Where will gold end 2015?
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August 28, 2015 PDF Print E-mail
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Friday, 28 August 2015 16:08
  • Saudi Arabian ground troops have advanced into northern Yemen, in a bid to push back against Houthi Shia militia and forces loyal to ousted president Ali Abdullah Saleh, military and tribal sources said. This has added a significant war premium to crude oil, initiating a short squeeze that sent the price to $45. As a result, global energy stocks were, um, energized. They carried the day in global markets.
  • Stocks on Wall Street mostly edged higher at the close, as European equity markets did hours earlier. The Dow Jones industrial average closed down 11.76 points to 16,643. The S&P 500 rose 1.21 points to 1,988. And the Nasdaq Composite added 15.62 points to 4,828.
  • In the 48 hours following Tuesday's late session meltdown, the Fed has moved in to calm nerves and elevate stock prices — proving once again that equity prices are a key concern for policymakers (despite their pleas that policy is set based on economic data alone). On Wednesday, New York Federal Reserve Bank President William Dudley lowered expectations for a September interest rate hike, noting that the evidence was "less compelling" given recent financial market turmoil. This flies in the face of comments last Friday from St. Louis Fed President James Bullard that the Fed does not react directly to equity markets. Central bank officials have not made a decision yet on whether to raise rates, Federal Reserve Vice Chairman Stanley Fischer said today. But he added that they will be closely following data such as next week's jobs report and market moves before the Sept. 16-17 meeting.
  • Societe Generale's Albert Edwards notes that there is a high probability — 99.7%! — that we are already in a bear market. This is something that's usually more obvious in hindsight and rarely acknowledged at the time it happens. For instance, in 2008, the Fed was unaware for over half a year that the U.S. was in a bear market.
  • State-owned Industrial and Commercial Bank of China, China's and the world's largest bank by assets, this week reported another spike in bad loans in the first half and net profits that grew at most by 1.5%, significantly below the double-digit growth banks enjoyed after the 2008 financial crisis. With China's economy set to grow at its weakest pace in a quarter of a century this year, the lenders said they were bracing themselves for even more bad loans as industries ranging from steel to petrochemicals and property struggle. "We will continue to face pressure from non-performing loans for a period of time," ICBC President Yi Huiman said.
  • Brazil has entered recession after official figures showed the country’s economy contracted by 1.9% between April and June compared with the previous three months. Analysts had expected a contraction, but the number was worse than expected. First quarter output was also revised down to show a 0.7%, rather than a 0.2%, contraction. The country, the seventh-largest economy in the world, has seen economic growth fall sharply in recent times.
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August 27, 2015 -- Chinese Treasury Dump Officially Recognized PDF Print E-mail
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Thursday, 27 August 2015 17:10
  • According to Bloomberg, China has communicated with U.S. authorities about the sales of U.S. Treasuries this month to raise dollars needed to support the Yuan including through China selling directly as well as through agents in Belgium and Switzerland acting on China's behalf to the tune of over $100 billion in just the past two weeks. This move has many unintended consequences including the unwinding of the $1+ trillion carry trade and essentially undoing QE, since QE is the printing of dollars to buy U.S. Treasuries, and what China is doing is selling U.S. Treasuries into the market for dollars, absorbing huge amounts of dollar liquidity. This is probably why commodities are falling so hard. Furthermore, trillions of dollars of foreign exchange reserves at other central banks around the globe may be mobilized to get in front of the value of their bonds dropping. If other countries holding foreign reserves of U.S. Treasuries decide to trim their holdings even modestly in response to China's dumping, it could put significant upward pressure on interest rates. Citi estimates that every $500 billion of bonds liquidated implies a better than 1% hike in the 10 year bond. This would be exacerbated should the Fed try to hike rates (stop buying so many Treasuries itself), as that would likely prompt even more dumping ahead of bond prices falling further. The Fed would have to defend against this with a gargantuan new QE program to buy up all of these bonds being liquidated by foreign reserve holders around the world. This could be seen finally for what it is -- a country deep in debt monetizing its bonds to escape traditional market feedbacks and prevent from paying appropriate interest rates based on the risk. That could tip off a full-scale dumping of Treasuries and a true currency crisis.
  • The two main Chinese indices surged 5.3% and 5.9% on Thursday, snapping a five-day losing streak that had wiped around 20% in market value and sent tremors around global financial markets.
  • Wall Street rallied in a volatile session on Thursday, fuelled by optimism after the government revised GDP figures higher (no doubt an accounting gimmick to assuage markets) and the Fed hinted that a September interest-rate hike was unlikely. The Dow Jones industrial average rose 369.26 points, or 2.27%, to 16,654.77, the S&P 500 gained 47.16 points, or 2.43%, to 1,987.67, and the Nasdaq Composite added 115.17 points, or 2.45%, to 4,812.71.
  • Oil rocketed more than 10% higher on Thursday, posting its biggest one-day rally in over six years as recovering equity markets and news of diminished crude supplies set off a short-covering scramble by bearish traders. Snapping back from a deep two-month slump that knocked U.S. crude to 6-1/2 year lows below $40 this week, oil climbed as world stock markets rose on hopes Chinese government measures to stimulate the economy would pay off, while the Dollar strengthened as risk aversion eased. The rally was aided by news of a force majeure on Nigerian oil exports declared by Shell and private data indicating more drawdowns in crude this week at Cushing, Oklahoma, traders said.
  • Despite recent gains, traders remain skittish following Monday's market meltdown and liquidity rout. The weekly Investors Intelligence poll of investment advisors showed the lowest number of professed bulls in five years. The CNN/Money Fear & Greed Index is deep in Extreme Fear territory. There are signs that suggest the markets could be gearing up for significant further declines, says Mark Newton, Chief Market Trader at Greywolf Execution Partners Inc. “Just look at the time we’ve gone without a 10% or 20% correction,” Newton says. “Historically, these rallies, when they do turn around, they tend to be pretty ugly, erasing anywhere from 25% to 40% of what you’ve done. That would mean a much bigger decline.” There are also various cliches about there being no market bottoms in August and that September and October tend to be the worst months for stocks and the most likely to produce significant declines.
  • Ukraine's central bank became the 39th monetary authority to ease policy this year, cutting interest rates to 27% from 30% to support flagging growth. Ukraine also reached a deal to restructure $18 billion of debt.
  • Heavy machinery manufacturer Caterpillar said it plans a new round of layoffs to cut costs as declining revenues from global mining and construction activities erodes its bottom line. It will reduce staff in its customer services support division by cutting 475 jobs. The move comes after the company previously announced about 270 layoffs. "The restructuring is a result of a consolidation of several divisions combined with current business conditions," spokeswoman Lisa Miller said in a written statement. Caterpillar has let go about 4,800 employees over the past year and has cut 20,000 full-time employees worldwide since 2012, more than 10% of its global workforce.
  • Venezuela is seeking an emergency OPEC meeting to figure out how the cartel can stem the collapse in oil prices, The Wall Street Journal is reporting. According to people familiar with the matter, the Journal reports that Venezuela has contacted other members of OPEC — the 12-state oil cartel led by Saudi Arabia — to hold an emergency meeting "in coordination with Russia." Russia is not a member of OPEC — the Organization of Petroleum Exporting Countries — but like OPEC's members, Moscow is heavily dependent on oil revenues to meet its governmental budget needs. One problem is that OPEC is effectively dissolved at this point as the member countries are no longer coordinating at all, with Saudi Arabia trying to break the American shale producers with low prices. Venezuela, for its part, has not been handling the collapse in oil prices well: it is teetering on the edge of hyperinflation.
  • Venezuela is preparing to issue bank notes in higher denominations next year as rampant inflation reduces the value of a 100-bolivar bill to just 14 cents on the black market. The new notes -- of 500 and possibly 1,000 bolivars -- are expected to be released sometime after congressional elections are held on Dec. 6, said a senior government official who isn’t authorized to talk about the plans publicly. Many Venezuelans have to carry wads of cash in bags instead of wallets as soaring inflation and a declining currency increase the number of bills needed for everyday purchases. Replacing notes with higher denominations is the typical move at this stage of a hyperinflation. Later, they exchange those high denomination notes for new currency in a lower denomination with a fixed exchange rate between the two currencies, e.g. 1 new note for 1000 old ones, but Venezuela is not quite to that stage yet. Of course none of this addresses the core issues -- primarily exorbitant government spending and monetization, price controls, capital controls, etc.
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August 26, 2015 -- Fed Capitulation PDF Print E-mail
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Wednesday, 26 August 2015 20:43
  • After the PBoC set a weaker Yuan benchmark rate yesterday, as expected, the currency fell even further in the spot market. Today’s Dollar/Yuan parity rate of 6.4043 represented a 0.1% depreciation of the Yuan versus the Dollar as compared with its last fixing of 6.3987, but the Yuan fell as much as 0.3% versus its Tuesday close in the spot market. The Yuan has depreciated 3.5% against the Dollar since the central bank devalued the currency on August 11.
  • The PBoC moved to ease the economy further on Wednesday, saying it will inject 140 billion yuan ($21.8 billion) into the financial system through a short-term liquidity adjustment (SLO) operation. The SLO loans come with a 2.3% interest rate. Short-term liquidity operations were last launched by the PBoC in 2013 to reduce fluctuations in liquidity and stabilize interbank funding costs.
  • Bill Gross, who manages the $1.47 billion Janus Global Unconstrained Bond Fund, tweeted Wednesday “China selling long Treasuries ????” The PBoC and the U.S. Embassy in Beijing didn’t immediately respond to requests for comment.
  • The continuing turmoil in global financial markets has reduced the chances that the Federal Reserve will raise its benchmark interest rate in September, a senior Fed policy maker said Wednesday. In response to a question at a news conference after delivering a speech in New York, William C. Dudley, the influential president of the Federal Reserve Bank of New York, said the case for a September increase had become “less compelling.” “From my perspective, at this moment, the decision to begin the normalization process at the September F.O.M.C. meeting seems less compelling to me than it was a few weeks ago,” Mr. Dudley said, referring to the next scheduled meeting of the Federal Open Market Committee, which sets monetary policy. He also said "we are a long way from" additional quantitative easing, though kept the door open for it. On the markets, "I don't have a view on why the stock market is doing what it's doing," Dudley said. Either that's the truth and the Fed is completely ignorant of their own unintended consequences or they are simply loathe to take responsibility.
  • In an unprecedented testament to the severity of the current crisis, the New York Stock Exchange invoked the little-used Rule 48 to pre-empt panic trading at the stock market open for the third day in a row on Wednesday.
  • Tokyo’s benchmark Nikkei 225 index gained 570.13 points, or 3.20%, closing at 18,376.83. The broader Topix index finished with a 3.23% gain. The Shanghai composite index — now down by over 40% since mid-June — climbed nearly 3% in afternoon trading before closing down 1.3% at 2, 927.29. In Europe, most of the major regional benchmarks were lower. Germany's DAX index was 1.3% lower and France's CAC 40 index dropped 1.3%. The Dow closed up 619.07 points on the day, or nearly 4%, to 16,285.51, interrupting a devastating 6-day slide in a long expected correction on the way to a bear market. After such a steep downturn the past few sessions, the "likelihood of a bounce in the near-term is high," Jason Trennert, founder of Strategas Research Partners, told clients in a note. But he is advising clients to sell into the rally attempts.
  • Markets bounced Wednesday after a week of deep declines, but Marc Faber, creator of the Gloom, Boom & Doom Report, doesn’t think this is the end. He expects U.S. markets to decline between 20% and 40% -- that brings us beyond a correction and into a full on bear market. It’s not only Chinese markets that have been over hyped, says Farber. “U.S. markets have been massively hyped up over the past few years through the media and corporations that bought back their own shares instead of investing in people and capital.” But the biggest perpetrator of all, according to Farber, is the Federal Reserve. Farber believes the Fed should have raised rates a long time ago but he doesn’t think it will happen anytime soon. “The Fed is happy to see the stock market down,” he says. He thinks there will be more intervention, more money printing and more government debt. According to Farber, the Chinese economy isn’t just decelerating, it’s in recession and the Fed will also use that as an excuse. “There’s a decline in car sales, a decline in smart phone sales and a decline in exports,” he says. “I don’t know where any growth could come from at this time.”
  • Kazakhstan unshackled its Tenge from the Dollar last week after the Yuan was allowed to float, and bets are growing that from Hong Kong to Saudi Arabia, Dollar pegs are at risk. "Markets are now questioning the sustainability of other Dollar pegs, wondering which will be the next domino to fall," Deutsche Bank told clients. A peg fixes the value of one currency relative to another and uses central bank reserves to enforce the relationship. Pegs are relatively rare these days among the bigger economies, partly because of the 1997-2002 emerging market crises that were exacerbated by the cost of clinging to fixed exchange rates. Kazakhstan's Tenge has fallen 30% since it was depegged last week under pressure from falling commodity prices and steep depreciation in neighboring Russia's Rouble. Russia ended its own flexible or "crawling" peg to the Dollar after burning billions of dollars in reserves to defend the Rouble while Ukraine and Belarus followed suit earlier this year. Now pressure is mounting on others, especially "petro-pegs" such as in Azerbaijan, Saudi Arabia and Nigeria. Justifying the cost of clinging to them will become increasingly difficult for those reliant on commodities and exposed to China's weakening economy, says Simon Quijano-Evans, chief EM strategist at Commerzbank.
  • Ray Dalio clarified his view released earlier this week predicting QE4, "We are not saying that we don’t believe that there will be a tightening before there is an easing. We are saying that we believe that there will be a big easing before a big tightening," he said in an updated post on his LinkedIn account. "We don’t consider a 25-50 basis point tightening to be a big tightening. Rather, it would be tied with the smallest tightening ever." The smallest tightening to date was 0.5% in 1936, the same year that the U. S. was undergoing a deleveraging of the long term debt cycle. Coincidentally, this very tightening is the one Janet Yellen has been scared to death of repeating, believing that the Fed caused a second downturn of the Great Depression. “To be clear, while we might see a tiny tightening akin to what was experienced in 1936, we doubt that we will see anything much larger before we see a major easing via QE,” Dalio wrote. He also pointed out that since 1981, every cyclical peak and cyclical low in interest rates were lower than previous points until short-term interest rates eventually dropped to 0%, which prevented a further rate cut. In response, central banks launched quantitative-easing programs to boost growth amid strong secular disinflationary forces. "We believe those secular forces remain in place and that pattern will persist," said Dalio.
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August 25, 2015 -- China Dumping U.S. Treasuries PDF Print E-mail
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Tuesday, 25 August 2015 20:48
  • China stepped up its credit-easing efforts by slashing interest rates (cutting the 1-year lending rate by 25bps to 4.60% and the 1-year deposit rate by 25bps to 1.75%) and flooding its banking system with new liquidity (trimmed the reserve requirement ratio by 50bps to 18%, with additional 300bps reductions for leasing companies and 50bps for rural banks), its second such combo move in two months aimed at battling a deepening economic slowdown and its worst stock-market selloff in decades. The People’s Bank of China (PBoC) announced the one-two punch late Tuesday after the country’s main stock index fell another 7.6%, bringing losses to more than $1 trillion in market value over the past four trading days. "PBOC rate/RRR cut may spark temporary rally, but will not 'save' China stock market from further correction," wrote Patrick Chovanec, Managing Director, Chief Strategist at Silvercrest Asset Management, on Twitter.
  • The total amount of liquidity injected by the PBoC will be close to $106 billion based on today's onshore exchange rate, according to an estimate from Societe Generale SA. In perspective, the PBoC may have sold more official FX reserves than this amount since the currency regime change on 11 August. I.e. in the past two weeks alone China has sold a gargantuan $106 (or more) billion in U.S . Treasury paper just as a result of the change in the currency regime. This is a $2.6 trillion annual pace, up from the $1 trillion annual pace Goldman Sachs previously estimated in July. At this rate, China will have completely dumped all U.S. debt within 5 months. And at what time do other Treasury holders see that a dumping is underway and try to get out while the getting is good?
  • The New York Stock Exchange invoked the little-used Rule 48 to pre-empt panic trading at the stock market open for the second day in a row on Tuesday.
  • A strong rally on Wall Street evaporated on Tuesday and stocks ended with deep losses. In a dramatic trading session, major indices turned negative in the final minutes of trading after previously climbing almost 3%. Investors cited more worries that a slowdown in China could hobble global growth, even after the country's central bank cut interest rates on Tuesday for the second time in two months. The move came after Chinese stocks slumped 8% on Tuesday, on top of an 8.5% drop on Monday. In the past week, the S&P has lost 11%. All of 10 major S&P sectors lower. "Investors are still concerned about exogenous growth and shifting Fed policy, and both of those are still on the table," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. The Dow Jones industrial average fell 204.91 points, or 1.29%, to end at 15,666.44. The S&P 500 lost 25.59 points, or 1.35%, to finish at 1,867.62, and the Nasdaq Composite dropped 19.76 points, or 0.44%, to 4,506.49. This past week has seen the largest point drop in history (though not the largest percentage) and makes August the worst month for stocks since the collapse of September 2008.
  • Bespoke Investment Group observed that the S&P 500 has closed more than four standard deviations below its 50-day moving average for the third consecutive session. That's only the second time this has happened in the history of the index. May 15, 1940, marked the end of the last three-session period in which this occurred: This string of sizable deviations from the 50-day moving average is a testament to just how severe recent losses have been compared to the index's recent range. "Not even the crash of 1987 got this oversold relative to trend," writes Bespoke. Indexing the S&P 500 to five sessions prior to the tumult shows that a replication of the mid-1940 plunge could see equities run much further to the downside and into a bear market: If it tracked the 1940 trajectory, the S&P 500 would hit a low of 1,556 in relatively short order.
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August 24, 2015 -- Black Monday PDF Print E-mail
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Monday, 24 August 2015 20:49
  • Stocks took a stomach-turning dive on Monday following big declines in Asia, sending the Dow Jones industrial Average (DJIA) down more than 1,000 points, or almost 7%, in a matter of seconds at Wall Street's open. The Dow cut its losses throughout the day but still finished down 588 points (3.6%) to 15,871. The Standard & Poor's 500 index (S&P500) closed down 3.9% for the day (it's worst day since 2011) to 1,893 and was 11% lower than its May record high. The benchmark S&P index has accumulated 9.95% of losses in just five sessions. A key measure of U.S. equity volatility, the CBOE Volatility Index, or VIX, shot above the 50 mark for the first time since 2009, dropped back near 30 and then rose to 40.
  • Monday's trading volume was almost 14 billion shares, according to Reuters data. This was roughly twice the 7 billion daily average for the month to date. In a historic move, the New York Stock Exchange (NYSE) invoked the little-used Rule 48 to pre-empt panic trading at the stock market open, so just imagine how bad it would have been considering it dropped over 1,000 pts even with this rule in force! To invoke Rule 48, an exchange would have to determine that certain conditions exist that would cause market disruptions. Those conditions include:
    • volatility during the previous day's trading session
    • trading in foreign markets before the open
    • substantial activity in the futures market before the open
    • the volume of pre-opening indications of interest
    • government announcements
    Rule 48 was approved by the Securities and Exchange Commission (SEC) on Dec. 6, 2007 and has been rarely used. Unlike a circuit breaker that stops stock trading, Rule 48 speeds up the opening by suspending the requirement that stock prices be announced at the market open. Those prices have to be approved by stock market floor managers before trading actually begins. Without that approval, stock trading can begin sooner.
  • The stock market event was widely dubbed "Black Monday", alluding to a similar crash in 1987. Former Treasury Secretary Larry Summers tweeted, "As in August 1997, 1998, 2007 and 2008 we could be in the early stage of a very serious situation."
  • Chinese stocks were down 9%, finally pushing that market into negative territory for the year. European stocks closed off 5.4%. Tokyo's Nikkei ended down 4.6%. London's FTSE 100 ended down 4.7% for its 10th straight decline - its worst run since 2003. The MSCI all world stock index was off 3.8% at the end of the U.S. session.
  • The Dollar Index was down 1.6% against other major currencies after falling as much as 2.5% earlier in the day.
  • The worldwide market decline has extended to commodities, including crude oil, which is below $40 per barrel for the first time since the financial crisis six years ago.
  • Traders have been putting their money in investments they consider safer, including government bonds and gold.
  • In a Wall Street Journal op-ed piece, Harvard professor Martin Feldstein says the collapse was “the inevitable result of the Federal Reserve’s policies, namely quantitative easing that produced abnormally low interest rates.”
  • In a just released letter to clients, Ray Dalio, the head of the world's largest hedge fund -- Bridgewater Associates -- delivered the following warning: "...the ability of central banks to ease is limited, at a time when the risks are more on the downside than the upside and most people have a dangerous long bias. Said differently, the risks of the world being at or near the end of its long-term debt cycle are significant... These long-term debt cycle forces are clearly having big effects on China, oil producers, and emerging countries which are overly indebted in dollars and holding a huge amount of dollar assets—at the same time as the world is holding large leveraged long positions. While, in our opinion, the Fed has over-emphasized the importance of the 'cyclical' (i.e., the short-term debt/business cycle) and underweighted the importance of the 'secular' (i.e., the long-term debt/supercycle), they will react to what happens. Our risk is that they could be so committed to their highly advertised tightening path that it will be difficult for them to change to a significantly easier path if that should be required... We Believe That the Next Big Fed Move Will Be to Ease (Via QE) Rather Than to Tighten."
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August 23, 2015 PDF Print E-mail
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Sunday, 23 August 2015 20:50
  • Venezuela’s currency, the Bolivar, tumbled from 82 bolivars to the dollar last year, to 300 bolivars in May, and to a staggering 670 bolivars this August. The Venezuelan administration stopped publishing inflation figures in December 2014 (when annual inflation reached 68%), but some economists have estimated a current inflation rate of between 400% and 800%.
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August 22, 2015 -- 6.9 Million Student Loans Delinquent PDF Print E-mail
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Saturday, 22 August 2015 00:05
  • The Wall Street Journal reports that nearly seven million Americans have gone at least a year without making a payment on their federal student loans, a staggering level of default that highlights how student debt continues to burden households despite a supposedly improving labor market. As of July, 6.9 million Americans with student loans hadn’t sent a payment to the government in at least 360 days, quarterly data from the Education Department showed this week. That was up 6%, or 400,000 borrowers, from a year earlier. The figures translate into about 17% of all borrowers with federal loans being severely delinquent -- and that share would be even higher if borrowers currently in school were excluded. Additionally, millions of other borrowers who haven’t hit the 360-day threshold that the government defines as a default are months behind on their payments. Each new crop of students is experiencing the same problems” with repaying, said Mark Kantrowitz, a higher-education expert and publisher of the information website Edvisors.com. “The entire situation isn’t getting better.”
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August 21, 2015 PDF Print E-mail
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Friday, 21 August 2015 20:50
  • Wall Street witnessed its steepest one-day drop in nearly four years on Friday and left the Dow industrials more than 10% below a May record high, closing down on the day 530.94 points, or 3.12%, to 16,459.75. The S&P slumped 5.8% for the week, its biggest weekly decline since September 2011. The index lost more than $1 trillion of its value this week, according to S&P Dow Jones Indexes. Only 10 S&P 500 components advanced on Friday. The selloff was broad, with all 10 major sectors in the red. One-third of the S&P 500 stocks are in a bear market (20% drop or worse). Wall Street's selloff this week suggested investors are growing nervous about paying high prices for stocks at a time of minimal earnings growth, tumbling energy prices and an expected rate hike by the U.S. Federal Reserve that could gradually usher the end of almost a decade of easy money.
  • Weak Chinese manufacturing data on Friday and another drop in China's stock market rattled investors' nerves.
  • Dollar was down against the Yen, Euro, Pound, Swiss Franc, and other global currencies. Dollar Index closed down at 94.80.
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August 20, 2015 PDF Print E-mail
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Thursday, 20 August 2015 20:51
  • Dow dropped 350 pts. Stocks broke below some key technical levels, portending bigger drops ahead. St. Louis Federal Reserve President James Bullard said the Fed does not react directly to equity markets or other markets, but equity markets are forward looking and trying to assess trends in the global economy, and so does the Federal Open Market Committee (FOMC), so they are looking at similar indicators. Bullard said he would not have the same assessment on the outlook for the global economy -- especially being more sanguine about the impact of global growth coming from fears regarding China -- and said it is risky for rates to stay near zero for too long.
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August 19, 2015 PDF Print E-mail
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Wednesday, 19 August 2015 20:51
  • The minutes of the Fed's July meeting said “almost all members” of the Federal Open Market Committee “indicated that they would need to see more evidence that economic growth was sufficiently strong” to bring inflation closer to its target before they were ready to raise rates for the first time since the financial crisis. Several analysts said the uncertain tone of the minutes suggested the Fed was somewhat less likely to start raising rates at its next meeting, in mid-September. Investors, too, reduced their bets on a September liftoff, as reflected in the prices of financial assets tied to interest rates. “The bet is still that they achieve liftoff in September,” Diane Swonk, chief economist at Mesirow Financial in Chicago, wrote in an analysis after the Fed distributed its latest bag of tea leaves. “However, Fed officials need to telegraph that soon if they actually intend to do so.” The Fed has held its benchmark rate near zero since December 2008 as the centerpiece of its campaign to revive economic growth and reduce unemployment. Janet L. Yellen, the Fed’s chairwoman, has said the Fed plans to wind down that campaign by gradually raising rates back toward a more normal level, starting later this year and continuing for the next few years. The minutes said most of the meeting’s 17 participants “judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point.”
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