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.
Continue reading President Trump could cut rates and restart QE to fight against secular stagnation →
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 →
The dollar will fall, and the yen will strengthen in 2016. The Fed could not continue to raise rates, and the strong yen will be back again as the Bank of Japan’s monetary expansion is now limited.
There might be a number of investors who still bet on the yen’s fall due to Abenomics, but we recommend to reconsider. We even recommend to buy the currencies under quantitative easing, such as the yen or the euro. Here are the reasons.
Continue reading USD/JPY forecast in 2016: the BoJ’s expansion and the Fed’s rate hikes will both decelerate →
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 →
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.
Continue reading ECB cuts rates and extends the QE, the negative market reaction suggests the end of the QE bubble →
Throughout the last hundreds of years, the essence of the financial markets has never changed, and the investors repeatedly experience absurd financial bubbles of the common root.
This perhaps gives this article some significance, as we explain here the cause of Black Monday in 1987. Many say there was no specific reason of the market crash, or it is difficult to identify the cause, but some great investors indeed predicted the collapse in advance, as there were the definite causes of the bubble we can explain here.
Continue reading Why did Black Monday happen in 1987: Reaganomics, the Plaza Accord and the German rate hike →