World markets  |  October 10, 2012 12:56:55

5th Anniversary of the SP500 index maxima

Equity markets in the U.S. yesterday experienced severe decline, which has led the technology sector again. Apple shares had experienced a further decline. Intraday be traded at a loss higher than 2%, well im finally managed to conclude with just drop by 0.36%. Yester cocktail stock: Dow Jones -0.81% SP500 -0.99%, Nasdaq Composite -1.52%.

Apple disappointed shareholders from vendors

The shares of the world's largest companies, which from their maxima skorigovali a record of around 10%, still influence mainly concern about filling sales targets iPhones fifth Production is very challenging due to the display technology and at the same time the company has a problem with the fact that customers are dissatisfied with the fact that phones are coming with poškriabaným body of the phone.Apple shares halt the fall but has potential anticipated iPad mini, which according to Apple Leaflet loved ones ordered by the supplier company to 10 million units. Device should be the main trhákom of Christmas markets where competing for leadership post among devices Google Nexus 7 and Amazon Kindle Fire.


Japan and Chinese cliff

One of the suppliers for the iPhone display is a Japanese company Sharp. Japan and the Japanese economy but currently feels much larger than the pressure on the part of Apple. Is it ongoing dispute with China over the islands to which the Claim both countries. For the sake of a few rocks recorded sales of Japanese automobiliek in China for September Overflow oncoming 50%.If we look at the structure of Japan's foreign trade, we find that China's sovereign greatest destinations to Japanese exports. If these problems worsen, it may loose mainly landscape vychádzajúceho sunshine.

5th Anniversary of the SP500 index maxima

While U.S. stocks currently are looking for their routing, exactly five years ago, lost it for good. 9th October 2007 when the stock index SP500 has concluded the rekordnej at 1565 points, which is not yet overcome. From these levels realitného concerns about the state of the market and, consequently, the financial sector shares forfeited by nearly 60%, with most overflow took place between September and November of 2008, when markets were in a state of heart attack.

To help them come the Obama stimulus as well as the central bank, which cut interest rates to zero and started buying assets from the market in quantities of up to $ 2 trillion. The Fed is also zviazal that rates will remain low until mid-2015, which is from December 2008 to seven years. The prospect stratenej decade is therefore not unrealistic.

QE is not a stimulus to the economy

What impact should loosen its monetary policy to financial markets and the economy? About rozdielnom pôsobení the Low rates and QE on the financial markets, and whom helped on the real economy, where the impact is negligible, we've been writing since several times. QE does not directly affect the possibility of the economy. Should really little, then it was not fear any fiscal cliff because the nearest months the Fed will stimulate the economy through purchases of mortgage bonds in the volume of 40 billion USD per month. In a year that's up to 480 billionUSD, which is around 3.5% of GDP in the U.S. economy. Should these stimuli were indeed miraculous, nobody would have to worry about fiscal cliff and Bernanke would simply pushed prosperity.

But it does not work this way. QE produces flax fetish of asset prices, and promotes bad investment through low interest rates. If you add additional recessionary time will have come in, since the economic cycle is based on striedaní periods of expansion and recession, the consequences of deleting it very hard. The rates are no longer cut and can not be seen that QE is not any panacea.

The BoE is becoming a hedge fund

A similar strategy is also currently trying to British Central Bank. She decided to go through Funding for lending scheme, which aims to increase consumption through an increase in the attractiveness of new loans. Banks receive from BoE liquidity based on how much credit provided during the reporting period.These loans then commercial bank will provide as collateral for other loans. The regulator also approved that against these new bank by credit does not have to hold any capital. This means that the central bank begins to operate as a large hedge fund. Risks lies with the bank, but not at all on the Do not prepare, since they do not have to hold against any capital. Such a strategy only encourages bad investments. Financial sector in the UK so basically increases their risks, not reduce them.

IMF highlights the risks of European banks

The risk reduction but yesterday urged the International Monetary Fund.That, in its polročnom Řepora on global financial stability, he said that the eurozone's problems, and your current outbreak of European banks should be over the next two years to reduce its balance of up to USD 2.8 trillion, which is about 200 billion more than six months ago. In the worst case scenario if the number of developments may be up to 4.5 trillion USD, which may already have a very negative impact on employment and growth in the euro zone.

Money as debt

So I see a sharp contrast between what should be do (reduce your risk), and between what must be done to promote stability monetárneho system (constant growth). Top it describes the recent article in the British Guardian newspaper from the author Charles Eisenstein: Our monetary system can only work in the growing economy.Money are created as debt, for which it is necessary to pay interest and incur when someone promises in future pay more money. Accordingly, there is always more debt than money. The growing economy that is not a problem, because new money (new debt) was was constantly creating that may have been old debt is repaid. But when growth slows down, the opportunities for loans were vyparia. Indebtedness is growing faster than income, debt redemption becomes harder and are growing bankruptcies and layoffs.

Works exactly like the global economy. On the debt. If you make a good step towards to a reduction of risk, we issue the crisis. If it do not, awaits us even greater crisis in the future. Goldilocks is beautiful deleveraging, as described by Ray Dali. What is needed is a bit of inflation, shred the quantitative release and a handful of fiscal stimulus. If this plan fails, Prepare yourself for a true crisis.

Shares close sales

Equity markets currently but those prospects are not interested. Sufficient liquidity does not allow marketers to think about the other direction than down. Apple shares drop but struck the Nasdaq 100 index, which is already technically looks for fall. If added to behold prelomením SP500 index below 1,420 points, we can talk about the beginning of the declining trend in Action. Earnings season in the U.S. because it may end up well, but a weak outlook and worries about the fiscal cliff can send the shares down. Mind you, that if the company will publish the weak outlook in overcoming expectations, analysts have reduced expectations for the next quarter, but the company that subsequently can be overcome. So the result is lower profits, but two excellent seasons kvartálnych results. If we currently pass right through this stage, they could see the shares lower.Decline but we will still be seen as an interesting opportunity to purchase.

Author: John Benaki | TRIM Broker, as | Trading on exchanges TRIM Broker

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