Markets  |  April 04, 2013 12:54:07

Desperate central banks

Yesterday's trading have borne relatively brisk decline in U.S. stocks, which had been under the good habit for the most part skúpený, doin 'nothing big happens. Labor market data have been below expectations (but the last revised significantly upwards), the service sector remains in expansion but how slabšej waiting. But it still is not a disaster. Therefore, they are higher than U.S. stocks last night and this despite the fact that the euro has significantly attacked.

Eurozone economy is still in the worse condition than the splashing, the service sector in March, slightly scandalized.Eurozone remains in recession, while the EU's impossible to say just because the UK can keep stagnating (Markit estimates for 1Q2013 minimal growth, not decline). Even so, however, it is a big calamity when the euro area and the results of which we combine with capital controls on Cypre, we find no reason why, despite the significantly padajúcim yield peripherals (Spain also Italy), we see a large drop in the euro, which is in sight this year's lows.

It is therefore more interesting bigger picture, this week zasadajú najpodstatnejších three of the four central banks of the world. BoJ already proved decisive steps towards to more connection will governments and central banks with a view to increasing inflation and growth. But even the ECB and BoE already have to move from words to action, as it is very likely that the times of reflection, planning, alerts, intervention and phrases implying already quit.Suggests that even a downward trust funds in a "magical ability" ECB to keep euro in a body. Expectations from the ECB and BoE compared with the BoJ are of course below. During the last ECB meeting discussed the reduced rates, BoE again again saw voting for governor increasing QE (more members, however, was for the retention volume). Attention will focus on the backgrounder ECB, where it was recently suggested that the growing pressure on the ECB to again uľavila economy (because politicians are incompetent). Should it be confirmed that the ECB is working on a program that became bigger volume of loans and reduce the cost of financing small and medium enterprises, we could see a clasp short positions in the euro and growth to the level of 1.2890. It is not possible to reduce or eliminate tariffs, whereas about discussion. The state of the economy worsens, unemployment is rising and inflation is falling.Will also talk about Cypre and capital controls, lesson for solving similar statuses in the future and responsibilities of holders of bonds and depositors. Eurocrats are dušujú that Cyprus was a unique case, but Moody's warned that Cyprus is still facing bankruptcy and the impact on other countries for the euro zone would be some negative rating. Ongoing conflict in voting suggests a possible increase in the BoE QE in the nearby term, but it hardly at today's meeting. Survey of credit conditions indicated further improve the availability of credit for households, but not for small and medium enterprises. Overall, the condition improves, but there is no demand for loans from the. It is very likely that the BoE will wait for orchid inflationary and decides to report, or other expansion QE is on the spot.

If you connect to the dictionary all the major central banks (including the Fed), we see tremendous despair. The ECB wants to do everything to preserve the euro, Fed QE wants to leave as long as possible and buy the bonds regardless zlepšujúcu the economy, the BoJ is on another level entirely, and after the merger of two programs for the purchase of assets (Rinban behold the long-term CP) and the removal of limits on the maturity of bonds it remains only way to unlimited QE and the Fed, and finally just handing out bundles of money on the street. Inflation Japan wants to jump-start what standing posture. That's all they want CB. It's a big advantage, especially for government. It is not just growth in assets and the effect of wealth (assets not descend on the value and the debts remain high, the risk of bankruptcy).It's about that new money is available to reach the selected operators, who shall buy an old one will get the lower price and other entities that price growth will pay its costs. So this is a disguised form of taxation (which is nothing new, it reminds flax) while the yield on those're connecting even higher tax revenues (if prices rise, VAT revenues also are growing). Consequently, the government can be stolen, or the economy is growing only nominally (through higher prices) or real (to produce more). Tax revenues are growing and may be redistributed. Present-day monetary system is thus very useful (for some). So convenient that along with the possibility of almost unlimited zadlžovania created economic perpetual motion machine, which should also be the results that it was worth it keep them alive at all costs. So many millionaire and created a miliardárov about bland business plan.Well a perpetuum mobile will now deteriorate, and that's bad. A fail to repair it, while its repair efforts may bring his smash completely. Accordingly, the despair. Such an BoJ already not pretend to be independent (does what says Prime). ECB says while it is. We will see whether it will occur even if the major problems (peripheral bond sale, which threatens from large funds).

Capital appreciation is looking for a while and apparently completely outside the euro area. We see the decline of the euro and even gold growth stocks. America. European shares have grown more slowly. On the chart below, we see the development of the gold (blue), euro (orange) and S & P500 (in black). Gold struggles of maintaining minuloročného bottom fell yesterday along with the euro, but failed to take advantage of its growth. U.S. stocks while after včerajšom overflow after sample data today has risen despite the inroads of the euro to new lows.

Author: Thomas Swimmer | TRIM Broker, as | Trading on exchanges TRIM Broker

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