Some time ago, Deutsche Bank’s chief international economist, Torsten Slok, presented several charts which showed that “Canada is in serious trouble” mostly as a result of its overreliance on its frothy, bubbly housing sector, but also due to the fact that unlike the US, the average household had failed to reduce its debt load in time. Additionally, he demonstrated that it was not just the mortgage-linked dangers from the housing market (and this was before Vancouver and Toronto got slammed with billions in “hot” Chinese capital inflows) as credit card loans and personal lines of credit had both surged, even a...
Fed Chair Janet Yellen said they are monitoring inflation closely, but also expressed optimism about the economic situation. What does it mean for the Fed? Here is the view by ABN AMRO: Here is their view, courtesy of eFXnews: ABN AMRO Research comments on Fed Yellen’s testimony before the Congress. “Although the Fed seemed to stick to its base case that diminishing slack would foster ‘a stronger pace of wage and price increases’, Ms. Yellen was a little more cautious about this prospect. She noted that there was ‘uncertainty about when–and how much–inflation will respond to tightening resource utilization’. The Fed’s con...
EUR/USD 4 hour The EUR/USD bullish breakout reached the 1.15 target but then fell quickly down to 1.14. The bearish reaction could indicate that the waves 5 have been completed within wave 3 (green), which could indicate the start of a bearish retracement within wave 4 (green) towards the Fibonacci retracement levels of wave 4 vs 3. A break above 1.15, however, would indicate the revival of the uptrend and invalidate a larger correction within wave 4. 1 hour The EUR/USD could be building a bigger correction first before completing the wave 4 (green) retracement. Alternatively, the price could be in an uptrend if the EUR/USD manages to break a...
Previous: On Wednesday, trading on the euro closed down. Market volatility was high as Janet Yellen’s pre-prepared remarks were published. She remarked that the US economy was growing fast enough for another rate hike and plans to continue normalising the Fed’s balance sheet. The dollar strengthened against its major rivals on this news. In theory, it should have begun to weaken against the euro by the end of the day, given that the US regulator doesn’t feel it necessary to sharply raise interest rates. US bond yields sharply fell in response to the comments. Depending on the data to come out over the course of the rest of the year, the...
After opening the day on a positive note, stock markets in India have continued their momentum. Sectoral indices are trading on a positive note with stocks in the FMCG sector and realty sector witnessing maximum buying interest. The BSE Sensex is trading up 235 points (up 0.7%) and the NSE Nifty is trading up 67 points (up 0.7%). The BSE Mid Cap index is trading up by 0.6%, while the BSE Small Cap index is trading up by 0.7%. The rupee is trading at 64.42 to the US$. Indian share markets scaled record high levels during the morning trades today. Most of the gains were seen on the back of dovish comments by the US Fed Chair Jane...
The wall of worry continues to propel stocks higher as this long plodding economic expansion is assumed to be in the later innings. With low interest rates and slow growth, many are still waiting for the the full throated recovery to manifest. However, for the luxury and leisure world the good times just keep rolling. Cruise ships, air travel, luxury car sales, hotels …you name it and it’s delivering consistent sales expansion over the past 6 years. With aging boomers and an economic cycle with room to run there could be more to come from the big spenders and silver haired crowd. The global baby boom is transforming into the senior...
Wolf Richter sounds the alarm about the S&P 500’s current price earnings ratio: Before we go any further, let’s acknowledge that Wolf would be absolutely right if earnings were the fundamental driver of stock prices. Unfortunately, they’re not. Instead, dividends serve that function (here’s the math and several years of forecasting results to back that claim up). From that perspective, the seeming inexplicable levitation of stock prices is completely understandable during this period of time. When Wolf looks at stagnating companies in the years between 2012 and 2017, there is perhaps no better example of...
If you dabble in the closed-end fund market long enough, you are probably going to own a fund that sees its dividend cut. This seemingly innocuous event can have numerous ripple effects for shareholders that should be carefully evaluated before you respond with any knee-jerk reactions. Closed-end funds generally operate their dividend schedules in two ways: 1) a managed distribution schedule set by the board of directors or 2) an income-only policy that distributes the actual dividends generated by the underlying portfolio. Both dividend strategies are subject to continual review and can change out of left field even when the market appears...
The monthly jobs report from the UK was a mixed bag with the unemployment rate falling to a 42-year low at 4.5%, down from 4.6% previously. Despite the solid headline, wages continued to disappoint. The unemployment rate fell to 4.5% and marked the lowest unemployment rate in the UK since 1975. Official data from the UK’s Office for National Statistics also showed that the number of people out of work and claiming benefits fell by 64,000 during the three months of March through May. The employment rate also jumped to 75.9%, marking a record high. UK Employment Rate (Source: ONS) Construction and accommodation and foods services sectors show...
Gold prices ended Wednesday’s session up $3.80 an ounce, extending their gains to a third-straight session, after Federal Reserve Chair Janet Yellen signaled a cautious approach to further monetary tightening. Yellen said the Federal Reserve will need to keep gradually raising interest rates in the coming years, but not to levels seen in previous rate cycles. XAU/USD traded as high as $1225.64 but gave up some of earlier gains as a rally in equities weighed on the market. XAU/USD is still trading below the daily and the 4-hourly Ichimoku clouds, suggesting that the downside risks remain. However, as I pointed out yesterday, prices are above...