Tag Archives: Brexit

The ECB lowered the interest rate to -0,5% and Trump wants to do the same

What a day. A very important day for Europe and the rest of the world. The ECB left its main refinancing operations rate unchanged and lowered the deposit interest rate by 10bps to -0,5 percent. Not only that; policymakers also approved a new round of bond purchases at a monthly pace of €20 billion as from November 1st.

They do this because we have Brexit and trade war with China and the plan is to boost growth. At the same time, the ECB lowered its GDP forecasts to 1,1 percent this year. Inflation expectations were also slashed to 1,2 percent in 2019.

President Trump attacked the FED, calling Fed Chair Jerome Powell and other members «boneheads» for not driving the U.S interest rates down to zero, or less. Trump explained that he wanted negatie rates in order to refinance the outstanding $22 trillion in government debt and lengthen the term.

Right now, there is a $16 trillion in negative yielding debt around the globe. What a number! Historically, negative rates have been used as an anti-recession tool to boost growth when the economy is weak.

But negative interest rate have now become much more common. Just take a look at the value of the negative-yielding debt over the world. It has shot up to $16 trillion, according to BofA.

If you have your money in your bank, it means you have to pay your bank to lend them your money. Crazy right? Normally, you will get paid from the bank if you have your money there, but with negaive interest rate, it is turned up side down.

Similarly, with government-issued debt, global investors also pay money to hold a bond with negative yields because the premium that they initially paid for it exceeds the total interest they receive over the life of the bond.

Switzerland have negative interest rate at -0,75 percent. Denmark; -0,65 percent. Sweden; -0,25 percent and Japan; -0,10 percent.

Other countries in Europe are near negative interest rate. All these countries have zero interest rate; Spain, Slovakia, Slovenia, Portugal, Netherlands, Malta, Luxemburg, Latvia, Italy, Ireland, Greece, Germany, France, Finland, Euro Area, Estonia, Cyprus, Bulgaria, Belgium and Austria.

In comparison; the U.K have 0,75 percent interest rate and the U.S have 2,25 percent. The U.S lowered the rate for the first time in July for the first time since the financial crisis, as inflation remains subdued amid hightened concerns about the economic outlook and ongoing trade tensions with China.

The U.S economy is good, but the global economy is slowing, notably in Germany and China. There are also growing possibility of a hard Brexit, rising tension in Hong Kong, and dissolution of the Italian government. Fed Chair Jerome Powell have a great challenge.

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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No-deal Brexit means less Italien Prosecco for the Britons

No deal is not only bad for the United Kingdom but also for the European Union as well. No deal will make them both suffer economically. Populist-Italy is already into a recession and a no deal will not make it any better.

A no deal means less Italian Prosecco for the U.K. Britons bought a record 164 million bottles of champagne and sparkling wine last year, but the effects of Brexit has hit Prosecco long time ago. For the first time in over a decade, exports of Prosecco to the U.K are slowing.

Prosecco is made from Glera grapes grown in the area surrounding the village of Prosecco near Trieste in north-east Italy. In 2015, Prosecco overtook champagne as Britain`s favorite sparkling wine, but it seems like the popularity has peaked for a while.

According to UHY Hacker Young, the Prosecco sales increased by only 5% compared with the previous year which is the smallest annual sales growth since 2011. A 5% decrease in sales isn`t bad, but it is bad compared to several yars of double-digit growth, and this can only be the beginning if we se a no deal between the U.K and the E.U.

Britons consumed 112,7 million bottles of DOC Prosecco in 2016 and exports to the U.K, U.S and Germany accounted for 75% of the sales.

If Boris Johnson want a bottle of Prosecco on Valentines day, he have a great chance to buy it at a normal price, but it can be one of the last chances because a no-deal Brexit will stifle trade and limit choice.

A deal win-win deal will help them both. Italy will sell more bottles of Prosecco and Britons will continue to enjoy a wide range of quality sparkling wines on Christmas eve later on this year. A deal without tariffs.

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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The EU deal is about a method of avoiding the return of a physical Northern Ireland border

Prime Minister Theresa May have spent over two and a half-year to negotiate with EU to leave the European Union. Later on today, the Parliament will vote on the deal and the question is not whether Mrs May loses but how badly it will be.

The opposition party will vote against her deal on Tuesday, and a defeat by more than 100 will be the worst since 1924. In other words; the Brexit deal is set to be rejected in the biggest Parliament defeat for a British government in 95 years, according to Bloomberg. 10% of the business is with the EU and 90% is outside of the EU.

More than 30 million people voted on the EU referendum in the U.K. Leave won by 51,9% to 48,1%, and the referendum turnout was 71,8%. The referendum was held on Thursday 23 June 2016. Since then, Theresa May have made a deal with the European Union.

England voted for Brexit by 53,4% to 46,6%, and Wales voted for Brexit with leave getting 52,5% vs Remain 47,5%. Scotland and Northland Ireland both wanted to stay in the EU. Scotland voted to Remain by 62% vs 38%, while Northern Ireland voted for a Brexit at 44,2%.

The idea to the European Union started right after World War II, and the idea is to avoid a war with each other by having European countries to trade together.

There are 28 countries in the EuroZone and that is not the same as the European Union which is «only» 19 countries with its own parliament, sets of rules and the same currency; the Euro.

The EU is an economic and political partnership and the idea is that countries which trade together were more likely to avoid to go to war with each other. People from the member states can move over the borders without any questions and so can goods and money.

Article 50 of the Lisbon Treaty gave PM Theresa May and the EU two years to come to an agreement. Both parties scheduled to leave the EU at 11pm UK time on Friday, 29 March 2019, but a European court has ruled that the UK can decide to stop the process. It can also be extended if all the 28 EU members agree.

Communist Jeremy Corbyn wants to try to force a general election if there is no deal later today, and if the UK`s main opposition party Labour succeeds, they wants to go back to Brussels and negotiate a new version of Brexit.

PM Theresa May has warned Conservative Mps thinking of voting against the deal she has reached with the EU that they risk «no Brexit at all». That happened in another referendum which was backed by the SNP, the Green Party, Plaid Cymru, Lib Dems, some Conservatives and a large group of Labour Mps. They want the public to be given the final say, with the option to remain in the EU.

There is a 585-page withdrawal agreement. It covers the cost for the UK to leave the EU and that is an estimated £39 billion. It also proposes a method of avoiding the return of a physical Northern Ireland border.

The Northern Ireland Democratic Unionist Party will vote against the deal. They have a 310 mile land border with the EU and this is a point that dominated the Brexit talk. Nobody wants surveillance cameras at the border because the question is free cross-border flow of trade and people.

So, is it gonna be a hard border, soft border or no border at all? Both, the UK and EU agreed to put in place a «backstop» to ensure there is no hard border whatever the outcome of the trade talk between them. This is a safety net wich is good for both parties.

All the opposition parties in the House of Commons and the Labour party have said they will vote against the deal. In addition; some reports say as many as 100 are also opposed to it. The Northern Ireland Democratic Unionist Party, who PM Theresa May relies on to keep her in power, have also said they will vote against it.

PM Theresa May argues that if her deal is voted down, Britain risks leaving without a deal, and some think it will cause chaos at the ports and damage industry. Alternatively, she says, there will be «no Brexit at all».

Mrs May need at least 320 votes to pass and so far it seems to be difficult. Some say that the deal they have today is not what they voted for. Others say it is even worse than staying in the EU.

Nobody know for sure whats gonna happen if the Parliament rejects the Brexit plan, but there are a few scenarios; they can leave the EU without a deal or they can have another vote in Parliament. They can also go for another EU referendum or a general election, or Mps can remove Theresa May and start to renegotiate a deal with the EU.

If some of this happens, the Brexit date of 29 March will therefore be delayed by a few months and that should be enough to renegotiate a deal if EU agree.

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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America is governed by Americans. We reject the ideology of Globalism and we embrace the doctrine of Patriotism,» Trump said.

The U.S President Donald Trump said in a UN speech today that; «Migration should not be governed by an international body. Unaccountable to our own citizens. The only long-term solution to the migration crisis is to help people build more hopeful future in their home countries. Make their countries great again.»

Brexit boss Nigel Farage said Trump`s speech was music in his ears. The best speech by Trump so far. He also said that we want to have a world in which we respect the differences that exists between our countries, rather than pretending we can all be governed by one body. Run by bureaucrats. And that’s the theme, that ran to the whole of that speech, Farage said.

Donald Trump is also the man many claims coluded with Russia. So far, without any evidence. But whats more strange is that Germany is totally controlled by Russia because they are getting from 60 – 70 percent of their energy from Russia and a new pipeline. Who is talking about that?

The German market is the largest buyer of Gazproms exports and it accounts for about 27 percent of Gazproms European exports.

Not only Trump had a speech at UN today. Macron was also having a speech, and they both talked about competing visions at the UN. Trump talked about a New World Order, while Macron talked about a different one.

«I think that were seeing a crisis of our the very foundations of todays world. Were losing our benchmarks and our functioning. This is a reflection of our failures of the past,» Macron said.

«We will never surrender America`s souverenty to an unelected, unaccountable global bureaucracy,» Trump said. America is governed by Americans. We reject the ideology of Globalism and we embrace the doctrine of Patriotism,» Trump said.

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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The European Union rose “only” 0,4 percent in Q1 of 2018

Last week I talked about America`s fantastic growth of 4,1 percent on quarter in Q2 of 2018, and this is only the beginning. It is no doubt; President Trump must be doing something right. But, what about the European Union?

GDP in the European Union rose «only» 0,4 percent on quarter in the first three months of 2018. Not much to write home about. But the growth have never been above 1 percent since the financial crisis in 2008.

The European Union reached an all time high of 1,30 percent in 1999 and that is right before the tech bubble burst. Since then it has been a dead fish, reaching an all time low of -2,60 percent in the first quarter of 2009.

At the same time we can see that the unemployment rate reached a record low of 6,80 percent in February of 2008, and that`s right before the financial crisis. It reached an all time high of 11 percent in February 2013, but in May this year it fall down to 7 percent again.

This isn`t good enough if we are living in a capitalistic world.

The European Union in Brussels are nothing more than unelected bureaucrats. Draghi and the ECB have, just like Japan and the U.S «printed» a lot of money, and will continue to do so. If they can`t turn around the ship, they need to consider a strong cheerleader.

European Commission President Jean-Claude Juncker had a meeting with President Trump last week. They were talking about trade, free trade and tariffs. Mr Trump`s goal is to make better deals so both the U.S and the EU can take more profit and prosper.

I think that the EU should be glad for that and they need to hurry up. The U.S is the world`s third biggest exporter, yet exports account «only» for 13 percent on GDP. Exports in the U.S reached an all time high of 215328 USD million in May this year, which is pretty impressive.

The EU has 28 member states and the biggest among them all is Germany (21 percent of total GDP), the United Kingdom (15 percent), and France (15 percent).

Exports of goods and services account for 46 percent of GDP while imports account for 42 percent, adding 4 percent of total GDP. But this is about to change. If the UK contribute with 15 percent of the total GDP in the EU, then what will happen to their growth after Brexit?

That being said; nor is the UK a success story. The British economy grew by 0,1 percent in the first three months of 2018 and well below 0,4 percent in the previous period. It is the lowest growth rate since a 0,1 percent contraction in Q4 2012.

The largest contribution to growth in the UK was from household spending at 0,2 percentage points. From the production side, the service industries made the largest contribution to GDP growth, followed by production.

Agriculture, the smallest component within the output approach of GDP made no contribution to growth to one decimal place, while construction deducted from GDP growth. The service industries increased by 0,3 percent.

Positive growth was recorded within all sub-sectors of the services industries; distribution, hotels and restaurants (0,1 percent vs -0,1 percent).

President Trump have repeatedly said that the EU have treated the US very bad. I have written many articles about that long before Mr Trump`s inauguration. The European Commission has fined Google €4,34 billion for breaching EU antitrust rules this month.

In May 2009, Intel was imposed with a 1,06 billion euro fined for abusing its market dominance on central processing units. Microsoft has been in trouble with the Commission on several occasions. In 2004, the Commission ruled that Microsoft had abused its market dominance.

In 208, the Commission fined Microsoft nearly 900 million euros for charging «unreasonable» royalty fees. In 2013, another fine of 561 million euros was imposed on Microsoft. This time for failing to comply with the Commission`s ruling that it had to allow users to more easily choose a prefered web browser.

The European Commission fined Facebook for 110 million euros in May this year in relation to its takeover of WhatsApp. Facebook acquired the messaging service in 2014 for $19 billion, but provided the Commission with misleading information about the acquisition.

In August 2016, the Commission ruled that tech giant Apple had received illegal tax benefits from Ireland worth up to 13 billion euros. Ireland was ordered to recover the unpaid tax from Apple, plus interest.

As early as 1966, British Politician Tony Benn said that «Communism run by commissars from Moscow did not work, and nor will capitalism run by commissioners in Brussels. Both deny people their right to develop in their own way.»

Now, under President Donald Trump, big companies like Apple are moving home to the United States with billions of dollars. Apple alone, are bringing in $230 billion. They will build new plants and a magnificent campus.

They will spend their money wisely and the money will be in the U.S. All this is possible because of Trump`s tax cuts and reforms. This is how you make growth.

 

 

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