Tag Archives: Ben Bernanke

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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Online shopping increasing – foot traffic declines

Online shopping is taking off. Amazon was the most visited online retailer followed by EBay and Wal-Mart`s site. It is reported that the online orders is twice as many on black friday this year than last year.

The trend is that the shoppers is planning to buy before they shop, and it is a lot of mission shopping going on. That is bad news for retailers because they lose their impulse purchase which is about 20% of their holiday sales.

The report Institute of Supply Management`s November manufactoring survey will be on the radar today. This is the most closely followed report, and gives a great snapshot on the economy for the recent month. It is expected to fall back to 55 in November (56,4 in October).

ADP data on private-sector employment, the trade balance, new home sales, ISM non-manufacturing index and FED`s Beige Book later this week are interesting news. Later on we have jobless claims, and a revision to third-quarter gross domestic product and factory orders.

News sometimes moves the markets. Money makers has lost faith in Gold and the gold price is dropping down, trading at $ 1235,90. Gold is set for the first annual drop in 13 years. News today: FED chairman Ben Bernanke speaks at 8:30am, ISM Manufactoring PMI at 10:00am.

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The biggest threat to this bull market

Investors tend to listen to Washington D.C more now than focusing on individual economics and corporate fundamentals emanating from different financial offices around the world. People fretted over whether or not the FED would start tapering or not, and now everyone is shocked by the decision Ben Bernanke did; no tapering.

Finally, the decision of no tapering is over, so now people can start to buy stock again. Or…… What is the problem now? What do we have to fear? Now, people are panicked by the possibility of a government shutdwon, because of the partisan impasse on the budget and debt ceiling limit.

Stocks went down last week on a light volume. VIX rise and we are near the 50-day moving average in the index. It seems like investors are waiting for a rally. Which means; no fear. We have been in this situation before, and this will hopefulle be no different.

Do you remember the fiscal cliff in desember last year? Well, nothing happend. It will be a deal, and then we will move on again. Government shutdown sounds like a scary thing, but it isn`t. Since 1975, we have had 17 of them.

History tells us that the politicans will discuss and compromise very quickly, and the average shutdown duration is 6,4 days. Remember what Ben Bernanke said when he was not tapering: “Upcoming fiscal debates may involve additional risks to financial markets and to the broader economy.”

Credit default swap (CDS) prices for U.S. Treasury notes aren’t giving us any warning signs. CDS are trading at 23 basis points compared to 41 for the last three years. History tells us that during the last two shutdowns, the stock market didn`t move. The biggest threat to this bull market is not the government.

Today is the last day of september, october has always been a challenging month in the stock market. Smart money will probably look for this to change. I will follow the index when it touch the 50 day moving averange.

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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Speculators cut bulllish gold futures

The gold has been falling because the investors do not see any oportunity in «disaster insurance»,

Ben Bernanke said in july this year. What will Ben Bernanke say this week? The gold prices are falling, because investors are not so concerned about the extreme outcomes anymore.

A stronger dollar will diminish gold demand. Once the tapering is known, investors expect a fresh selling wave. In addition, if the inflation keeps low the gold prices will continue its decline and probably below $1000 an unce.

Goldman Sachs target for gold is $1050 for 2014, and gold futures haven`t traded below $1000 since 2009. Credit Suisse expected the gold to decline below $1000 an unce in may this year. The gold prices have been falling over 20 percent this year. The inflation is still low, and so far we have seen an equity rally.

From 2008 to june 2011 gold prices jumped 70 percent! In that period Ben Bernanke pumped more than $2 trillion into the market to buy debt. I think that Ben Bernanke will never accept deflation, and if they are in need, they will continue to print money. No matter who the Fed chairman is.

Who`s the next Fed chairman? Larry Summers has been a name on the list but is withdrawing as a candidate to the next Federal Reserve Chairman. We will probably see a chairwoman next time after Ben Bernanke. Janet Yellen is the next big name.

Wall street love her, and they wan`t a person that will pump a lot of money into the market when the new crises hits. Janet Yellen is the right one to do that. She will PUMP! No matter what. She is the right person.

Investors will wait for the outcome of the FOMC meeting this week. No tapering will likely usher in «relief» rally for this precious yellow metal.

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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Syria and Ben Bernanke

Finally, the Russian and American deal to damage Assads chemical weapons will give Mr Obama a «time out». But is it so easy? I hope so, but the list of what can go wrong is long, extensive and daunting.

What if Assads regime is hiding the chemical weapons stock? What if the international inspectors will be obstructed? Saddam Hussain played cat and mouse game with the international inspectors in 1991. The questions is: Do Mr Obama have a plan B? This case is not finish yet.

Tomorrow and wednesday, Ben Bernanke will have a very important speech. He sayd this on september 11; «Quantitative easing typically refers to policies that seek to have effects by changing the quantity of bank reserves, a channel which seems relatively weak, at least in the U.S context».

The meeting on 17 – 18 september will tell us whether the economy is strong enough to begin tapering $85 billion in monthly bond purchases. If so, they will use a forward guidance to try to convince the investors so they can keep the interest rates low and bring down the unemployment.

Thinking back in time, there is always something extensive and daunting things that could change the game in the market. Unexpected things can always happen and that is very often things that no other was thinking of. So what is the next big thing that will shock the financial market?

The world`s largest gold-backed exchange-traded fund SPDR Gold trust, had their biggest decline since Aug 1. Their holdings fell 0,66% to 911,12 tonnes on friday. Hedge funds and money managers have turned to a bearish sentiment for the first time in five weeks.

The gold price is 1314,80 right now.

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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