US Job Growth Strengthens But Fed Not Budging
US job growth beat expectations once more during the month of July, adding 255,000 payrolls. This puts a dismal May report behind – although it was revised up to 29,000 from 11,000 – and it shows continuation from the now revised 292,000 June job report. Nevertheless, the Fed seems to be reluctant to tighten monetary policy. In fact, with payroll growth alongside labor participation growth and even wage growth that beat estimates, the Fed’s cheap money policy has probably already run its course. It is time to tighten, but it seems that rates will stay the same all the way until the end of the year.
There is a possibility that the economy has become dependent on cheap money to keep consumption flowing. In fact, experts point to the consumer as the main driver of growth in the economy right now. Companies have refused to take advantage of the low rates to increase their investment. This means that without cheap money, consumers might also start tightening their spending and the economy could revert its growth trends. read more…
An Elusive 2%
Consumer spending in the US is up, and even surpassed estimates during the month of June. This economic activity that underpins 70% of the US economy, is now clearly showing a rising trend. So much so that it is affecting savings negatively, yet it has failed to bring inflation to the Fed’s 2% target. This raises questions about the likelihood of a rate hike, especially since despite all this higher than expected economic activity, US GDP growth has been disappointing so far this year, and has stayed below expected levels.
This raises questions about the Fed’s continued reluctance to raise rates and normalize monetary policy. It seems that the emergency monetary measures that it rolled out about 8 years ago, have effectively become the new normal. Walking back from cheap money will be even harder than everyone thought, but the Fed has also put itself in a position in which it is stuck with little room to maneuver. read more…
South American Economies Failing As Olympics Set To Start
South America and more specifically Brazil have attracted a lot of attention this year due to the Zika virus, corruption scandals, and electoral turnarounds and of course the Rio Olympics. But while the Olympic celebrations are set to begin, and South American countries are eager to show the prowess of their athletes, their economies are far from the podium finishes they were getting just a few years ago. Instead many countries are mired in recessions, fighting rising inflation and decreasing revenues from exports.
This is largely due to their dependence on raw materials, namely agricultural products, oil and industrial metals. South American economies had also become much more dependent on China as a result of the abundance of natural resources within their territories, and their traditional eagerness to find an alternative to demand from the US. Nevertheless this newfound partnership with China, together with the resurgence of socialist-oriented governments in some countries, generated a push towards over-dependence on raw materials and a subsequent bout of Dutch Disease which will be very hard to overcome. read more…
Oil Dips Below $40 USD
Once more, oil prices are down and are projected to stay down in the near future. Analysts point at the ‘oil product glut’ as the reason for the weakness in the markets. With an oversupply of oil products such as gasoline, and an increase in US oil rig count, the Saudis are giving an additional discount to their Asian customers in order to protect their share of the market. These factors promise to keep oil prices subdued for a longer period of time, and this year might wind down with lower oil prices than previously expected.
These fluctuations in oil markets might be indicative of the new dynamic created by the fracking revolution. Traders must start thinking about short price runs in oil markets that end give them very short windows of opportunity to play with the upside. Looking beyond these short term investments, lower oil prices will continue to have a negative effect on inflation. This could mean that investors will have to change their outlook on other unrelated investments. read more…
TradeRush Launches Education Center
TradeRush has just introduced its new multimedia education center. They provide an assortment of Binary Options training material including videos and an eBook.
They offer sample videos for those who visit the TradeRush website. The remaining videos and the eBook are available for those who register for an account (no deposit needed).
The TradeRush Education center has 3 sections. The first section they call the Video Academy. The academy offers a series of videos in the following 5 categories: Introduction to Binary Options, Trading Psychology, Financial Management, Market Analysis and a Trading Platform Tutorial. These lessons give a general overview of trading.
The next section in the education center is called Binary Options Courses. These courses are a compilation 21 videos more specifically related to Binary Options trading divided into the following 3 categories: Beginners, Advanced and Our Platform. The advanced section provides a video demonstration of 5 basic trading strategies.
The final section is the Binary Options eBook. The 55 page eBook consists of chapters dealing with a the World of Global Trading, Trading Psychology and Capital Management, Market Analysis, Trader Strategies and a Glossary.
If you are interested in trading Binary Options or you are a new trader I highly recommend opening a TradeRush account and going through all of the information in their education center. Intermediate and advanced traders will probably be familiar with most of the material, but learning all of the basic strategies provided in both the videos and eBook would be beneficial to all traders.
Financial Markets – Preview for Week Starting 26th June 2016
Major Events of Last Week
Global investors were stunned late last week by the surprised decision of Great Britain to exit the European Union which subsequently generated levels of high price volatility and chaos last recorded during the 2008 equity meltdown. For example, riskier assets, such as stocks, crashed around the world as traders rush to the sanctuary of safe-havens, such as the Yen, gold and US treasury bonds. Sterling was particularly hit hard by nose-diving to values not seen since the mid-1980s. The British ‘LEAVE’ verdict came as a complete shock as earlier polling and wide-spread betting had strongly supported the ‘REMAIN’ camp. The premier US indices plummeted last Friday confirmed by the Dow Jones Industrial Average crashing 557 points lower; the S&P500 dropping 69 points and the NASDAQ plunging by 198 points. read more…
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