Currencies  |  January 25, 2013 13:58:39

Fed's Balance Sheet: 3 trillion dollars

S & P at 1,500 points

SP500 stock index yesterday reached the psychological level of 1,500 points. Traded over it after the first time since December 2007, but failed to conclude over it. Overall, however SP500 index has been rising for seven days in a row, which is the longest series of increments since October 2006. Yester cocktail stock: Dow Jones +0.33%, S & P 500 +0.01%, Nasdaq Composite -0.74%.

Apple did not please investors prospects

Interest of the traders yesterday upieral priority, in shares of Apple. Firms are publishing the excellent results for 1Q, no prospect for the coming quarter were below market expectations, which caused the largest U.S. sale of shares of the company. Shares of Apple zatvárali with a loss of 12.35%. What is their biggest daily decline in the last four years.

With the explosive growth of Netflix

Not all companies technology sector but yesterday stihol such fate. To shares managed the company Netflix, which is devoted to streaming videos. The company had posted the profit for the previous quarter, while consensus waited strata. To the prospects for the next two quarter ended above expectations. Shares of the company improved by 42.22%.

Dow Jones is Apple-free

Who Nasdaq failed with the evolution of Apple war, the oldest stock index Dow Jones, since the Apple-free, managed to record a decent growth. Are most successful at banks and energy companies in the index, because the euro hovers near their annual maxima.

Fed's Balance Sheet: 3 trillion dollars

Interesting administration yesterday came also from the Federal Reserve Bank. Fed had posted a weekly update to the size of central bank balance. Th reached 3.013 trillion USD, so for the first time in the history of the central bank balance overcame level 3 trillion. Given the tenor of the new balance of QE has tended to grow until the end of the 4 trillion USD.

Searching for yield

The Fed is trying to continue to actively support the economy and financial markets, what is most liked participantov market. Mainly player on the debenture market, since the record-low interest rates still support the search for yield, thus finding of adequate revenue to satisfy investors.Since government bonds have minimal interest, investors seek yield even junk bondoch or dlhopisoch naviazaných the mortgage market. This development will take some more time to continue, since the central banks have not already nechystajú rate increase. If a bond market but we look from the opposite side, we find that they no longer have the revenue decline and where too after tridsaťročnom býčom trend of the time must come dlhopisoch turnover. His timing is something to what people are already scorched more than one investor and mainly on Japanese dlhopisoch where the end of this country forecasts since the 90s.

Debenture supertrend

For example, BoE Governor Mervyn King on Tuesday warned that long-term bond yields are at unsustainable low levels and pose a risk to financial stability.Outgoing chief of The Old Lady of Threadneedle Street will surely realizes the risks resulting from the increase of revenue, but the question is not it, what would become after náraste revenue, but what their cause. Inflation is still not a problem, financial markets are reluctant to higher rates and government also certainly nebažia for higher interest costs. Growth of revenue may give rise to improvements such as macro-economic situation, in whom no central banks are buying bonds in the market, it is still too early to wait for the end of Debenture supertrendu.

Stimulate or nestimulovať?

The low yields dlhopisoch must also back for the other side. Low interest rates serve to a large extent, as a tool to prevent excessive hardening of individual names. Denmark has even negative rates.Who Fed, BoJ and BoE participujú active in the market in order to maintain low rates, ECB this role as an independent central bank avoids. Yesterday it in his speech in Davos warned known investor George Soros. The ECB had taken kvantitatívnemu release monetary policy, which might in other months significantly push up the euro and hurt exportnému core countries, especially the Netherlands and therefore Germany. Therefore, prefers the euro and vice versa just does not like him.
Opposite view of these developments have bank Morgan Stanley analysts, who expect that the ECB will ultimately even with an aggressive policy of devaluation after BoJ patterns in order to encourage an increase in the competitiveness of the euro area. Therefore, assume that next year the euro falls against the dollar at parity.

ECB can come with QE?

This view is correct but does not appear to us and that in two respects. The first is the fact that Germany will no longer support such a policy, and therefore, even if the ECB would have sketched a plan, the German nein zatriaslo would behold the new ECB premises in Frankfurt. The second one to the fact that the euro area has to external competitiveness of the problem, but to the underlying competitiveness. And she is gradually recovering.

Periphery is becoming more competitive

The following graph, coincidentally also from Morgan Stanley shows that the countries at the periphery of competitiveness to receive back the membership level, the creation of which were in the euro area. This situation is good for the periphery, no bad for Germany. This is also Vystihol Japanese Economy Minister Amari words: Germany is a country whose exports benefited the most from of fixed rates in the euro area.This means that when the process is finished, Germany will be the country where the few years of depression may return. The system of fixed exchange rate without a common fiscal policy imbalances are factors vyrovnávajúcimi flax unemployment and debt. But this is still very distant future.

View on today

The euro is now backed by better results IFO German sentiment. He ended above expectations. In addition, the administration that European banks are planning to return next anniversary LTRO operations to 137.2 billion euros of liquidity vs. expectations 100 billion, encourage the growth of the common currency, which has našliapnuté prelomenie at level 1.3485 and then to 1.3550 for growth. The growth is the view.

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

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