Tag Archive | "Reins"

Tags: , , , , , , , , , , , , , , , , , , ,

Tapering No, Obamacare Yes


Federal Reserve Chairman Ben Bernanke surprised analysts on Wednesday by announcing there would be no tapering at this time. The announcement sent waves around the planet as global equities turned up sharply. US equities surged off the news and continued their upwards movement Thursday. It had been expected the Federal Reserve would announce initial tapering of between $10 and $20 billion per month.

Bernanke’s move was a pullback from his original tapering announcement in May, when he indicated a tapering in the $85 billion bond buying measure was likely in three months and that the program would end when US unemployment hit 7 percent, around the middle of 2014. Unemployment dipped to 7.3 percent last month but the progress is due to more people leaving the labor force and is not reflective of new job growth.

The Federal Reserve’s balance sheet is now at $3.6 trillion and growing every month. Bernanke’s decision not to taper will give the incoming Chairman, presumably Janet Yellen, a dove, greater flexibility to start and end QE3 according to her own standards. Further policy statements could be made at the October meeting but at this point it appears no trimming will take place before December.

Yellen will face major decision as soon as she takes the reins in February.

  • When to begin asset purchase tapering
  • When to halt the buying program
  • How much to taper
  • Whether to trim purchase of Treasuries or mortgage-backed securities first.

The announcement boosted equities and weakened the dollar. Yellen is due to make a high-profile speech in New York on October 1. Investors may get insight into future Federal Reserve policy at that time. President Obama may propose Yellen for confirmation as early as next week.

Canada And Mexico

Canada had one eye on the Federal Reserve decision and another on its weakening employment sector. However, August inflation fell to 1.1 percent from 1.3 percent in July. The Bank of Canada is expected to hold its interest rate at 1.0 percent, where the rate has been since September 2010.

On Friday, the Canadian dollar was trading at $1.0289 USD or at $0.9719, down from Thursday. The loonie had posted  significant gains immediately after Bernanke’s startling announcement. The benchmark 10-year Canadian bond held with a yield of 2.713 percent.

Board minutes from Mexico’s Central Bank showed the Board was divided over the lowering of interest rates earlier in the month. Mexico has reduced the interest rate to 3.75 percent, down 25 basis points. This marks the lowest  Mexican rates have been since before the recession in 2008.

Euro Watches German Elections

The USD moved up against a basket of currencies in early Friday morning trading. Immediately after Bernanke’s announcement on Wednesday, the dollar had slumped to 80.060. Friday morning, a slight comeback bumped the dollar to 80.37. Nervousness about an undefined Federal Reserve policy was weighing on the greenback.

All eyes in Europe are on the elections in Germany where Chancellor Angela Merkel is expected to win a third term. However, Merkel may lose control of Parliament as her centre-right coalition looks to be losing seats.

The euro was up 0.01 percent against the yen to 134.60. Against the USD, the euro was trading at $1.3545 Friday morning after striking a 7-month high on Thursday.

The dollar was flat at 99.39 yen. The yen endured a broad selloff on Thursday. The yen hit a 3-month low against the Australian dollar on Thursday and touched a 4-year low against the euro.

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Tapering No, Obamacare Yes

Tags: , , , , , , , , , , , , , , , , , , ,

Bernanke and Fed Tapering Together


Federal Reserve Chairman Ben Bernanke and his $85 billion per month bond buying spree will be tapering down and winding down together.  Wednesday’s announcement eliminated speculation about the Fed’s plans. Tapering will begin later this year and the spending spree will conclude in 2014, the same year Bernanke will relinquish the reins.

The news has sent shock waves through global equity markets and created uneasy volatility in currency markets. The move sends a loud message that markets and investors must return to fundamentals. Interest rates will rise, enterprises will be valued by their performance and the Fed will have to start planning to dispose of trillions of dollars of assets. It’s back to the basics and for many it’s about time.

The Fed’s position should not have been a surprise. In his May 22, 2013, meeting, Bernanke set the stage. Equity markets reacted but bounced back. This time, the fall has been faster and deeper.

Currency markets have also reacted strongly. On Thursday, the benchmark 10-year US Treasury note was down 24/32, yielding 2.4412 percent. The USD reached two-week highs against major currencies and is poised to extend gains on Friday. On Fridy, the 10-year Treasury yield rose to 2.531 percent.

Meanwhile, investors rushed to pull money from emerging economies. The dollar posted a 1.53 percent gain against the yen to 98.28 yen. The dollar pushed the euro to a two-week low at $1.3162. Speculation is that the euro will soon fall below the $1.30 mark.

Disappointing factory output in China had analysts wondering if the government would intercede.  China’s economy slowed to the lowest growth rate in 13 year in 2012 and is on pace to shrink further this year.

In Europe, Markit’s Flash Eurozone Composite PIN remained below the trend line for growth in the region. With China’s slowdown and the tapering of US stimulus, prospects for growth in Europe are dim. The Fed’s stimulus had a major impact upon the global marketplace. In overnight trading, political turmoil in Greece pushed 10-year bonds up 70 basis points to an unsustainable 11.4 percent.

Peru’s currency, sol, closed at 2.79 against the USD, it’s lowest close in more than 2 years. The central bank immediately tried to sell 950 billion soles in two-month notes. Currencies in Malaysia, Thailand and the Philippines experienced large volume pullback, underscoring the fragility of emerging economies.

The dollar got a further boost from improved factory output in the Midwest and from an increase in existing home sales. Against a basket of currencies, the USD reached a two-week high of 82.145, up 0.5 percent. The Australian dollar fell to a 33-month low against the USD. This decline was heavily influenced by China’s nine month low factory report.

Equity Markets. Tremble

On Wednesday and Thursday, the S&P 500 suffered its biggest losses since April. The index fell below its moving 50-day average for just the second day this year.  The S&P was 4 percent below the record high of 1,669.16 set the day before Bernanke ‘s May speech.

The Dow Jones shed 293.06 points, nearly 2 percent, settling at 14,819.13 at Thursday’s close.  Equities in Europe lost 3 percent. MTSCI’s emerging market index slumped 3.69 percent. The Asian Pacific region outside Japan fell 3.87 percent. MTSCI’s all-country world index lost 2.93 percent, while the FTSEEurofirst 300 index settled at 1,143.99, down 3.07 percent.

On Friday, major equity indexes rallied slightly. The Nasdaq fell for the third straight day. 47 percent of Nasdaq stocks rose on Friday. 10.29 billion shares exchanged hands on the New York Stock Exchange.6.36 million Nasdaq shares were traded.

When trading commenced on Friday, the S&P 500 was off 5 percent from its all-time high reached on May 21. The CBOE Volatility Index fell 8 percent after jumping 23 percent on Thursday.

For the week, the DOW was off 1.8 percent. The S&P 500 was down 2.1 percent  and Nasdaq shed 1.9 percent. Nicholas Cage, the chief market analyst At ConvergEx in New York summed up analyst sentiment; “A lot of investors thought the sell-off was overdone after we broke through those technical levels, but all the existential things that drove us down are still in place. People aren’t sure what’s going to happen with Fed policy or rates or anything else. It is too soon to say we hit a bottom.”

Bernanke and Fed Tapering Together

Federal Reserve Chairmen Ben Bernanke and his $85 billion per month bond buying spree will be tapering down and winding down together.  Wednesday’s announcement eliminated speculation about the Fed’s plans. Tapering will begin later this year and the spending spree will conclude in 2014, the same year Bernanke will relinquish the reins.

The news has sent shock waves through global equity markets and created uneasy volatility in currency markets. The move sends a loud message that markets and investors must return to fundamentals. Interest rates will rise, enterprises will be valued by their performance and the Fed will have to start planning to dispose of trillions of dollars of assets. It’s back to the basics and for many it’s about time.

The Fed’s position should not have been a surprise. In his May 22, 2013, meeting, Bernanke set the stage. Equity markets reacted but bounced back. This time, the fall has been faster and deeper.

Currency markets have also reacted strongly. On Thursday, the benchmark 10-year US Treasury note was down 24/32, yielding 2.4412 percent. The USD reached two-week highs against major currencies and is poised to extend gains on Friday. On Fridy, the 10-year Treasury yield rose to 2.531 percent.

Meanwhile, investors rushed to pull money from emerging economies. The dollar posted a 1.53 percent gain against the yen to 98.28 yen. The dollar pushed the euro to a two-week low at $1.3162. Speculation is that the euro will soon fall below the $1.30 mark.

Disappointing factory output in China had analysts wondering if the government would intercede.  China’s economy slowed to the lowest growth rate in 13 year in 2012 and is on pace to shrink further this year.

In Europe, Markit’s Flash Eurozone Composite PIN remained below the trend line for growth in the region. With China’s slowdown and the tapering of US stimulus, prospects for growth in Europe are dim. The Fed’s stimulus had a major impact upon the global marketplace. In overnight trading, political turmoil in Greece pushed 10-year bonds up 70 basis points to an unsustainable 11.4 percent.

Peru’s currency, sol, closed at 2.79 against the USD, it’s lowest close in more than 2 years. The central bank immediately tried to sell 950 billion soles in two-month notes. Currencies in Malaysia, Thailand and the Philippines experienced large volume pullback, underscoring the fragility of emerging economies.

The dollar got a further boost from improved factory output in the Midwest and from an increase in existing home sales. Against a basket of currencies, the USD reached a two-week high of 82.145, up 0.5 percent. The Australian dollar fell to a 33-month low against the USD. This decline was heavily influenced by China’s nine month low factory report.

Equity Markets. Tremble

On Wednesday and Thursday, the S&P 500 suffered its biggest losses since April. The index fell below its moving 50-day average for just the second day this year.  The S&P was 4 percent below the record high of 1,669.16 set the day before Bernanke ‘s May speech.

The Dow Jones shed 293.06 points, nearly 2 percent, settling at 14,819.13 at Thursday’s close.  Equities in Europe lost 3 percent. MTSCI’s emerging market index slumped 3.69 percent. The Asian Pacific region outside Japan fell 3.87 percent. MTSCI’s all-country world index lost 2.93 percent, while the FTSEEurofirst 300 index settled at 1,143.99, down 3.07 percent.

On Friday, major equity indexes rallied slightly. The Nasdaq fell for the third straight day. 47 percent of Nasdaq stocks rose on Friday. 10.29 billion shares exchanged hands on the New York Stock Exchange.6.36 million Nasdaq shares were traded.

When trading commenced on Friday, the S&P 500 was off 5 percent from its all-time high reached on May 21. The CBOE Volatility Index fell 8 percent after jumping 23 percent on Thursday.

For the week, the DOW was off 1.8 percent. The S&P 500 was down 2.1 percent  and Nasdaq shed 1.9 percent. Nicholas Cage, the chief market analyst At ConvergEx in New York summed up analyst sentiment; “A lot of investors thought the sell-off was overdone after we broke through those technical levels, but all the existential things that drove us down are still in place. People aren’t sure what’s going to happen with Fed policy or rates or anything else. It is too soon to say we hit a bottom.”

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Bernanke and Fed Tapering Together

Tags: , , , , , , , , , , , , , , , , , , ,

Republicans Reeling, Boehner Surrenders


Republicans Reeling, Boehner Surrenders

House Majority Speaker, John Boehner, supposedly the most powerful Republican politician in the country, met his match Thursday in an embarrassing non-vote that once again demonstrates the ineptitude of the conflicted GOP. Boehner did not absorb the humiliating lack of support for his Plan B solution well. To put an end to the Republicans self-destruction mode, Boehner dismissed the House for the Christmas Holiday burying his head in the sand and leaving a concerned middle class wondering “who are those guys?”

Boehner turned the reins over to the Senate and President Obama and left middle class taxpayers hanging out to dry. The conservative Tea Party refused to support Boehner in his hour of need, making very clear that there are at least three political factions working against each other in Congress. While it is easy to criticize the politics, the middle class will pay their dues for not ousting Republicans from the House and Senate in the 2012 elections. The price will be a self-inflicted recession.

It is painfully clear that the majority of Republicans are more interested in standing behind Grover Norquist and the wealthiest 0.005 percent of the voting public than they are about preserving the nation’s credit rating or preventing a recession that could make the 2008 recession pale.

If there was ever doubt about the mechanics of Washington, they should be eliminated now. The international community appears a smoothly operating engine compared to the dysfunction that threatens to take the country apart. On the heels of the tragedy in Newtownn, Ct. Americans are struggling for identity socially, economically and financially. The morale of the country is low and the state of mind for middle class America, the apparent conscience of the country, is distraught. Soon to be bombarded by irresponsible tax increases, massive layoffs and more irresponsible politics, American consumers will hit the crisis mode when the bills for holiday shopping arrive. The middle class can soon look forward to working half the year to pay new taxes and new healthcare levies.

It’s a disaster. A disaster caused by political subsidies, self-interest and the absence of moderate politicians.

Senate Republican Leader, Mitch McConnell had the audacity to call the failure of his party to embrace a real problem, the President’s fault. In another self-serving, stumbling statement from the aged Republican, the Republican leader continued the rhetoric that has accomplished nothing in three years.

The Republican Party is broken and the sooner Americans fight back, the better. This is an inexcusable breach of the public’s trust. Last Monday, Boehner and Obama came to a sweeping tentative agreement. When Boehner returned to the dark corners of the House offices, the deal fell apart rapidly.

Boehner has no control He has fallen from the most powerful Republican in Washington to the depths of an impotent fraud, like the party he represents. Wake up America! This is a disgrace and if you do not pick up the phone and ruin Christmas and New Year’s for your representative, you have no one but yourself to blame.

 

Forex Trading Articles by Forex Blog & Online Forex Trading

Posted in Forex Trading NewsComments Off on Republicans Reeling, Boehner Surrenders