Tag Archives: Inflation

by | March 11, 2016 · 11:59 pm

Very important week

Next week will be exiting. The earnings season is at the end and investors focus now will be on a flood of data coming in. It all starts on monday March 14 were the Bank of Japan will announce its policies.

Bank of Japan Gov. Haruhiko Kuroda is in a special situation. Just like ECBs Mario Draghi, he talked about his «bazooka» and said he wanted to do whatever it takes to get Japans economy back on track to a stable growth.

debt

The answer so far is negative interest rate, and they started charging commercial banks 0,1% interest on some reserves last month. That lowered the borrowing cost, but on the other hand, it made some confusion about the effects on Japan`s savers.

Haruhiko Kuroda has been called to parliament for questioning many times and more than any other central bank chief during the same period. Japanese 10-year Government Bonds traded at -0,20% for the first time in history and dropped farther into negative territory.

Negative rate is also seen in Sweden, Denmark and Switzerland. Sweden`s goal is to raise the inflation. The goal in Denmark and Switzerland is to prevent the currency to raise too much.

Negative rates can be the new normal because none of them turn this situation into a strong economic growth. So, What about America?

All eyes will be on Federal Reserve Chair Janet Yellen and the Federal Open Market Committee (FOMC). The FOMC meeting will kick off on Tuesday 15, and the Fed`s interest rate decision is the highlight on Wednesday 16, with the 2 p.m ET announcement followed by a 2,30 press conference with Fed Chair Janet Yellen.

According to Wall Street Journal`s Jon Hilsenrath who is the mouthpiece of the Fed, the central bank will hold off raising rates this month, but will leave the door open for a hike in April or June this year.

U.S Consumer prices went up 1,4% YoY in January of 2016, and the inflation rate accelerated for the fourth straight month which is very impressive. CPI for February 2016 is scheduled to be released on Wednesday 16.

The European Central Bank (ECB) followed BOJ, and increased QE by 20 billion euros per month on thursday. Not only that. They also lowered interest rates, which is an unexpectedly strong move. The ECB increased its monthly bond buying from 60 to 80 billion euros and drove commercial deposit rates from -0,30% to -0,40% and cut a main refinance rate from 0,05% to 0,00%.

As you may know, many people are very angry. Not only in Europe, but also in America. The middle class is wiped out and businessman Donald Trump knows that. He doesn`t like what he see and want to do something about it; Make America great again.

The battle for the White House continues, and next week`s Ohio and Florida primaries would give Donald Trump the knockout blow necessary to capture the GOP nomination. Anti-Trump groups are spending millions of dollar on TV ads to attack him. Is that enough to stop him? If not, it will be a short way left to the White House.

Very important week.

 

sbnews

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.

Leave a comment

Filed under Politics, Quantitative Easing, Stock market

Tagged as , , , , , , , , , , , ,

by | March 3, 2015 · 9:48 pm

Inflation and Gold

Investors buy gold because they think that gold is a hedge against inflation. The value of the paper currency falls in terms of the goods and services that it can buy and inflation goes in the opposite direction; up.

Investors love gold when inflation is high and as you may know, gold has a direct relationship with inflation. So when inflation goes up so does the demand for gold. Imminent hyper inflation was expected during the QE program, but that is not the reality right now.

You can track inflation using the Consumer Price Index (CPI). This index measures how the price of a basket of consumer goods and services changes. CPI will give you a picture of the increase in the level of prices.

us cpi

This data is released by the U.S Bureau of Labor statistics on a monthly basis. U.S inflation rate is -0,09%, (released Feb 26, 2015), compared to 0,76% in December and 1,58% last year. This is lower than the long-term average of 3,32%. Down -111,8%.

Inflation fell in January for a third straight month as U.S consumers continued to spend less on gas, food prices flattened and as costs retreated for new vehicles,used cars and trucks, household furnishings and operations, airline fares, alcohol and tobacco. U.S inflation turned negative for the first time since 2009.

The CPI measures what American pays for everything from cloths, airline tickets, fruits and vegetables to cars. Declines were again led by energy as prices at the pump tumbled about 19%. Gasoline prices have plunged 35% over the past 12 months.

A slower pace of inflation means consumers can buy more with their money, but a sustained decline over and extended period (deflation), can wreak havoc on an economy. Falling energy prices are beginning to filter down into other areas.

Core US inflation advanced 1,6% over the last 12 months, and the core 12-month reading is the benchmark inflation figure monitored by the Federal Open Market Committee (FOMC) as it helps in deciding where to set the key interests rate.

«We think inflation is going to move lower before it moves higher. Declining oil prices have had a very major influence,» Fed Chairwoman Janet Yellen said in a testimony.

The current level remains below the Fed`s 2% annual inflation target. In written remarks read to Congress, Janet Yellen stated:

“The Committee expects inflation to decline further in the near term before rising gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of lower energy prices and other factors dissipate, but we will continue to monitor inflation developments closely.”

Consumer Price Index data for February inflation and the annual period is scheduled for release on March 24, 2015.

 

Click the link below and check out the Fan Fund

https://www.eventbrite.com/e/fan-fund-tickets-15580655159

 

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.

Leave a comment

Filed under Commodities, Politics, Quantitative Easing

Tagged as , , , , , , , , ,

by | June 20, 2014 · 9:36 am

Gold rally

 

Gold and Silver bulls were on the run yesterday as the precious metals rallied after the FOMC meeting, and this run-up was the best in a very long time. Gold hit the key psychological resistance at $1,300.

Gold

Investors are buying this precious metals as a safe-heaven amid risk aversion in the market place, a slumping dollar and strong technical buying. Buy stop orders were triggered at technical levels to accelerate the advance in gold and silver prices.

Spot gold was last quoted up $40,20, trading at $1,318, and July Comex silver is up one dollar to $20,84 an ounce. The civil war in Iraq remains a major factor and continues to prompt risk aversion among traders and investors, and in turn safe-heaven buying in gold.

Crude oil prices are rallying on worries about Iraqi crude oil exports being reduced and investors are worried that the violence in Iraq could spread to other Arab nations. Fed Chair Janet Yellen`s comments at her press conference rallied stock, bond and the precious metals markets. In addition; she said that the interest rates are not going to be raised any time soon.

But what can we expect in the future? Well, I like to take a look at Japan, because they know how to print money. Despite the significantly bigger hammer it`s using to attempt to create inflation, growth and inflation have remained muted.

Look at the inflation in Japan. It remains low, year after year after year. Nothing is happening. That`s strange because they have printed so much money. This is probably what we will se in the U.S too. Low inflation and worst of all; deflation.

ECB is on the way to print money too. It looks like this will be a deflationary world. What a trend QE is! So, what will happen if the Chinese real estate prices start to collapse? And slowing in Germany and further slowing in the real estate recovery in the U.S?

The stock market will simply continue to edge up if none of these events come to pass, because right now, there`s nowhere else for investors to go. One of the things Fed Chair Janet Yellen said after the press conference was that the stock market is at a good valuation and is not a «bubble».

Many people were listening and bought stocks with both hands. CNBC and other News channels say that Yellen has given a «green light» for stock traders to buy. Remember; we are five years into a bull market, and they are talking about «green light»?

I have seen the same things going on many times. Again and again. When we are at the top, like we are now, everyone is bullish and tell you to jump aboard and buy stocks. I my opinion, we are now at the top on the trend from 2000 and 2007, and that`s pretty scary. People tend to do the same thing; they buy on tops and get smashed on bottoms. I just want to warn you; be cautious.

This is the nature. It reminds me of the Word Cup Champion in Soccer from 2010; Spain. The winners are out of the World Cup 2014, as they goes from the top to the bottom. Many of the players hail from Real Madrid and Barcelona, which is two of the soccer`s richest clubs. Most of the players in Spain earn more in a year than a Spanish worker earns in 40 years. You couldn`t belive that when you saw they lose 2-0 against Chile. They are simply not hungry enough. The European championship from 2008 also saw a humiliation 5-1 loss to Holland earlier this week. Six year on the top is now over.

I`m watching the markets very closely right now. As you may know, bull markets come to an end, and so do bull market rallies. When the last buyer is in the game, it is over and the correction or a big bear market comes. But how can we know when that day is coming? What is the sign we should look for? I will talk about that next week. In the meantime; many soccer players are now working hard to get the GOLD!

 

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.

 

Leave a comment

Filed under Commodities, Stock market

Tagged as , , , ,

by | June 18, 2014 · 2:22 pm

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.

 

Leave a comment

Filed under Stock market

Tagged as , , ,

by | June 16, 2014 · 2:27 pm

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.

 

Leave a comment

Filed under Commodities, Stocks

Tagged as , ,