All posts by globalmacroresearch

Commodity markets, Gold

2016 Gold price forecast: gold will be a boom when the Fed ceases rate hikes

After writing about the US economy and the oil price forecast, this is finally about the main issue: gold. The gold will be a boom in 2017, but the question is when to buy gold in 2016.

2015-12-26-gold-long-term-chart

After the mortgage loan crisis in 2008, as the Fed started quantitative easing, the gold price once reached $1,900 in 2011. However, as the Fed stopped the QE in 2014 and started raising interest rates in 2015, the gold price has been radically falling.

Continue reading 2016 Gold price forecast: gold will be a boom when the Fed ceases rate hikes →

Market outlook, US stock market

In 2016 US economy will slowdown: the Fed’s rate hikes, the strong dollar, energy prices and high wages

The US stock market still remains at around the all-time high after the Fed started raising rates, and that is because investors believe, rationally or not, that the strong US economy will keep equity appreciated even without the support of the Fed. However, the US economy will slowdown, and then the stock market will lose its last resort.

Continue reading In 2016 US economy will slowdown: the Fed’s rate hikes, the strong dollar, energy prices and high wages →

Commodity markets, crude oil

Crude oil price forecast 2016: the high yield bond crisis and bankruptcies in the shale oil industry

The crude oil price has fallen radically and is finding a comfortable level to be. Is it going down further? We presume it has to be, though we also suppose it will rebound eventually.

Then, how much further is it going down? When is it going to rebound? We provide answers to these questions in this article. The following is the long-term chart of the WTI crude oil futures:

2015-12-15-WTI-crude-oil-long-term-chart Continue reading Crude oil price forecast 2016: the high yield bond crisis and bankruptcies in the shale oil industry →

Market outlook, US stock market

2016 stock market forecast and stock option strategy: Crash or flat, that is the question

As the last article discussed the overall view of the financial markets in 2016, this article aims to specifically discuss the stock market.

We have insisted the easy market fuelled by the QE is already over, and the stock market will face difficulties and uncertainties. The following three remarks conclude our general forecast for the US stock market:

  • The upside is limited due to rate hikes and the strong dollar
  • A sudden plunge can always happen, presumably by 10-30%
  • It still take a while till the total collapse of the QE bubble

In such a situation, mere buying or selling cannot be profitable. Both of short selling and the long-short strategy have some flaws. Then what can we do? After long contemplation, our conclusion is as below.

Continue reading 2016 stock market forecast and stock option strategy: Crash or flat, that is the question →

Commodity markets, Foreign exchange market, Market outlook, US stock market

The financial markets in 2016: the forecast for stocks, bonds, currencies and commodities

The easy market for investors supported by the Fed’s quantitative easing is already over, and now the question is merely when, not if, the asset bubble bursts in several markets. The assets in a bubble are stocks, bonds and the dollar.

The Fed has ended its QE programme and is now in a process of raising interest rates. Will the US stock market be okay? It can never be okay as the central bank has injected trillions of money and is now going to retrieve it, but the market is manifesting groundless optimism.

The greatest premise investors believe in is the strong US economy and thus the strong dollar. However, the time is near for the uptrend of the dollar to be fading out. Why, how, and when? We will explain it in this article.

Continue reading The financial markets in 2016: the forecast for stocks, bonds, currencies and commodities →

Currencies

How the ECB’s QE extension affects the euro: the QE timeline and the forecast of EUR/USD

On the third of November, 2015, the ECB (European Central Bank) decided to cut interest rates and to extend its quantitative easing. Whilst we interpreted the market’s reaction in the following article, in this article we analyze how the increasing monetary base affects EUR/USD in a long term.

In this meeting, the deposit rate was lowered from -0.20% to -0.30%, and the QE programme was extended from September 2016 to March 2017. Thus, we first look into how the monetary base changes by the end of March 2017.

Continue reading How the ECB’s QE extension affects the euro: the QE timeline and the forecast of EUR/USD →

European stock market, Market outlook, News

ECB cuts rates and extends the QE, the negative market reaction suggests the end of the QE bubble

On the 3rd of December, the ECB (European Central Bank) decided to cut interest rates and extend its quantitative easing. The deposit rate was lowered from -0.20% to -0.30%, and it was declared that the central bank would maintain the QE until March of 2017, postponed from September of 2016.

As Dr Mario Dragi, the governor of the ECB, had suggested further easing in advance, some investors were expecting the expansion of the QE, which was not decided this time. Consequently, EUR/USD sharply rebounded.

2015-12-3-eurusd-chart Continue reading ECB cuts rates and extends the QE, the negative market reaction suggests the end of the QE bubble →

News

Form 13F: George Soros buys Chinese stocks, the biggest bet common with John Paulson

The Form 13F for the third quarter is now available, so that now we can see the buy positions of famed hedge fund managers. This time, we review those of Mr George Soros and Mr John Paulson.

Mr Soros bets on China

One of the most interesting positions of Soros Fund Management would be his buying call options of iShares China Large-Cap ETF (NYSEARCA:FXI; Google Finance), which invests in large Chinese companies. Mr Soros bought the call options for the stocks of $140 millions, which means he bet on a quick rebound of Chinese stocks.

Continue reading Form 13F: George Soros buys Chinese stocks, the biggest bet common with John Paulson →

News

2015 3Q Japan’s real GDP growth: the QE works against the slowdown after consumption tax hike

On the 16th of November, the Cabinet Office of Japan published the GDP data for the 3rd quarter of 2015. The real GDP grew 1.08% (year-on-year) during the quarter, revealing that the economy slightly recovered from the negative growth after the consumption tax hike in 2014.

To compare, the growth for the previous quarter was 1.00%. We look into the details of the numbers.

2015-3q-japan-real-gdp-growth Continue reading 2015 3Q Japan’s real GDP growth: the QE works against the slowdown after consumption tax hike →

News

2015 3Q US GDP: The growth slows down, might hurt the strong dollar

On the 29th of October, the US Bureau of Economic Analysis published the US GDP data of the third quarter of 2015, revealing the US economy grew 2.03% (year-on-year). This means the economy slowed down from the second quarter, in which it grew 2.72%. The following is the chart of the US GDP growth and its elements:

2015-3q-us-real-gdp-growth

From the graph we observe the investment is the one that slowed down the most. The strong imports are also a minus to the GDP growth, although it might imply the domestic demand is still alive. We look into each factor closely.

Continue reading 2015 3Q US GDP: The growth slows down, might hurt the strong dollar →