Tag Archives: ecb

Economic look

11 Feb

imagesRisk trends collapsed in 2000 and 2007 although the foundations were perceived as excellent, with economic growth (speculative) in the U.S. and Europe. Current trend is not a creation of wealth  (everybody get a loan) or expectations in this regard but the creation of  coordinated central bank interventions. Creation of paper money out of thin air led this to historically low interest rate levels forcing investors to protect themselves from negative real interest rates and seek higher returns in safety and risk assets (stocks, commodities, currencies like NZD, EUR, GBP, CAD which tend to appreciate in periods of optimism, against  USD, JPY, CHF, which is appreciated in times of panic). Continue reading

Monetary Stimulus Could Lift The Gold Price?

7 Feb
Gold Price
·         Sept. 21, 2011: Federal Reserve launches “Operation Twist.” The central bank swaps $400 billion of short-term bonds for the same dollar amount in longer-dated securities. Deadline for program is slated for June 2012.
 
·         Oct. 2011: Bank of England initiates new round of quantitative easing, creating an additional 85 billion pounds in stimulus.
 
·         Nov. 2011: The Federal Reserve pledges to “leave the door open for further action” and to keep interest rates at record lows “at least through mid-2013.”
 
·         Jan. 2012: Federal Reserve pledges to “keep interest rates near zero until at least late 2014.”
 
·         Feb. 2012: Bank of England adds an additional 50 billion pounds to stimulus program
 
·         June 2012: Federal Reserve extends “Operation Twist” to the end of the year, swapping an additional $267 billion of shorter-term securities for 6-to-30-year Treasury’s.
 
·         July 2012: Bank of England adds an additional 50 billion pounds to stimulus program, bringing the total to 375 billion pounds.
 
·         September 2012: Federal Reserve pulls the trigger on a third round of quantitative easing, QE 3. The new, $40 billion per month bond purchasing program of mortgage-backed securities is open-ended, with no time limit.
Source: elliottwave.com

2013 Could Be A Watershed Year

10 Jan

Sovereign Ratings

After more than three years of economic, financial, and budgetary stress in the European Economic and Monetary Union (eurozone), especially on its so-called “periphery”, some signs of stabilization emerged in the latter half of 2012. Is this a sign that the financial and economic troubles leading to the rating downgrades of 12 of the 17 eurozone member states since the onset of the crisis may have run their course? We believe that 2013 could be a watershed year for the eurozone debt crisis. It could mark the start of the region sustainably overcoming the market volatility and fragmentation that has affected it over the past few years. It could also see the return of some so-called “program countries”–member states that have borrowed from the European Stability Mechanism (ESM) or the European Financial Stability Facility multilateral loan programs–such as Ireland and Portugal, to more substantial primary issuance in the capital markets. Continue reading

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