Tag Archives: Draghi

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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Interest-rate cut in the Euro Zone

 

Japan`s Nikkei index rose to a 7-week high today, up +0,97%. Yen retreated against the dollar and a record high for Wall Street helped the Asian stocks on upbeat U.S housing data. The broader Topix advanced 1,2% to 1,194,69.

 

European stocks are also up today, helped by Italy`s Prime Minister Matteo Renzi. FTSE MIB outperform after Italy`s Prime Minister`s centre-left Democratic Party`s reform were endorsed by a strong showing in European elections.

ECB

A big surprise for many nervous «Sell in may and go away»-investors on friday. The U.S indices increased with the DOW up +0,38% to 16,606,27, Nasdaq +0,76% to 4,185,81, and S&P 500 +0,42% to 1,900,53.

 

ECB`s President Mario Draghi says the policy makers are watching the market closely and once they see low inflation they will be ready to take some action. Draghi said they are looking for a negative spiral to take hold between low inflation, falling inflation expectations and credit.

 

«We are not resigned to allowing inflation to remain too low for too long», Draghi said today. He is trying to guide the euro area through a fragile economic recovery that remains threatened by subdued pricing power.

 

Next ECB meeting is June 5 and they are now working on a package including interest-rate cuts and liquidity injections. Many investors will wait for the next ECB meeting and the lower the interest-rate is, the bigger the problem in the economy is. You are tough if you buy stocks now.

 

Reports today:

 

04:00 a.m EST ECB President Draghi Speaks

All Day Bank holiday

 

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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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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European Central Bank in focus

Nikkei is up today +0,8% to 15,071,88. It`s up because of the news from China which is taking steps to stimulate its economy. All this because they want to reach their goal of the growth at 7,5% in GDP.

ECB

The dollar hit a 10-week high to the yen. Rising up after solid U.S economic data. Investors in the Euro zone are waiting for ECB news and the markets are flat so far today. The ECB will announce its interest rate decision today at 11:45 GMT.

Mario Draghi will talk about any further policy decisions at the conference at 12:30 GMT today. It is expected to see ECB keep the rates steady and offer no new aid to the euro zone`s fragile recovery.

As I wrote about yesterday; the inflation in the Euro zone is dangerously low, but despite the lowest inflation in more than four years, they will probably wait for some action now. It seems like the U.S markets will open up today.

Gold is declining as the investors are waiting for the ECB news. Because of the incumbent macro events, the gold prices is continue to fall. New reports from U.S jobs numbers comes tomorrow too. That will be a final sign to see that the economy is on the recovery path.

Reports today:

08:30 a.m EST ECB Press Conference
08:30 a.m EST Trade Balance
08:30 a.m EST Unemployment claims
10:00 a.m EST ECB President Draghi Speaks
10:00 a.m EST ISM Non-Manufacturing PMI

 

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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Draghi speaks

Shares rose today following gains in Asia, while the Euro held steady on speculation the European Central Bank would ease monetary policy later in the day. The economy in the Euro zone is still fragile and the ECB was expected to keep interest rates on hold.

Emerging stocks and currencies were broadly higher as diplomatic talks to moderate the crises in Ukraine were set to continue. The European leaders are having a meeting in Brussels today. They will discuss Russia and warn them but not sanction them, diplomats said.

Fears of military confrontation is reduced, and the attention now has shifted to what ECB will do now. Investors are waiting for Draghi today. ECB may hesitate to buy government bonds, unlike other major central banks like U.S Fed and BoJ.

The problem in Europe is high unemployment rate and slow growth. Will all this end up in deflation? The Euro is now traded at $1,3720 and it is expected to hear dovish talking from Draghi later today.

When the risk in Ukraine is reduced, the dollar strengthened against the safe-haven yen. It went up half a percent at 102,7 yen. The dollar index rose, which measures the greenback against a currency basket.

Reports today:

08:15 AM ET FOMC Member Dudley speaks
08:30 Am ET ECB Press Conference
08:30 AM ET Unemployment claims
08:30 AM ET Revised Nonfarm Productivity
10:00 AM ET Factory orders m/m
01:00 PM ET FOMC Member Plosser speaks

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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