As we have written, there is no large economy in the world that is growing rapidly. Reflecting the decreasing demands in the world, including the Chinese economy slowdown, the commodity markets completely collapsed, such as copper and iron ore.
However, it does not mean any single small country does not enjoy any significant growth. Thus, we review the world’s economy again to find out which area is the most profitable for investors to bet on.
After much ado, Greece reached an agreement with the Troika of creditors, and investors seem to be convinced that the crisis is over, as the yield of 10-year Greek government bond, which was largely sold before the agreement, went down to 8% from 19%.
Is the Greek debt crisis really over? Is the Greek economy going to recover? Unfortunately, you would know it will not as long as it is in the euro zone, if you are familiar with economics. Germans do not want to admit it. Greeks do not want to believe it.
Continue reading The fatal flaw of the euro zone: how Germany is increasing the Greek debt
Bill Gross, a famed bond fund manager of Janus Capital, explained in the Twitter account of Janus Capital about how to trade in the very volatile stock markets.
Earlier this year, Mr Gross also successfully predicted the bear market in German bonds and the plunge of the Chinese stocks. He is without a doubt one of the greatest investors who correctly understand the market situation before the Fed’s rate hikes, the opinion of whom is worthwhile to follow.
Continue reading “Bond King” Bill Gross explains how to trade in equity markets amid the turmoil
After the stock plunge in August, the global stock markets rebounded once, and they are now confirming their second bottom. The stock market plunge was essentially caused by the lack of the driving force for the global economies, proven by the Chinese slowdown, and it will continue until the authorities take any action, namely further monetary easing or financial stimulus.
However, if S&P 500 goes down by more than 20% from the peak, there would be a possibility that the central banks would rescue the financial markets. As we have been bearish about the stocks before August, we are also responsible to explain the future of this bear market.
Continue reading S&P 500 could go down by 30% in 2015 to urge central banks to ease further
In September, despite the market’s speculating that the Fed might raise interest rates, the Fed decided to leave rates unchanged, postponing a rate hike.
Despite our guess, it also did not particularly emphasize its intention to raise rates within the year, even though there is an obvious difference of recognition between the Fed and investors in expecting how fast the Fed is going to raise rates in the next few years.
Is the Fed intentionally leaving the gap as it is? If the answer is yes, and there is some hidden strategy behind the Fed’s attitude, it might imply what the Fed truly wants to do, and it is neither about the labour market nor the inflation. It is something else.
Continue reading The Fed wants US stocks to go down to degas the QE bubble
On 16-17 Sep, the Fed will hold the FOMC meeting with a possibility of a rate hike for the first time since the subprime mortgage crisis. The result will be published on the 17th.
Although we have already been writing about the Fed’s rate hike, we would like to summarize our opinions here. We regard the following 2 scenarios as highly likely: Continue reading Will the Fed raise interest rates in FOMC on 17 Sep?
After the radical plunge in the global stock markets in August, the stock prices rebounded once and are seeking its direction after this turmoil.
Investors are carefully watching what the central banks will do. Some of them first even expected the Fed might restart the QE, but after the Fed policymakers revealed to remain seeking a rate hike, this kind of subjective hopes disappeared. We already explained why they would remain hawkish:
Continue reading Why 2015 resembles 1987 before Black Monday: central banks and rate hikes
Our readers wouldn’t be surprised at the ongoing turmoil in the global stock markets as we’ve been warning about the decreasing liquidity and global economies’ slowdown:
However, we feel China’s currency devaluation increased investors’ worries further, so that the plunge became rapid and radical. For investors who’ve got concerned about their positions, we explain which trend in the markets is unchanged and what we can buy during the turmoil.
Recently, the Fed seems quite hawkish and rushing to raise the interest rate. According to Reuters, Mr Lockhart, Atlanta Fed President, insisted the point of “lift off” is close.
Although the GDP growth remains to be over 2%, the speed of the growth is weakened, and the CPI is still far from their inflation target of 2%.
This means there are other reasons for the rate hike than just the economic recovery of the country. The Fed is actually getting pushed to raise the interest rate by some other fear: the reverse flow of the portfolio rebalancing.
Continue reading Why the Fed is so hawkish and rushing to raise the interest rate
The commodity markets are tumbling. Gold, oils and almost all the other commodities are immensely depreciated. It may be seemingly explained by the Fed’s rate hike and the slowdown of the Chinese economy, but the two following factors can’t be explained by them:
Although the Fed has surely stopped the QE, they haven neither sold the purchased bonds nor raised the interest rate. If, in addition, the Bank of Japan and European Central Bank stopped the QE, the commodity prices could tumble further, so that what has happened after the massive QE is the deflation. It would be very unreasonable, and so investors need to conceive a reasonable explanation for it.