The US Federal reserve just raised interest rates to 0.75%. This move was largely expected. It is the second time in as many years that the Fed increases the interest rate, but despite making the same move it made a year ago, it seems this rate hike will be the last of its sort. The Fed sees more rate hikes during 2017, accelerating the pace of monetary policy normalization. This is largely due to the fact that President Elect Trump turned the markets on their heads and is vowing to accelerate fiscal expansion.
Fed Trumps the Rally
The Dow Jones took a small tumble after the Fed’s announcement yesterday. Markets had already priced a 2016 rate hike in, but were not entirely aware of the Fed’s plans to raise rates three times next year. read more…
As the Fed is set to decide whether or not it will increase the interest rates this week, markets couldn’t care less. The Dow Jones is at historical highs, pushing towards the 20,000 mark, despite the threat of more expensive money. It seems that the markets are convinced that Trump’s fiscal expansion will out-pace Fed interest rate increases. At least this is the bet that investors seem to be making.
Investor confidence pushing the Dow Jones towards 20,000
Fed interest rate increases could well serve to cancel out any GDP expansion generated by Trumps fiscal plan. That is however, hard to tell. Trump himself seems convinced that he can bring the economy back to a 3%-4% growth rate. Fed experts disagree, putting that figure close to 2%, but if Trump manages to beat that, then growth through fiscal spending might outpace Fed tightening. read more…
It is clear that the OPEC deal to cut oil supply, which involves some of the biggest non-OPEC producers, is having an effect on oil prices. WTI has stayed above $50 USD per barrel for over a week. Nevertheless it is still too early to call it a success. The deal kicks in on January 2017, and until then oil still faces many headwinds. Ultimately, oil shipment tracking data during the first half of 2017 will give a clear indication of whether the deal was good or not.
Why isn’t current price a good indicator for the success of the OPEC deal?
Analysts must keep in mind that this deal will come into play after Saudi Arabia and Russia – the OPEC and non-OPEC biggest producers – hit an all-time oil production high. read more…
Markets definitely took Trumps win with stride. The Dow Jones industrial average soared to more than 1000 points above the level it was at the day before the election. The NASDAQ and S&P also advanced after retreating initially. It seems investors like a CEO – however controversial he might be – in the White House. There is a sense that President Elect Trump will run the country more from a business perspective, unlike any president before him.
Nevertheless it is too early to celebrate. The Dow did reach a new record high yesterday, but the markets remain volatile and President Trump remains a riddle in many aspects. His proposed fiscal expansion could generate drag elsewhere, especially if it comes with a tax cut. It could well increase the already precarious debt situation that the US is facing. read more…
Globalization is one of those terms that people may take as a blanket concept. The level of interconnectedness in the world gives some the sense that capital is truly free to move from one place to another. This capital is supposed to help its users acquire unrestricted access to goods and services, no matter where the owner of the capital lives. In come the regulatory bodies, each in their jurisdiction, which set accessibility rules for that capital. The binary industry is no stranger to these norms. However, since binary options have become increasingly popular in the last few years, regulatory bodies have been playing catch up, further confusing potential investors. It is time to clarify and understand the basics. read more…
Major Events of Last Week
Global equities were lifted last Friday after China posted encouraging inflationary data which registered an increase for the first time in five years. The British pound also staged a comeback late last week after the Bank of England advised that it was not overly concerned about Sterling’s 20% recorded since the United Kingdom voted to exit the European Union. Increasing discretionary spending and improving motor sales helped US retail sales regain their composure during September. The premier US indices raced higher last Friday epitomized by the Dow Jones Industrial Average soaring by 66 points; the S&P500 rising by 4 points and the NASDAQ climbing by 9 points. read more…
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“Wasn’t Bitcoin valued at over $1,000 last year, and now it’s around $200?”
“Bitcoin won’t last”
We’ve heard it all before. Several thousand times, each statement more forceful than the last. We’ve seen the death and rebirth of Bitcoin several times over, but with the recent price surge, the naysayers have been out in full force. It’s interesting how the perspectives differ in this regard – a slow, steady incline towards the $300 mark has Bitcoin users jumping for joy (and allowing themselves an ‘I told you so’) while the detractors are using the price increase as fuel for maintaining their distrust for Bitcoin in general.
While the BTC/USD price didn’t linger very long over the $300 mark, it is still holding strong close to the mark, and is fairing much better than it has been for a very long time. A quick glance at a price chart from the past month shows an incredible upward trend in the price – but without being a spike, aka something that is a complete fluke and destined to drop. Bitcoin is on the rise whether you like it or not. read more…
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