Tag Archives: FED

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

 

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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).

rolls_royce_2-wallpaper-1920x1080

(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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Food prices are up – so are Giggles N Hugs

 

It`s not going to be easy for the restaurants if the cost is rising. A beef is 25 percent higher now than at the end of last year. If this continue, the restaurants need to rise the prices on the products they have on the menu. Or they can simply change the menu.

Giggles N Huges logo

What does that mean for the customers? It means it will be more expensive to eat out, so it will be a question about eating out or going the long way to the refrigerator. This is not good news for the restaurants as the industry is grappling with excess capacity and declines in foot traffic.

 

This is why it makes it difficult for the restaurants to rise their prices because they can lose a lot of customers. In addition; disposable income growth as the primary driver of consumer spending hasn`t improved in this slow recovery since the financial crises started in 2008.

 

According to the Bureau of Labor Statistics monthly consumer price index, the cost of eating at home rose 1,7 percent in April, while consumers paid 2,2 percent more at U.S eateries. Food-at-home inflation has been accelerating, and May data on retail prices will be released tomorrow.

 

It`s not a good ting when prices are increasing as the wages remains low or declining, but there are one out there that is waiting for the prices to increase; the Fed. Their inflation goal is about 2 percent, and they are now looking for signs that companies are able to pass along higher costs to their customers.

 

According to the Beige Book from June 4, policy makers said price pressures are «contained», some are reporting rising food costs and that is particularly meat and dairy products. For example beef and pork is now more expensive at grocery stores, so restaurants will probably boost prices of certain menu items.

 

McDonald`s is up 3,6 percent YTD, while Chipotle Mexican Grill is up 10,4 percent YTD. This big companies, but what about a smaller one; Giggles `n` huge, which is up 20,69 percent in one day! This can be a growth company in the future.

 

The company operates a kid-friendly restaurants in California. They are known for its own creation called Mom`s Tricky Treat Sauce, which hides pureed vegetables in kid`s favorite meals, such as pizza, pastas and macaroni and cheese.

 

Its restaurant features kid-size castles, giant climbers, a pirate ship, and a walk-on dragon, as well as tricycles, swings, bouncies, and an abundant selection of toys in each location. Their stock price rose 20,69 percent on friday, closing at 0,700. When was the last time McDonald`s made jump like this?

 

Reports today:

08:30 a.m EST Empire State Manufacturing Index

09:00 a.m EST TIC Long-Term Purchases

09:15 a.m EST Capacity Utilization Rate

09:15 a.m EST Industrial Production m/m

10:00 a.m EST NAHB Housing Market 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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Inflation and interest rate

What a rally in Asia today! Japan`s Nikkei is up +2,11% to 14,338. Hang Seng is up +0,51% and ASX 200 is up +1,02%. It was a great rally in the U.S yesterday too. The Dow was up +0,97%, S&P 500 +0,81% and Nasdaq +0,85%. Great!

Why this rally now? The investors like the good news from China. The China manufacturing data is good, and that will have a positive impact on Europe. The message from the Fed minutes is also good. They say that there will be no rate increase soon.

Asian stocks rose to set for the biggest gain in three months, after minutes showed Federal Reserve policy makers see muted risk of inflation from continued U.S stimulus. Fed`s policy makers said continued stimulus to push unemployment lower doesn`t risk sparking an undesirable jump in the inflation rate.

money2

Policy makers are watching progress toward their goal of full employment as they consider the timing of the first interest-rate increase since 2006. The Fed has said the benchmark rate will stay low for a «considerabe time». They ended its bond-purchase program that set to wind down by late this year.

The Fed have earlier said that they will keep the interest rate low at least as long as the jobless rate is below 6,5% and the outlook for inflation didn`t exceed 2,5%. Is that really possible? Let`s take a look at Japan. They have printed more money than U.S.

Japan`s inflation peaked out in the middle of the 70`s, but the real problems started in 1989. Japan`s Nikkei Index hit its all time high on December 29, 1989, during the peak of the Japanese asset price bubble. It reached an intra-day high of 38,957 before closing at 38,915,87.

700px-Nikkei_225(1970-).svg

(Picture: Japan`s Nikkei Index)

The bubble burst, and the Nikkei stock index plummeted and lost nearly all these gains, closing at 7,054,98 on March 10, 2009. That is 81,9% below its peak twenty years earlier. The unemployment rate increased, but stopped at 5%. Now, Japan`s unemployment is down to 3,6% (April, 2014).

Unemployment_Rate_of_Japan_1953-2009

(Picture: Unemployment rate in Japan 1953 – 2009)

 

Japan`s inflation rate is stable, and that is strange. Normally when you print a lot of money, inflation rate are increasing and it becomes extremely difficult to reduce it. If you look at the Japan`s inflation rate, it is stable.

The inflation rate in Japan was recorded at 1,60% in March of 2014. It had an all time high of 25% in February of 1976, and a record low of -2,52% in October of 2009. Japan`s inflation rate is in black on the picture below:

japan-inflation-cpi and US inflation compared

(Picture: Japan and U.S inflation rate – compared)

 

The most important categories in the CPI (Consumer Price Index) are Food (25% of total weight). Housing (21%), Transport and communications accounts for 14%. Culture and recreation (11,5%), Fuel, light and water charges for 7%. Medical care (4,3%), clothes and footwear (4%), Furniture and household utensils, Education and Miscellaneous goods and services account for the remaining.

Central banks around the world will try to sustain an inflation rate of 2 – 3%. The purchasing power is falling if the prices of goods and services is rising. Central banks attempt to stop severe inflation, along with severe deflation. They will keep the excessive growth of prices to a minimum. Inflation plays a large role in the Fed`s decisions regarding interest rates.

So far so good!

 

Reports today:

08:30 a.m EST unemployment Claims
09:45 a.m EST Flash manufacturing PMI
10:00 a.m EST Existing Home Sales

 

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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Go Daddy IPO

What a jump for tech stocks yesterday! Facebook up +7,25%. LinkedIn +4,19%. Yelp +5,95%. Yahoo +3,07%. Even Twitter was up yesterday; +1,70%. That`s just a few of them. Many investors saw a huge opportunity and jumped into the market yesterday.

The market was very quiet yesterday, but that was before the release of the Fed Meeting Minutes. Right after the release, we saw a nice move in the markets. This time investors was bullish and most of the tech stocks skyrocketed.

With the rally yesterday, we can see a new bullish trend in the chart, but it is a little bit too early to say that 100% right now. It’s just early in the stage of the new bullish trend. Equities rallied, but Treasuries declined after the minutes eased concern about the timing of future interest-rate increases.

They probably might have to keep the rates at levels below normal for longer because of tighter credit and a slow growth. In addition there will be higher savings. Fed have always said that they will keep the rate low as long as the unemployment rate exceeds 6,5%.

Fed also said that the benchmark interest rate would rise faster than previously forecast. Only the new data that comes in will tell them what to consider when to increase borrowing costs. Bad data coming in later will destroy their plans and vica verse.

Go Daddy

The leading domain name registrar Go Daddy has hired JPMorgan and Morgan Stanley to handle an IPO that could occur later in 2014. They provide individuals and businesses with internet services, such as domain name registration and website hosting.

They also have software for functions that include e-mail, e-commerce, podcasting and website creation. Go Daddy boosts some 57 million domain names under management. They targets niche markets the likes of priate domains and reseller programs through affiliates Domains By Proxy and Wild West Domains.

Founder Bob Parsons remains its majority shareholder, while both KKR and Silver Lake have been partners in Go Daddy since 2011. Go Daddy was acquired by KKR, Silver Lake, and VC firm TCV for $2,25B.

Their rival Wix went public last year and soared +7,82% yesterday. Verisign jumped only +1,2%. Wix has a 52 week low of $16,19 and a 52 week high of $32,69. The stock`s 50-day moving average is $26,28. 200-day MA is $25,12. Market cap is $831,7 million.

I personally use Go Daddy and I like their competitive prices and their service. I will look for the IPO and I will wait for Alibaba to come to the exchange later on this year too. That`s gonna be two new stocks for the tech sector in the future.

Reports today:

08:30 a.m EST Unemployment Claims
08:30 a.m EST Import prices m/m
08:30 a.m EST G20 Meetings
08:30 a.m EST G7 Meetings
02:00 p.m EST Federal Budget Balance (Previous: -193,5B Forecast: -76,5B)

 

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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Fed Chair Janet Yellen testifies

An uneventful trading session yesterday made it a quiet session. The U.S indices finished up a few points. Dow +0,05%, S&P 500 +0,16% and Nasdaq +0,54%. Gold is running fast now. Trading at 1285,01. It seems like the market will open up today, but the rest of the day will be interesting.

Fed Chair Janet Yellen is testifying before the House Financial Service Committee. The testimony comes in two parts: first part is a prepared statement that is releases before the testimony. The second part is a Q&A part.

As a Fed chairman/woman you need to be careful for what you say. Wrong word can be a disaster in the stock markets and vica verse. Therefore; the second part in the testimony can be a very interesting moment for the traders.

Gold rose today on expectations that the Fed Chair Janet Yellen will stay the course in winding down bullion-frendly monetary stimulus. What will Janet Yellen say today? The financial markets are hoping for reassurance that the Federal Reserves bond purchases will continue for a long time to come. Gold also rise up on worries over debt-ceiling talk. Silver is trading at $20,04.

Janet Yellen has served the Fed in different roles over the past 36 years. In this testimony she has a unique chance to reintroduce her self to the rest of the world. She need to be able to answer questions about the unemployment rate. What is the bottom line? What is the expectations about the growth? How fast and how long will it take to grow in the long run? Wages growth or inflation?

Reports today: Fed Chair Janet Yellen testifies at 10:00am.

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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