterrorated considerably in recent years, since Correa took office in Ecuador, mostly due to his Correa`s growing relationship with Cuba, Venezuela, Bolivia and Iran and also his public criticism of the Foreign Policy of the United States.

Last year, Ecuador announced that it will auction more than three million hectares of Amazonian rainforest to Chinese oil companies. The indigenous people inhabiting the land protested the deal, but Ecuador`s Shuar People`s women`s leader, Narcisa Mashienta, said that the government lied when claiming that the people would have given their consent.

The NGO Amazon Watch claims that the reason for the projects is the governments 7 billion dollar debt to China and the desire to get Chinese funding to build a 12,5 billion dollar oil refinery. In fact; they are not talking about dollar debt but a new digital currency debt very soon.

Ecuador is probably not the only one to start with a new digital currency. In addition; many will start to pay and transfer electionically by phone which means the greenback money will disappear. In the future; it will be difficult to say; Cash is King.

Reports today:
10.00 a.m USA ISM Manufacturing PMI

 

Please give us some feedback;

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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Rolls Royce up 6% on buybacks

 

All the commodities are up today. Silver up +0,92%, Gold +0,76%, Copper +0,23% and Oil (brent) is up +0,31%. Nikkei is also up today, as it advanced +1,62%. ASX 200 is up +1,59%. Europe is in a green territory too. Stoxx 50 is up +1,11%, FTSE 100 is up +0,83%, CAC 40 +0,89% and DAX is up +0,78% to 10,008,17 points right now (13:14:00 CET).

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(Picture: Rolls Royce)

The crude oil price have never been so high this year and that`s because the conflict that is going on in Iraq right now. The Iraqi government forces battling Sunni militants for control of the country`s biggest refinery. The rally in Asia and the rest of the global stock market is because of the FOMC meeting yesterday.

The stocks rallied after the U.S Federral Reserve signaled that rising inflation won`t trigger an interest rate rise any time soon. investors liked it and sent the European bourses up sharply today. Asian equities posted strong gains, and S&P 500 rose to another record high yesterday.

The Fed Chair Janet Yellen slashed its 2014 growth forecast but expressed confidence that the economy will continue to recover steadily in the coming years, which could warrant a slightly more aggressive pace of interest rate hikes when they start.

That probably won`t be until the middle of next year, and Fed Char Janet Yellen dismissed the resent rise in inflation to its highest in over a year as «noise». Some people were speculating that the Fed would have to come up with a more hawkish commentary and obviously they have been disappointed.

But there were one loser yesterday after FOMC meeting yesterday; the dollar, which fell against major and emerging market currencies, in tandem with U.S Treasury yields, hitting a five-year low against sterling.

A big winner in the European stock market among the blue-chips was Rolls Roys RR.L. An auto car maker for the luxus market. The stock rose 6% after it announced a one billion pound ($1,69 billion) share buyback.

 

Reports today:

08:30 a.m EST Unemployment Claims

10:00 a.m EST Philly Fed Manufacturing Index

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

 

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All eyes on FED today

 

European stocks advanced today as investors awaited a Federal Reserve monetary-policy decision. The Stoxx 50 Index was up 0,21 percent earlier today. DAX is up 0,15 percent. Gold is trading at $1,271,40. Silver at $19,73. Crude oil (brent) $113,55.

The dollar held firm today after a surprisingly high reading for U.S inflation raised expectations that Federal Reserve Chair Janet Yellen could strike a more hawkish tone on the monetary policy outlook. U.S futures are all up today.

Fed

The Fed is expected to chop another $10 billion from its monthly bond purchases at a meeting on Tuesday and Wednesday. Many investors will be focused on whether officials tip their hand on longer-term plans for interest rates.

Fed Vice Chair Stanley Fischer will release updated projections for the economy and for when they think rates should finally rise from near zero. The policy-making Federal Open Committee (FOMC) started its meeting Tuesday at 10 a.m Eastern, and they discuss how to raise rates when the times comes.

Fed Chair Janet Yellen will talk about employment and inflation. More than 200,000 jobs were added in each of the last four months. Inflation rate is still below the Fed`s two percent target, which is their goal.

Unemployment is now 6,3 percent which is impressive. March expectations was 5,6 – 5,9 percent. They could nudge up their 2014 inflation forecasts from about 1,5 percent and cutting their GDP forecast.

Reports today:

08:30 a.m EST Current Account

10:30 a.m EST Crude Oil Inventories

02:00 a.m EST FOMC Economic Projections

02:00 a.m EST FOMC Statement

02:00 a.m EST Federal Funds Rate

02:30 a.m EST FOMC Press Conference

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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