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Currencies  |  March 15, 2013 13:23:11

Abenomics 101


SP500 two points from highs

The U.S. economy last month unveils one better macroeconomic outcome after another, which broadly praja growth U.S. equity market. Yesterday, for example, were weekly applications for unemployment benefits. Tie ended up with the lowest result since January, but more important was the 4-week-gliding average of these applications, which is trying to make atonement for weekly volatility to give. This average closed at its lowest level since March 2008, and shows that the job market is starting to slowly stabilize. SP500 index reacted to these moves data growth, and is no longer just in their historical maximách from October 2007. Yester cocktail stock: Dow Jones +0.58%. SP500 +0.56%, Nasdaq Composite +0.43%.

Banks were given permission to raise dividend

The U.S. stock market yesterday was the most successful at the energy sector and finances. Banks risen in anticipation of the results of the revision of plans capital of banks by the Fed. Tie were published after the market closure, no too happy. Fed even last week published the results of testing záťažových U.S. banks. In them, with one exception banks have passed. Last night was the publication of the second more important part of the Bank's control. These involve their capital plans. Fed yesterday approved 14 out of 18 such plans. Fed Disliked the capital plans of banks Ally Financial (shares after hours -0.12%) and BB & T (-3.03%) and partly approved plans of banks JP Morgan Chase (shares in the pre-Mark -2.02%) and Goldman Sachs (-1.67%). When GS is a revision came minulotýždňových záťažových testing toward worse.Banks that it got permission, then announced plans share buyback and dividend apposition, among them banks like Bank of New York Mellon, American Express, JP Morgan, Bank of America (shares in the pre-MARK +4.41%) and Wells Fargo (+1.3%). The total financial sector responds a slight decline, since the main dissembled.

JP Morgan, deploy regulators

The largest U.S. bank by balance sheet total yesterday received a double blow below the belt. First Capital Plan JP Morgan Chase Fed only partially approved and then report to the Commission of the Senate stores London Division, which led to huge losses Whale-London, accused the bank of the introduction of regulators as well as investors from ignoring own limits while taking risks, risk models, manipulating to errors or sighted and ignoring warnings traderov own.Report senátnej commission led Democratic Senator Carl Levin, who subsequently issued 300 Verge administration. At best it says that the bank violated limits on key risk 170 times during the first three months of the year 2012 and then in April to 160 times. The bank also failed in investigating the incident. Today, even in the Senate for this report hearing, where several people will be summoned representatives of the bank. Also on the basis of their terms it chooses Levin, or forward the report to the Ministry of Justice inquiry. Dimon not be summoned, but according to official e-mails he was human, so that in January 2012 ordered that the bank regulator, the Office of the Comptroller of the Currency, did not give daily reports on profits and losses of the investment banking division of the bank. It still may not be enough to make anyone was specific for the loss of $ 6.2 billion direct responsibility.

Abenomics 101

Recent months, Japan is very sharp monitored investors. The reason is the current policy of Prime Minister Shinzo Abe's known as Abenomics. This is a three-stage policy, in order to jump-start growth and stop deflation. The first is the degree of monetary policy, which is to weaken the yen and boost inflationary expectations. The second is the degree of fiscal policy, which is intended to help boost growth and help the infrastructure. The third degree is a set of measures to structural changes in the economy. This is a package of measures, which expected to be published in June and include matters such as the support of education, innovation and green energy.

BoJ has new leadership

The first stage, monetary policy, at night gained much support when he was under the new BoJ governor elected Kuroda and viceguvernérov Iwata and Nakase. The opposition we saw a problem in Iwate, but was ultimately approved. Aggressive monetary policy and got the green light.

Time reflácie

Kuroda is this known to his attitudes. Already in 2002, together with his colleagues from the Ministry of Finance Kawaiom wrote the article for the Financial Times entitled (It's) Time to make the transition to a global reflácii in which it advised Japan to inflationary established a goal of 3% and apply innovative, unconventional and antideflačné policy . Kuroda is a well-known advocate of the American economist Irving Fisher, who warned of the risks of deflation in the state of the credit contraction.

Inflation can improve the fiscal position

Fruits of his work are expected in the next two years, when it should have been by word Kuroda inflationary goal fulfilled. Japan needs to inflation, because it will be positive for the fiscal position (nominally higher tax revenues in the future, which will repay the debts that inflation drops cash value) as well as for economic growth. According to a study Citigroup may transition from deflation to inflation to raise Japanese growth by up to one third of a percentage point. A representative of the rating agency Standard and Poors, Tan, also said that halting deflation is positive for Japan's credit rating.

Halting the decline in prices is egg-dance

Mind but that deflation and weak growth is a structural problem in Japan.The main obstacles to growth are non-competitive service sector, aging population and deflation that meets the older citizens, since a stable nominal pensions in the future, bring them a higher purchasing power. Halting deflation will be the big test of any policy. While ostávame skeptical on these efforts.

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


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