TRIMBROKER (TRIMBROKER)
Markets  |  February 08, 2013 13:05:47

David and Goliath


iPoint.cz SP500 stock index hovers at 20 bodovom band 1495/1515 was the last two weeks and so far we have not seen from him vymanenie. Traders rather play good ping pong from side to side. Yesterday the market opened after silnom euro's decline due to President's commentary on the level of 1498, come to the conclusion we had already been trading about 10 points higher. Such a narrow band in the market, we should not have more time and indicates considerable indecision of traders in the next routing.

David and Goliath

Help during rebound yesterday provided mainly shares of Apple. In so yesterday put on the investor David Einhorn, who is worth Hedge Fund Greenlight Capital.This is the type of fund that just does not hold shares in anticipation of growth, but as a shareholder seeks to actively enter into the company's decision or request a change in the management optionally some curative action (in the English language to such an investor called activist investor). Einhorn to 0.12% own Apple shares, but displeased him that the company planned to propose a vote of investors as to whether im can offer preferential shares as a way to use the company with surplus cash. Einhorn argue that the cash balance of the company is the property of the shareholders and they have a right to it. Management company but after administration of the Greenlight plans to sue the company after a few hours indicated that the management and board of directors are in active talks about how we distribute more cash to shareholders. Apple has on its books to 137 billion USD, so the company certainly has more to share. Apple shares rose yesterday by 2.97%.

Draghi sent the euro down

Greatest attention but yesterday pútal ECB President Draghi. From him was splashed on the possible notes to the euro exchange rate, economy as well as to the sources of repayment of LTRO. Draghi but right from the first minute talked about that inflation is low, that even the prospect of inflation is low, and that inflationary expectations remain well anchored. Market his comments about low inflation gathered together as the possibility that, if necessary, the ECB will reduce the basic rate, to prevent excessively low inflation. This indirectly confirmed by the comments, that the long-term strong euro must be assessed, even in light of inflationary perspective. This means that if the euro will be too strong and inflation is low, the ECB may consider reducing tariffs. Common currency reacted to this development by taking strong decline from 1.3580 to 1.3370.

Draghi was also marginally expressed the topic of monetary military, but only what he said, that if the actions of central banks spôsobovali significant effects on exchange rates, certainly about it at the ECB discussed. The ECB certainly on those vplyvoch discuss, no Draghi about them does not intend to officially comment.

Monetary war on the rise

Foreign exchange is the current wars are top topic and it shows the attached chart from Credit Suisse, which shows how a growing number use the term monetary war in Articles agency Bloomberg. January is so far in this record-breaking, and it appears that the growth of the euro and the yen slump begins to trigger a stir in the market.



Very nicely explained the issue of monetary military analysts Credit Suisse: From our perspective, competitive depreciation of currencies of developed economies are (neželaným) by-product of efforts of politicians and central bankers to reduce real earnings on dlhopisoch. When rates are already at zero, the central banks and economies will no longer assist not by decreasing the nominal rates, they must be in a central bankers to reduce real interest rates through increases in inflation expectations, leading to a decline in the exchange rate of the currency. But it has a more minor effect. If any country does not increase the balance of its central bank, then currency will strengthen Asian currencies against the team whose balance to Inflate. Reinforcing the exchange continues until such time as deflationary pressures associated with strong shoulders are not as well marked that the central bank is also a constraint magnify his balance.


Balance skresáva ECB, the euro is rising

Maybe that's what analysts are mentioning the bank is starting DIAT. Euro is starting to have a deflationary effect and therefore it is a little time and it skresať this role being undertaken by Draghi. Intervention by words but something entirely other than real action. Tie euro in growth while reinforcing. The following graph, also from Credit Suisse shows that since July 2012 the ECB balance decreased due to repayment of the resources of the LTRO and also due to behold nižšiemu banks' demand for liquidity, whom balance of other central banks (BoE, BoJ and Fed) continued expansion. This chart explains why the euro is the strongest currency.



Japan vs. Eurozone

Growth of the euro is most prominent suspect against Japan and China along with the U.S.. At most obviously bothers strong yen, since the eurozone's biggest trade partners about the same as Japan. Therefore, it show the same views that the ECB will also somehow push the expansion of their balance, for example, through the suppression of Italy or Spain to have asked for help and the ECB could buy their bonds. Such a step from the ECB, but in the meantime neočakávame and the ECB will probably have to pursue stronger euro from the background.



Japan as a stooge of monetary war

Currently the largest monetary battle we see in Jena. Japanese Prime Minister Abe is trying every possible way to combat deflation and weak just under it is only a result of this policy, even if it probably was the first intention.Interestingly to look at the whole issue of noted economist Richard Koo of Nomura Bank. He thinks Abe monetary saved the world from war yet in 2008. Abe was then prime minister and the meeting of the G-20 landed that through strong yen Japan could encourage other countries in how to address both its own problems and weak export-names. Japan was then the countryside with a huge surplus of trade balance, but it has already been completely lost in the last year and a small Japanese first trade deficit for the past almost 30 years. According to Koo-and now is, when the Western financial system stabilized, time for Japan to support its economy through weak only. Therefore expected that should only reinforce the near time.

View on today

Euro yesterday registered strong slump and lost about 200 points. Today, the market seeks higher growth, no development looks to be only Konsolidacni stop, which could be followed by a new decline downward. Today we prefer to approach and sell the rally as an interesting level to the level of sales we see 1.3460. Today we expect only data in the form of the U.S. trade balance and wholesale inventories. Overall, he was having a sale yesterday, but very powerful and yet still do not have a signal that would drop to an end.

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


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