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.
Continue reading Fed rate hikes: Janet Yellen is aware of secular stagnation
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.
Continue reading Benefiting from the financial crisis: gold and US Treasury bonds 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.
Continue reading How you could have predicted the financial crisis in 2008
RIT Capital Partners published a half-year report for early 2016, in which Jacob Rothschild, the chairman of RIT and the head of the Rothschild household of England, explains his investment view for 2016.
Continue reading Lord Rothschild buys gold, says low interest rates are ‘the greatest experiment in the history’
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.
Continue reading The dollar to fall as the GDP growth in 2Q radically weakens, secular stagnation looms
In the EU referendum the UK said no to the EU’s bureaucracy, and that was indeed the people’s refusal of any bureaucratic failures in general, in which the OECD should be counted, as proven by its own reactions to Brexit.
As a result of the referendum, the UK regained several rights of freedom, one of which is fiscal freedom. The EU imposes austerity to its member countries, and they are required to maintain their budget deficit below 3% of their GDP, and thus the UK is now ready to enjoy their freedom outside the EU.
Continue reading Brexit reveals the bureaucratic ambition of the OECD
The earning releases of the US shale oil firms have been published in May 2016, whilst the oil price is rebounding from its bottom. The following is the chart of the WTI crude oil futures:
Then, how are the financial situations of the US shale oil industry? Would the financial results justify the recent rebound?
Continue reading The break-even point of the US shale oil industry and its production decline
In the first quarter of 2016, Japan’s real GDP grew -0.05% (year-on-year), slowing down from 0.85% in the previous quarter. This is the first time since 2013 for Japan’s economy to grow negatively, excluding the four quarters after the consumption tax hike.
Continue reading 2016 1Q Japan’s GDP: the economy grew negatively due to the market turmoil
The Form 13F for the first quarter of 2016 has been published, and the portfolios of hedge fund managers revealed.
In the disclosure, Mr George Soros’s Soros Fund Management appeared to have started positions in gold and a gold miner and also to have continued short selling of US stocks as he claimed in Davos in January 2016.
Continue reading George Soros buys gold and a gold miner, short sells S&P 500
Since the first rate hike in Dec 2015, the Fed has been in the course of normalizing interest rates. Although we as well as many of the famed hedge fund managers expect the central bank will eventually cease raising rates and resume easing, it is still reasonable to assume one or two rate hikes in 2016 are still possible.
Even if it happens, rate cuts will follow it anyway, but it is important for investors to consider how to trade on the temporary monetary tightening. As federal funds rates futures expect only one rate hike in 2016, two rate hikes will be a surprise if it happens.
Continue reading 2016 US REIT forecast: the Fed’s rate hikes, rate cuts and quantitative easing