Recently the main talk in markets was reflation, but about 2 years ago everyone was talking about deflation: why deflation was structural, all the thematic aspects of deflation, and new normal and new paradigms. But in the end, it appeared to be cyclical or transitory – as the chart below shows. The chart shows the proportion of countries in ‘deflation’ (negative YoY change in headline CPI), which peaked about 40% in early 2015. The main driver was falling commodity prices, hence the transitory nature of it. But it was the largest, longest and most widespread episode of “deflation” that we’ve seen in rec...
Consumers in the UK have been on a credit binge since the Bank of England cut its benchmark interest rate to an all-time low as investors braced for the widely anticipated economic shock of Brexit – a shock that, unsurprisingly, has yet to arrive, despite warnings from the academic establishment that a “leave” vote would trigger an imminent economic catastrophe. And now, with total credit growth rising at 10% a year, the BOE is warning that the increase in unsecured lending is becoming increasingly unsustainable. While the central bank is less concerned with mortgage debt than credit-card debt and other types of consumer cre...
The dollar hovered near a 10-month low during early Asian trading as investors continued to doubt whether the United States would tighten monetary policy as aggressively as originally expected. Data out of the U.S. late last week showed disappointing readings for consumer prices and retails sales which started the dollar’s struggle and called Federal Reserve policy into question. The chances of a Fed rate hike in December fell to 43.1 from 55 percent on Thursday according to the CME Group’s FedWatch tool. In contrast, news out of China on Monday morning showed that the country beat GDP estimates, with second quarter GDP rising 6.9 percent...
The shock landslide defeat of PM Shinzo Abe’s Liberal Democratic Party (LDP) in the recent Tokyo metropolitan elections — and the triumph there of Tokyo Governor Koike’s new party (Tomin First) — has lit a faint hope that the radical Japanese monetary expansion policy could be on its way out. The flickering light though is not strong enough to soothe the mania in Japan’s carry trades and so the yen continued to slide in the aftermath of the elections. Between mid-June and early July, the Japanese currency depreciated by some 5% against the US dollar and 10% against the euro. The perception in currency markets is that Japan will ...
Gold prices settled at $1228.82 an ounce on Friday, gaining 1.35% on the week, as the dollar fell after weaker-than-expected U.S. inflation data reduced the market’s expectations for a Federal Reserve interest rate hike by September. In a congressional testimony last week, U.S. Federal Reserve Chair Janet Yellen sounded a more dovish tone on monetary policy. Yellen said that inflation should rebound, but the central bank could alter policy if softness persisted. After hitting a four-month lows on Monday, the precious metal was also due for a short-covering. XAU/USD found enough support in the 1208/5 area and ultimately tried to climb above ...
Share markets in India are presently trading marginally higher. Sectoral indices are trading on a mixed note with stocks in the IT sector and metal sector witnessing maximum buying interest. FMCG stocks are trading in the red. The BSE Sensex is trading up 63 points (up 0.2%) and the NSE Nifty is trading up by 21 points (up 0.2%). The BSE Mid Cap index is trading down by 0.1%, while the BSE Small Cap index is trading flat. The rupee is trading at 64.35 to the US$. As per an article in the Economic Times, foreign investors have pumped in nearly Rs 110 billion in the Indian capital markets during the first two weeks of July. As p...
Previous: On Friday, trading on the euro closed up against the US dollar. The price rose sharply after the release of US data. The consumer price, retail sales and Michigan University indices did not match up to expectations. US 10Y bond yields fell by 2.6% on this news, reaching 2.27%. The euro rate restored to 1.1468. Buyers hit a session high of 1.1472 before trading closed. US statistics: The Michigan University consumer sentiment index fell to 93.1 (forecast: 95, previous reading: 95.1). The industrial production index for June grew by 0.4% (forecast: 0.4%, previous reading: 0.1%). The consumer price index in June came to 0.0% MoM, 1.6% ...
Stockholm Syndrome is defined as “…a condition that causes hostages to develop a psychological alliance with their captors as a survival strategy during captivity.” While observers would expect kidnapping victims to fear and loathe the gang who imprison and threaten them, the reality is that some don’t. There is a loose analogy between being held hostage and being an investor in a regime of irredeemable paper currency and zero interest rates. In both cases, the victim has little hope of escape and must seek to somehow survive under malevolent conditions. Key behaviors in Stockholm Syndrome are positive feelings for their captors, a ...
This week we are going to look at gold from a different perspective— the intrinsic value perspective. I will then introduce a unique unknown fund to invest in the precious metals and resource development sector. It is an incredible opportunity which invests your money right alongside the premier resource investor of this generation. I will then move on to what I will now label as my Post Bubble Contraction (PBC) watch section and examine the leading indicators to follow to keep abreast of the PBC process. We will finish up with updates on Plunger’s trades and other highlights. Last weekend’s report included several long-term charts of g...
The Australian dollar shot up to 0.7834 AUD/USD following poor and disappointing US economic and inflation data released on Friday. This inflation data is likely to complicate the Fed’s path of monetary tightening and retail data suggests that Americans are pulling back their spending. The discouraging data indicated that last month was only the fifth time in seven years we have seen a drop in retail sales over consecutive months, increasing the argument that the strength of the US economy cannot withstand another IR hike in the near future. On the other side of the coin, despite dark clouds gathering in the distance, Australian and Chinese...