Category Archives: Quantitative Easing

by | May 19, 2014 · 2:18 pm

Consolidation since March

It was a good day for U.S stocks on friday. The Dow up +0,27%, S&P 500 +0,37% and Nasdaq +0,52%. Japan`s Nikkei is down today -0,64%, while Hang Seng is almost flat -0,04%. Copper is up +0,75% today, while Silver advance +1,14%. Gold is up +0,61%,Crude Oil (brent) is up +0,33%.

European stocks are in a red territory so far today. Stoxx 50 -0,57%, FTSE 100 -0,32%, CAC 40 -0,17% and DAX is down -0,35% so far today. Investors are waiting for the next Governing Council meeting on June 5 in Frankfurt.

It is expected that ECB (European Central Bank) will ease policy. The reason why this is expected is mostly because of what`s been saying in May 8 meeting. Draghi said that policy makers are «dissatisfied» with the inflation outlook and «confortable with acting next time».

Some speculate that it will cut the benchmark rate by 10 basis points to 0,15%, and the deposit rate, which is at zero. Denmark ended its experiment with negative rates last month. ECB`s inflation goal is just under 2%, but the inflation is below 1%.

The inflation has been below 1% since october and the Euro is strong. The currency has risen more than 7% against the dollar since early July 2013. The Euro climbed as high as $1,3993 on May 8, right after Draghi spoke. EUR is now trading at $1,3719.

Take a look at S&P 500 Large Cap Index.

SPX 19.05.2014

Many bulls and bears are frustrated. They are both waiting for the index to move, but the SPX have been in a consolidation for many weeks and months now. It all started in Mars this year. Investors are not waiting for consolidation, but rather correction. That`s why they are frustrated. The SPX is flirting with 50MA, which is at 1867,88.

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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by | March 20, 2014 · 1:51 pm

FED raise rates

Silver dropped -2,60%, while gold is down -1,01% after the news from Fed Chair Janet Yellen. Oil and Copper is also down today. Janpan`s Nikkei 225 is down -1,65% to 14,224 points. Hang Seng is also down together with the rest of Asia.

Janet Yellen

(Picture: Fed Chair Janet Yellen)

The U.S indices traded down yesterday too and Europe is also in a red territory. Most investors don`t know what to do right now. It seems to be a red opening in the U.S later today. This is all reactions on the FOMC meeting yesterday.

The Fed will probably end its massive bond-buying program this fall and probably start raising interest rates around 6 months later. This comment sent stocks and bonds tumbling. We will see a more aggressive path toward higher interest rates than anticipated she said yesterday.

The Federal Reserve has held the interest rate near zero since late 2008. They have pumped trillions into the markets with its bond purchases. All this because they tried to foster a stronger recovery. Despite the QE program, the growth has been very slow.

The change in its rate hike guidance did not mark a shift in its intentions and they will wait a «considerable time» after shuttering its asset purchase program before pushing borrowing costs higher. «Considerable time» means about 6 months.

But, as Janet Yellen said: «It depends – what the statement is saying is it depends what conditions are like».

Most people don`t know it, but the best period of economic growth in all U.S history was without a central bank. Do U.S really need Federal Reserve? They created the markets crash in 1929, and so far the FED has been a disastrous.

The FED started about 100 years ago, and since then the dollar has lost more than 96% of its value. The size of the U.S national debt is more than 5000 times larger. The Fed`s «debt-based» financial system has trapped the U.S, and are on the verge of the greatest financial crises in history.

Congress could have shut down the FED long time ago. I HATE DEBT!

Reports today:

08:30 AM ET Unemployment Claims
10:00 AM ET Existing Home Sales
10:00 AM ET Philly Fed Manufacturing Index
10:00 AM ET CB Leading Index m/m
04:00 PM ET Bank Stress Test Results

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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by | December 18, 2013 · 1:08 pm

Outrageous predictions for 2014

It is difficult to be in the market under circumstances we have now. We are at the top in many indices, and many of the great blue chips have gone too far. Netflix, Amazon, Yelp, Twitter and Pandora media (better called “the fat five), are all bubbles waiting to plunge about 50%.

The average stocks in the U.S is not expensive, but they are not cheap either. It is better to look at the European and the emerging markets. Gold is still declining but it seems to bottoming out soon, ready to take off again. Gold dropped -1.13% yesterday ahead of tomorrow’s Fed Statement and Press Conference. So, what are we suppose to do next year?

Every year, Saxo Bank are publishing a list with some forecasts and predictions about the markets next year, and those predictions can have huge impact of the global markets.

This time they have predicted scenarios from a return to a “Soviet-style economy” in the EU (?) and a huge recession in Germany. They also predict a failure of the QE program in the U.S. Wow!

These ten predictions are not the official forecast of the bank for 2014, chief economist Steen Jakobsen said, and they are not ment to be “pessimistic”.

2014 should be the year in which a mandate for change not only becomes necessary, but is also implemented, he said. History tells us that changes have always come as a result of the thorough failure of the old way of doing things.

What will happen to the U.S and German economy next year? Will they reach “escape velocity” next year, or will they slow to zero growth? What about the European Parliament? Will the upcoming elections herald a new anti-EU coalition?

Those predictions are made to remind us that “a wake-up call is necessary as the alternatives would leave us with a dire outlook, Jakobsen said.

The ten ‘outrageous predictions’ are listed below.

1. EU creates a new wealth tax on savings above €100,000 in a return to a ‘Soviet-style economy’.

2. The European Parliament elections see the creation of a strong anti-EU alliance, to include the UK Independence Party.

3. The bubble bursts in the five US technology giants that have been trading at a huge premium to market valuations this year – Amazon, Netflix, Twitter, Pandora Media, Yelp.

4. The yen falls below Ұ80 per dollar, as investors pile back into the currency, forcing the Bank of Japan to delete its government debt in order to escape deflation.

5. The US recovery slows down, bringing deflation worries back to the fore.

6. Far from tapering, the Federal Reserve increases QE to $100bn per month and focuses on mortgage bond purchases to support a flagging housing market.

7. The price of Brent crude falls to $80 per barrel, as producers fail to slow down production.

8. Germany enters an unexpected recession as economic activity slows.

9. The French CAC 40 index drops 40% as local politics takes a turn for the worse.

10. The currencies of the ‘Fragile Five’ countries – Brazil, India, South Africa, Indonesia and Turkey – fall 25% against the US dollar.

Take a good look at all the markets today. The Fed`s two day meeting with the FOMC statement release ends today at 2pm ET. If they start to taper or not, I think it will be very sensitive to all the markets.

I don`t listen to what the FOMC members say before those meetings. I do only listen to one person, and that is the Fed chairman Ben Bernanke. He is the man. Is he going to taper? I don`t think so, but let`s wait and see later on today….

News today: Building Permits & Housing Starts at 8:30am, Crude Oil Inventories at 10:30am, Fed Statement at 2:00pm, FOMC Press Conference at 2:30pm.

FOMC-dice

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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by | September 23, 2013 · 1:25 pm

Suicidal money-printing and inflation

Investors must find asset classes which must appriciate in value at a greater rate than the spiraling inflation from the printing money programs. One thing investors seek to do in bad times is investing in gold and silver. Humaity`s shield against predatory inflation and crime.

If a company print more shares, then the price of the shares will plummet. Let`s say you have shares in a company that prints more and more shares, the shares you have will at least be worthless. You will start to sell your shares as soon as possible, before it`s too late. If the banks do the same, like printing more money, the fiat currency must plummet in value (puchasing power). This is inflation!

We saw this hyperinflation in Weimar Germany. It is possible to delay its effects, but never possible to prevent this money printing from destroying the value of its own paper. At the end; it worked for Weimar republic! The banks now continue to ramp-up at an exponential rate. Banks in Europe use words like «unlimited» and banks in US use words like «open-ended».

We know the banksters must destroy their own fiat currency, and when they do, the value of these precious metals will probably not increase in value? This is something we need to have in mind. Currency dilution is not a theory. It is a simple relationship of arithmetic.

Most of the novice of investors understand the consept of dilution when it comes to shares in a company, but none of them understand exactly the same thing that is going on in the fiat currency market. Currency-dilution is the same as share-dilution in virtuelly every respect. Keep that in mind.

Have a look at the Fedeeral Government Debt and Primary Budget Surplus, 1912 – 2012 (percent of GDP);

Fed debt

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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