Currencies, European stock market, Market outlook

The eurozone is a German colony, the net exports of the member states explain

The eurozone’s economy is at the edge of collapse. Southern European countries experienced a sovereign debt crisis in 2010, and the unemployment rate in the euro area is still as high as nearly 10%. Italy rejected Mr Renzi’s pro-EU reform plan in the referendum, and in France, the anti-EU National Front’s Ms Le Pen is increasingly popular.

Yet what is the cause? Whilst the EU also faces the immigration crisis, the economic reason will be easily comprehended by only glancing at the trade statistics of the eurozone countries.

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Bond markets, History of markets, Market outlook, US bond markets, US stock market

Explaining how Reaganomics failed to act against the effects of rate hikes

Tax cuts, investment, the strong dollar and the twin deficits. For economists, Reaganomics is a very unique economic experiment. Looking at the GDP and the stock market in 1980s, it seems that Reaganomics was successful, but it is not well understood what exactly drove the economy. This article aims to explain why Reaganomics failed in the first few years and led to the later success, and what the cause was.

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Bond markets, Market outlook, US bond markets, US stock market

Hedge fund managers on President Trump’s economic policies

After Donald Trump won the presidential election 2016, the financial markets have reacted very dynamically, but investors also do not seem very determined about what the political shift would mean to the global markets.

Yet they would not be to blame, especially when even the world’s greatest hedge fund managers have diversified, different views. Some foresee rapid growth, whilst others still remain cautious. We introduce both in this article.

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Bond markets, US bond markets

President Trump could cut rates and restart QE to fight against secular stagnation

Donald Trump won the presidential election in 2016. Then the next question is: what does it mean to the financial markets? As Mr Trump plans to increase the federal debt to invest in infrastructure, the markets now expect high interest rates worldwide, but if you look at President Trump’s policies more carefully, you might assume something different could take place: rate cuts and QE.

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Bond markets, Market outlook, US bond markets, US stock market

Fed rate hikes would seriously hurt the US economy, as 3Q GDP shows

The US GDP data for the third quarter of 2016 is what investors, including us, have been waiting for, because it is much more relevant for future rate hikes than the job data, which the Fed claims to be caring about.

The job data has already been very strong for a long time, and thus if the Fed’s preoccupation is indeed the labour market, it must have already raised rates this year, which is not the case.

So the Fed, or at least Janet Yellen, is caring about the slowdown of the US GDP growth, and the new data showed that the slowdown is indeed ongoing, and rate hakes, if any, would put an end to the already weak growth.

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Bond markets, US bond markets

Fed rate hikes: Janet Yellen is aware of secular stagnation

Although the US labour market has already been very tight for a long time, the Fed has been hesitating to raise interest rates.

The Fed insists that its policy depends on the labour market, supposing that the strong job data leads to high inflation, but despite almost full employment in the US economy, there has been no rate hike since the first rate hike in December 2015. The reason is obvious: the Fed is not seeing the job data but seeing something else.

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Commodity markets, Gold

Benefiting from the financial crisis: gold and US Treasury bonds in 2008

We continue to research how the financial markets moved amid the subprime-loan crisis in 2008. In the previous article, we illustrated that the fall of the US house prices had actually warned investors several months before the stock markets collapsed.

Many asset classes suffered from the crisis. In such a situation, bonds and commodities are sometimes the keys to benefit from the adversity.

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History of markets, Market outlook, US stock market

How you could have predicted the financial crisis in 2008

It is not always easy to predict a collapse of a financial bubble, but there often is something that indicates it in advance.

In the case of the subprime mortgage crisis in 2008, some famed fund managers such as George Soros or John Paulson knew it could be as serious as it eventually happened to be. This article explains the economic situations during the crisis and shows the statistics that preceded to imply the timing of the collapse of the stock markets.

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Currencies, Market outlook, US stock market, USD/JPY

The dollar to fall as the GDP growth in 2Q radically weakens, secular stagnation looms

The US Bureau of Economic Analysis published the GDP data for the second quarter of 2016, and the real GDP growth turned out to be 1.23% (year-on-year), slowing down from 1.57% in the previous quarter. The US economy has been significantly slowing down in 2016 as we predicted last year, when it was growing more than 2%.

However, the published data this time suggests more detailed interpretation is necessary to predict the upcoming future of the US economy.

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Analysis and Practice in the Global Markets