Ailing CETA Gives Brexit Some Perspective
A free trade agreement between the EU and Canada has slipped beneath the radar on many news outlets. The Comprehensive Economic and Trade Agreement which was finalized under Canada’s previous government is now facing a roadblock in the southern Belgian region of Wallonia. If the Walloons do not approve the deal, Belgium will not be able to ratify it, stripping it of the 28 nation consensus needed to come into effect. Wallonia’s rejection of the deal has many repercussions for both the EU and Canada, but it mostly shows that the kind of protectionist sentiment seen during the Brexit referendum, is spreading to other places in Europe pretty quickly.
For some, Wallonia’s reluctance to accept one of the fairest most progressive trade deals with a like-minded Western country, proves that Britain had a point when it comes to membership in the EU. Partnership in the EU means giving up sovereignty, but the Walloons have proven that it may also mean subjecting national economic interests to a regional minority in a foreign country. read more…
Venezuela On The Brink Of Collapse
OPEC oil cuts may take a surprising turn. Venezuela which has been one of the most vocal members over the past 2 years, trying to get price boosts, might have its state oil company collapse. PDVSA, which is Venezuela’s only lifeline, is about to default on its bonds. This follows years of declining production, an endemic lack of appropriate investment in infrastructure to sustain productivity, and rampant mismanagement. Should PDVSA collapse, investors will probably have to take the hit, but it is Venezuelans who will be left reeling. In the meantime other OPEC members could be the unexpected winners in the short term.
In effect, Venezuela has exhausted every single option it had. Turning PDVSA into a cash cow, responsible for 95% of exports and virtually the country’s only source of foreign currency, left the South American nation vulnerable. Now with China refusing to lend it more money and record low foreign reserves to tap into – Venezuela has about $12 billion USD left in foreign reserves – oil price recovery will not be enough to extricate the country from the hole it dug for itself. read more…
Oil Giving Back Some Of Its Gains
As expected, oil is giving back some of its gains. OPEC’s recent deal to curb production and keep it within the 32.5 and 33 million barrels of oil per day, was the main driver behind the recent surge that saw WTI prices touching 15 month highs. Nevertheless, OPEC is widely known for consistently exceeding self-imposed production quotas. This, and other factors have contributed to the dip, that may not become as accentuated as the ones seen previously throughout the year, but could well keep prices at or even below the $50 USD mark.
Oil prices could fall back even further especially if the Fed hikes rates. A stronger US Dollar coming from tightening monetary policy, should impact oil prices negatively. This is due to the fact that oil is traded in US Dollars, so if the greenback is stronger the price of oil has to react accordingly. This, added to the fact that OPEC’s deal may fall short, due to increasing production in Libya, Nigeria and Iran, could see WTI finishing the year right around or slightly below the $50 USD mark. read more…
Great Opportunity Opening Up As Gold Plummets
The price of gold has seen a great decline in the past few weeks. Gold has closed down in 7 of the last 8 market sessions, sending some mining stocks down. But this is merely a sign that the Fed will finally raise rates this year, probably in December before year’s end. Gold, which is a non-interest bearing asset, tends to lose ground whenever interest rates increase. Nevertheless, it is important to understand the wider context of the markets to properly assess whether or not the lower prices represent an opportunity to buy, or whether the price of this commodity is closer to a more prolonged bear market.
The first aspect to consider under the current state of affairs in the global economy, is the fact that despite a likely Fed hike before year’s end, interest rates are holding at historic lows. If the rate hike goes through, it will be a 25 basis points increase, putting the overnight rates at 0.75%. read more…
The Story Behind the fall of the Canadian Dollar
Canadians are surprised, and rightly so. Their currency, the Canadian dollar or the loonie, as it is known for the iconic loon on the 1 dollar coin, has hit historic lows. It seems that there is no end in sight for the loonie’s demise, given that it is close to an all-time low of 62 cents against the US dollar. In fact, some analysts point out that since the currency started floating freely in 1971, this has been its steepest decline. Long gone are the days of parity with the US dollar, and Canada’s southern neighbor has a lot to do with its currency’s decline. read more…
Financial Markets – Preview for Week Starting 11th September 2016
Major Events of Last Week
The global financial markets were rattled last Friday after North Korea unexpectedly launched a nuclear test by activating a bomb more powerful than that of the Hiroshima strike during World War 2. Investors were already under stress after Germany issued a sequence of disappointing economic indicators and the European Central Bank delivered dovish monetary policies last Thursday. Oil prices rallied for the first time in three weeks driven by a substantial drop in US crude reserves. The foremost US indices crashed last Friday exemplified by the Dow Jones Industrial Average plunging by 321 points; the S&P500 falling by 43 points and the NASDAQ dropping by 109 points. read more…
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First Binary Options Broker to Accept Bitcoin
Beast Options has announced that they will accept Bitcoin as a currency for Deposits and Withdrawals. They are the first broker in the industry to take this step. Bitcoin is the most popular virtual currency having reached a price level of over $1100 per Bitcoin in November of 2013. Thousands of online merchants accept bitcoin for payment and many brick and mortar businesses are beginning to accept bitcoins as well. read more…
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