Markets  |  October 18, 2012 12:51:11

Fed unsuccessful assassination

Moodys Spanish-awaits rescue

Already three days in a row record the growth markets in the U.S.. Yesterday helped them mainly credit rating agency Moody's, which is zmilovala over Spain and does not decrease his rating. Hopes fact that the Spanish politicians receive wisdom and ultimately request help. Rescue from the ECB in the form of bond purchases helped uncapped rapidly skresať revenues dlhopisoch scheduled to mature in three years.The retention flange rating also affecting the long-term bonds, yields fall even noticed the 10-year dlhopisoch on the lowest level since March. Moving the current yields at 5.4%. Whereas nalieval capital into the euro, stocks and bonds-risk countries, opúšťal debenture market. Yields on 10-year U.S. dlhopisoch increased to 1.81%, the highest level since May.

IBM ide right direction

Equity index but silnejšom growth of technology companies defended the results, especially IBM. Big Blue posted a quarterly profit above expectations, no earnings were weaker and the company also did not increase the prospects celoročného profit, but their only confirmed what investors happy. Shares fell by 4.9%, which is their strongest decline since October 2009.This decrease does not change but the ultimate view of IBM thus firm, which unlike HP or Dell imagined them in time, that is in the future services and not the hardware.

BONY remains king of financial assets

The results took korporátnych asset manager Bank of New York Mellon. This bank is relatively unknown but the largest securities depository, that is an entity which holds assets for other entities. Bank yesterday published new statistics, according to which at the end of 3Q company held the following assets in a volume of up to 27.9 trillion. This is thus the largest bank sovereign entity in the world. Second place went to State Street firm with assets under custody at 23.4 trillion USD.

Fed unsuccessful assassination

Neither of these banks, but did not become the order yesterday revealed a terrorist attack. Yesterday, the FBI arrested a 21-year-old Bangladeshis Quazi Mohammad Ahsan Rezwanul Nafis-a. He stopped the van loaded with 500 kg of explosives in front of the New York Fed building in Manhattan. He is one of the Fed's monetary policy vykonávateľom. There, is governed by the operation of the free market and hence QE. Then he went to the nearby hotel where wanted to shoot a video of the attack, which should have been published later. In that time, but it zadržala FBI. She watched his behavior since January, when he came to the U.S.. Two undercover agents gave him fake explosives, so the threat to the citizens not to come. It appears that the terrorists are beginning to become aware importance of the financial system for the U.S. economy.

The lessons of history

Approximately four years ago, namely the 29th September 2008 marks the U.S. Congress House of Representatives failed in approving TARP program intended to rescue the banks. The result was a slump SP500 index start delivering some day down 8.5%.

FDR and withdrawal of incentives in 1937

Disapproval of bank rescue hence was great shocks and market turbulence triggered huge. A similar example of the damage in the market is also a premature withdrawal of fiscal stimulus. When in 1937 constant U.S. President Franklin Delano Roosevelt listened to the economy is no longer sustainable, he came with a plan expanzívnej cessation in fiscal policy. Over two years have been fiscally skresané spend up to 17%, which caused the slowdown in GDP growth, and finally in 1938 recession (GDP fell by 3.4%).The stock market reacted to these reports strong drop in the Dow Jones start delivering lapsed one year by about 50%.

Dow Jones 1937

Japanese harakiri of 1997

Similar experience has also Japan. After a series of incentives for the period from August 1992 through September 1995, which could also jump-start the economy and stock market fillip behold, then came during the 1996 views that the economy is already samoudržateľná and were considered Belt tightening plans. These will become a reality in April 1997. Was increased tax on consumption and were also abolished tax exemptions of revenues. The result was a drop in the Nikkei 225 index by about 45%, while its swoop stabilize as new stimuli in April 1998.

Nikkei 225

The lesson is clear. But we'll see what to make of it Consider U.S. politicians. Fiscal cliff is approaching and its full introduction in the worst case scenario may also result decline in GDP. Range škrtov months is much lower than in previous cases, but still it is a large risk.

View on today

Optimism in the financial markets continues. While European markets are mixed, no revenues dlhopisoch still decreasing. Overall, this is a positive development that should wish particularly common currency. From dvojdňového EU summit too much new information neočakávame. But Merkel said today that it will present at the Summit the Greek prime minister Samaras preliminary conclusions from the report Troika. When that will be satisfactory and the country to get help, it will mean for the euro a further boost.The common currency, therefore we remain The growth outlook, although the drop 1330/00 we would be perceived as an interesting pullback suitable for purchase.

The korporátneho calendars today we will follow the main results of the company Verizon and because of this, that would put them to knock the success of the new iPhone 5 at this mobile operator customers. Morgan Stanley also deliver, but this bank still has Dobray history of overcoming expectations.

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

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