Tag Archives: Quantitative easing

World’s GDP & stock market comparison: southern Europe finally starts to recover, Japan sinks

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.

Continue reading World’s GDP & stock market comparison: southern Europe finally starts to recover, Japan sinks

The fatal flaw of the euro zone: how Germany is increasing the Greek debt

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

“Bond King” Bill Gross explains how to trade in equity markets amid the turmoil

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

S&P 500 could go down by 30% in 2015 to urge central banks to ease further

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.

2015-10-1-s-and-p-500-chart

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

Correction or crash?: Worldwide stock plunge, US rate hike, commodity market crash, Chinese yuan devaluation

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.

Continue reading Correction or crash?: Worldwide stock plunge, US rate hike, commodity market crash, Chinese yuan devaluation

Why the Fed is so hawkish and rushing to raise the interest rate

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 market crash leads to worldwide deflation: gold, crude oil, natural gas, copper and iron ore

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:

  • ¬†The prices are radically falling even in the currencies with the quantitative easing, such as the yen and the euro.
  • The prices have fallen to the range before the US started the QE after the financial crisis in 2008.

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.

Continue reading The commodity market crash leads to worldwide deflation: gold, crude oil, natural gas, copper and iron ore

2015-2016: Bank of Japan’s monetary base and timeline for QE and its expansion

Since the Bank of Japan started the massive quantitative easing in early 2013 and then expanded it in late 2014, it’s remained silent on whether or not they’re planning more easing in the future.

Will they plan further easing? Our answer is yes, but there are a few possibilities for the timing. At the earliest it will be from Sep to Dec 2015, or at the latest it will be 2017. We shall discuss the data to explain why.

2015-jun-japan-cpi Continue reading 2015-2016: Bank of Japan’s monetary base and timeline for QE and its expansion

2015-2016: What will happen to USD/JPY when the BoJ expands the QE further?

As the BoJ only claimed it would continue its quantitative easing until mid 2016, investors are now speculating whether the central bank extends the easing or not.

In this article, we discuss the impact of the QE extension/expansion to USD/JPY to clarify if the BoJ has an effective means to affect the currency market to support the inflation. We first review the chart of the monetary base ratio:

2015-jun-japan-us-monetary-base-ratio-and-usd-jpy Continue reading 2015-2016: What will happen to USD/JPY when the BoJ expands the QE further?

US GDP weakened at 2Q 2015 but still strong enough for a rate hike in Sep

The GDP of the US grew by 2.32% in the 2nd quarter of 2015, weakened from 2.88% in the same quarter of the previous year. The US economy is affected from the strong dollar, but the number is still strong enough to justify the Fed’s rate hike in Sep.

2015-2q-us-real-gdp-growth

If we see the details, investment and exports are weak as expected, but the slowdown of imports is a bit of surprise. Personal consumption is weakened, too, which indicates with imports the weak demands within the country.

Continue reading US GDP weakened at 2Q 2015 but still strong enough for a rate hike in Sep