Energy markets are moving once again. A colder than expected winter hit Europe, so natural gas prices are on the rise as a result of increasing demand. On the other hand, oil prices took a dip as US rig count continues to increase due to the OPEC agreement. It seems that both the natural gas and the oil markets will see more volatility in 2017.
Oil and gas are close substitutes
To reduce exposure to price volatility in both markets, consumers could consider systems that would let them use either oil derivatives or natural gas to produce energy. read more…
A single man and a Twitter account can define the behavior of stock on any given day. President Elect Trump is still not in office, but his tweets seem to have overwhelming power over the markets, particularly the auto industry. 140 characters praising Fiat Chrysler’s decision to invest $1 billion USD in plants in Michigan and Ohio, to create 2,000 jobs, had the pre-market value of the stock up 2% yesterday. On the flip side, a tweet condemning GM imports of Chevy Cruze models into the US from the GM plant in Mexico, elicited a stark Twitter warning. The value of that stock suffered that day. But beyond those tweets, President Elect Trump might also be deriving political capital from decisions that stem from cold hard business analysis. read more…
The New Year hailed a wide variety of news that will certainly change the economic landscape for years to come. One of them is Alberta’s carbon tax, which is a prelude to the wider federal government initiative to tax emissions all over Canada from 2018 onwards. The tax already changed what used to be conventional wisdom; Alberta no longer has the cheapest gas prices in Canada. But this new tax initiative is also challenging a number of other assumptions that the Canadian government – and other around the world – should study in depth before implementing a Canada-wide carbon tax.
Carbon Taxes in Alberta an Experiment for Canada and the World
Government policy often defies the logic of empirical scientific research. In the case of carbon taxes, governments should be measuring emissions per capital before the tax and after the tax in order to establish if the policy meets the goal of bringing carbon emissions down. read more…
A few years ago, no one would have thought that the Euro would be so close to parity with the US Dollar. Now, parity is increasingly looking like the new normal. Every indicator seems to support the race down to parity, and turmoil in the EU is only helping. Euro-Dollar parity however, is far from a catastrophe. Quite on the contrary it could give the EU’s largest economy – Germany – the boost it needs to keep on pushing ahead. That is something every member of the EU would like to see, although members of the monetary union might not necessarily see it that way.
Diverging Monetary Policies Strengthen the US Dollar Relative to the Euro
There is no doubt that a weaker Euro is an advantage for export led economies such as Germany. Therefore diverging monetary policies across the Atlantic should bode well for the EU’s main economic engine. It seems that the ECB is in no rush to follow the Fed with a rate hike or any other step to normalize monetary policy in the Euro block. Many would say that this is because Germany has disproportionate influence over the decisions that the ECB makes, but reality shows that Euro block economies beyond Germany might not be ready for a rate hike.
Debt and Disarray
This is due to the fact that economic growth in the Euro block is still anemic despite some improvement. Many of the Euro block countries also remain highly indebted. Any rate hike could choke the signs of economic recovery and make debt repayment spiral out of control. Deflation also looms in many of the Euro block countries, so a contraction in the money supply might exacerbate the situation. On top of these structural problems – that cannot be solved through monetary policy alone – the EU is in disarray. Important Italian financial institutions are on the brink of collapse due to liquidity issues, while populism is sweeping across the continent.
In the US the Economy needs Monetary Normalization
In the meantime, at the other side of the Atlantic, rate hikes are needed, especially if Trump’s plan to hike investment in infrastructure ramps up inflation. The effect of so called populism on both sides of the Atlantic seems to be radically different. The fact that populists in Europe tend to be Euro-skeptics, is one of the main reasons why Trump’s populism in the US strengthens the greenback whereas calls to dissolve the EU affect the Euro negatively. The Euro depends on Euro block unity.
Euro – US Dollar Parity Before 2017?
In the meantime Germany keeps reaping the benefit of a low Euro. If it can keep the EU in order – much like Chancellor Merkel has tried to do with varying degrees of success over the last 10 years – it will continue to benefit from the race towards EUR-USD parity. The Fed’s plan to hike rates further and more frequently going ahead, will keep the value of the Euro in terms of US Dollars down. The long shadow of those future Fed rate hikes might even push the Euro closer to parity before the year ends.
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Major Events of Last Week
Investors were surprised last Friday when the USA declared that its economy expanded at its fastest rate during the third quarter of 2016 in almost 2 years. Rebounding inventory and surging exports helped to counter a weakening in consumer spending. Gross domestic product recorded an impressive increase of 2.9 percent annual rate after suffering an insipid 1.4 percent hike during the second quarter, the Commerce Department advised late last week. This was the strongest performance achieved by GDP since late 2014 and surpassed analysts’ expectations for 2.5% growth. Business investment improved last quarter, though spending on equipment remained weak. The topmost US indices slid last Friday illustrated by the Dow Jones Industrial Average edging 8 points lower; the S&P500 falling by 6 points and the NASDAQ dropping by 25 points. read more…
The Shanghai Forex Expo will be taking place on the 8th and 10th of December 2014 at the Shanghai Everbright Convention&Exhibition Centre. It is a three-day event for traders, investors, affiliates, IBs and brokers from across China and the world. With a growing affluent and upper middle class in China, we hope this event will provide the know-how about what’s moving the markets via a range of free seminars and an exhibition of forex products and services.
The Shanghai Forex Expo is also a great opportunity for brokers from around the world to promote their online forex trading platforms and get direct access to the most exciting forex market here in China. Over 50,000 attendees are expected at the three day event. We welcome you to register and share with us!
Over the years the gold markets have had many accessibility issues. From claims of price manipulation to expensive fees, the smaller investors who are often individuals looking to safeguard the value of their savings, have been shut off. In come the great 2008 recession and Bitcoin, and suddenly the gold markets started to transform. People were desperately looking for a way to keep the value of their money in an environment in which all types of assets were quickly depreciating, and commodities provided the protection needed. Bitcoin, the first cryptocurrency, conceived to emulate certain aspects of commodities, brought the mechanics of trading by using a commodity as a medium of exchange into the 21st century; Bitgold applied some of those principles to bring gold back as a medium of exchange, resurrecting the use of physical commodities as a currency through its services.
Based out of Toronto, Bitgold launched its services to the public keeping cryptocurrency (specifically Bitcoin) in mind as a means of exchange, but initially setting up a traditional exchange setting, allowing customers to buy gold through their bank accounts in their currency of choice. Much like Bitcoin, Bitgold’s services seek to offer an alternative to all the investment and saving features that the financial markets offer. The advantages of their services provide a safe haven from market volatility but can also be used as a means of payment, decreasing the concentration of economic power and providing an alternative for more direct trade between people. read more…
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