Tag Archives: Market

Euro Bounces Back

Euro Bounces Back

The euro bounced back from its four-month low on Tuesday morning as investors were anticipating data from the eurozone’s factory output. Eurozone PMI data is expected to be released later today. The single currency gained strength against the dollar, but Thursday’s European Central Bank meeting led by Mario Draghi will likely be the real determinant of the euro’s general direction. Moreover, concerns over the ongoing crisis in Cyprus continue to worry investors. The eurozone’s handling of the Cypriot debacle has been disastrous and it will take time until confidence in the euro returns in full strength.

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Decision Time for Cyprus

Decision Time for Cyprus

The debt-ridden Cypriot economy is faced with tough choices in the coming days. On Tuesday the country’s parliament rejected the tax levy on depositors and now the ECB, with the blessing of the IMF, has issued an ultimatum to the ailing Mediterranean island nation. If Cyprus fails to agree to the terms by Monday, ECB said it will no longer provide the Cypriot banks with liquidity assistance unless the country approves the bailout terms.

Moreover, Russia, Cyprus’s other major creditor, hinted that it will not agree to terms that would grant the country with a new 5 billion euro loan. Reports suggest that Russia is not willing to give the loan considering that the country already lent 2.5 billion euros to the island nation in December 2011. The euro group’s chairman, the man in charge of loan negotiations between Cyprus and other eurozone countries, Jeroen Dijsselbloem, told the press on Thursday that he still believes that the tax levy is the best option for Cyprus.

The growing crisis is visible in Cyprus where locals are terrified by the potential consequences of the ongoing debacle. The shell-shocked Cypriots all over the island are queuing at cash machines to drain their bank accounts ahead of the possible depositor tax.

Cyprus is in trouble, but it’s unlikely that the crisis will spread to the rest of the eurozone considering the country’s small size and relative insignificance in terms the single currency’s general health. However, Cyprus needs to decide how to solve the crisis in order to save its banks and calm its increasingly alarmed public.

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A Rally Before The Storm?

A Rally Before The Storm?

The S&P 500 finished lower on Tuesday, bringing the winning streak of gains to an end as investors moved away from technology, but the Dow managed to pull some gains and thus end at yet another record high. The Dow also hit a record high, while the S&P 500 is approaching its own high of 1,565.15, from October 9, 2007. The market’s surge recently has pushed the Dow up 10.3 per cent for the year and boosted the S&P 500 by 8.9 per cent for 2013 until now. Signs of improvement in the economy and the Fed’s quantitative easing policies might indicate a better future, but one economist, Steve Keen, believes that the US stock market is a massive bubble. “Nothing can accelerate forever. At some point the acceleration stops, and when it does the market breaks,” Keen told The Daily Ticker.

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Market Madness

Market Madness

Markets are performing well, US stock indices are shooting higher, euro is stable and the yen is looking sturdier by the day. Are positive developments in the market an indication that the US, eurozone and Japan are recovering from their respective financial crises or do markets have a life of their own, irrespective of a country’s economic health?

The positive employment news coming out of the US would lead one to assume that things are fine and dandy in the largest economy in the world. However, as Stephen Gandel points out, the number of jobs added in February should have been 13 per cent than the actual number reported. In fact, if the economy correlated with the market, the number of jobs should have been 150,000 higher.

The S&P, Dow and Nasdaq jumped on the news of seemingly good jobs numbers. However, would anyone honestly claim that the US is doing well? Trading on the news is not necessarily a good strategy because markets don’t always react in a rational manner.

For instance, markets have largely ignored Italy – except for a brief moment after the election – where Beppe Grillo is about to claim a prominent role. Why would the euro stay steady when a man who has vowed to take Italy out of the euro could very well be in a position to carry out his promise? Last summer Finland was erroneously reported to have threatened to leave the euro. The rumour prompted the single currency to fall, but now, when the third largest economy in the eurozone is rumoured to do the same, the euro is stable.

 

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What’s Next For Venezuela’s Oil?

What’s Next For Venezuela’s Oil?

Hugo Chavez left his cherished Venezuela rich with oil, but the country’s role as a major oil power has diminished over the last years mostly due to Chavez’s efforts to use oil revenues for political domination, anti-American activities and domestic social programs. The state-owned oil company PDVSA’s production fell by a quarter during Chavez’s reign and it remains to be seen whether the next regime will change course. The global oil industry waited impatiently for the Venezuelan strongman to die, hoping that the next leader would focus on developing rather than exploiting the massive oil reserves. Nationalisation of Venezuela’s oil industry intimidated foreign investors, but Chavez’s passing might change everything. However, it will take time to free the country from the power structure that was erected in the last 20 years.

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The Sun Never Sets On Gold?

The Sun Never Sets On Gold?

According to the conventional wisdom subscribed to by many investors, when currencies, indices and commodities are in flux, gold shines alone as the mirage in the desert. But as the word mirage suggests, the highly valued asset is in danger of becoming simply a mirage and not the safe haven it is thought to be.

Gold is down 6.5 percent year to date and it is possible that this could be the year we will witness its first significant decline over a decade. Obviously it would be foolish to argue that gold is a thing of the past, but the clouds on the horizon could signify lower gold prices in the near future, many analysts argue although dissenting voices exist.

Nathan Goldstein, a private investor and a gold-connoisseur, has been following gold since time immemorial and is convinced that it will maintain its role as a safe asset.

“Daily trends indicate that gold is going down for the next weeks, but I’m convinced we will see a surge in the prices in the long term,” Goldstein said.

Gold has come under growing pressure in recent months because of speculation regarding The Fed’s fiscal policies. Fed chair Ben Bernanke’s announcements on Tuesday and Wednesday will potentially answer some questions over the direction of the precious metal.

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