Thursday, 27 July 2017

GS: The bitcoin can make some more swings before reaching a new record

Investors and analysts are under pressure in connection with the forthcoming decision on 1st of August, whether we will see a split in the bitcoin and the currency will be divided into two parts.
This led to increased volatility in crypto currency, which, after registering a serious rebound in value on Monday, again declined. This time, however, the decline was far lower - 4.7% to $ 2,623.
According to Sheba Jafari, a Goldman Sachs technical analyst, the bitcoin may need a few more swings before its upward trend continues.
If the bitcoin is not able to break through its 13th June peak at a level of $ 3,000, it can be assumed that we are witnessing a triangle, the five waves on which to carry a bitcoin to the bottom of $ 1,786, according to Jaffari.
Up to now, Jaffari is quite constant in her analysis. At the beginning of July, the analyst predicted a depreciation of the bitcoin to levels below $ 1,857. A few weeks later, the expert warned we could see a test again at the $ 3,000 peak.
Since the beginning of the year, the bitcoin has risen by 166%.

Wednesday, 26 July 2017

New 23 year old bottom for VIX

US indices rose to new historical records and the volatility index fell to a new 23-year low.
The broadly-watched indicator reached the lowest value of 9.04 points, or a level not seen since December 1993.
The low VIX ratio is traditionally associated with bullish attitudes to the stock.
The average level of the index in the long run is about 20. Since the beginning of the year, however, the strong rise in US stocks and new records of indices sent the "fear" index to historical minimum.
On Monday, the index closed below 10 points for the eighth consecutive day, marking its longest-ever similar series.
Good economic performance, outstanding quarterly reports and the lack of more significant risk factors for the foreseeable future, are the main reasons for the low level of the indicator.
The sense of "security" is not limited to the stock markets alone. The one-month volatility of US government bonds is at 46.9963, or again the lowest in history.
Increasingly, investors are trying to take advantage of the low levels of the volatility index. There are massive purchases of call options on the VIX, or bets to increase the volatility of the index in the coming months.
The common theme for investors is to increase volatility after the summer.

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Tuesday, 25 July 2017

Why buy gold?

Gold is in a pretty good situation from a technical and fundamental point of view.
First of all, the noble metal recovered from its lowest values ​​since the beginning of this month, which is one of the worst for the metal historically.
Secondly, the price of gold is over its 200-day moving average, which is a relatively good signal for "golden bugs." They could position their stops to limit the loss, when the metal was down, below the specified value.
And thirdly, the 50-day average of gold is over 200-day one. Or the medium-term trend for the metal is extremely favorable.
There is a very simple gold trading system that gives excellent historical results. More precisely, over 12% of the average annual income if gold is bought when the 50-day average is over 200-day and goes out when the shorter term falls below the longer-term.
That is, there is now a signal to buy gold ...

And next, gold is very close to breaking the upper boundary of a descending long triangle. For such a breakthrough, as well as a confirmation signal, we can speak with a gold increase above $1,290. Such growth may be the first gold price rise to test its historic peak of over $1,900.
From a fundamental point of view, the prospects for gold are also good. There is an increased demand for physical gold in the first half of the year, including the second largest market - India.
In addition, there is an increasing expectation that the Fed's aggressive policy will slow down, which is reflected in the weakness of the dollar, to which gold is inversely proportional. Or, further preserving the weakness of the dollar, can ultimately unlock the positive potential of the metal.

Monday, 24 July 2017

Several counter-indications point to a major drop in US markets

Several counter-indicators give serious alarm signals to investors. And they can be a precursor to a serious downgrade for the markets.
First of all, private clients' cash has fallen to a record low as a percentage of their total assets, according to Bank of America Merrill Lynch.
This means that investors feel more relaxed than ever to direct their funds to financial assets. Evidence of this is also the record low value of the VIX volatility index, which is at 23-year minimum and one-digit value.
In addition, institutional investors also hold the lowest cash value since the beginning of the bullish market eight years ago, according to Citigroup. The cash value is about one third of its highest value reached in 2016.
Next, index funds have recorded the largest capital inflow in two and a half years.
Last but not least, the new record values ​​of the indices should be noted. The S&P 500 and Nasdaq 100 indices reached historic records, rising by 265 and 466%, respectively.
Meanwhile, the inflow to top-rated bonds continues to take full effect, with net capital inflows positive for the 30th consecutive week.
As BAML warns, there is a serious risk of melting the wings when flying too close to the sun.
Bank of America Merrill Lynch strategists comment in a letter to their customers that a big downturn in the market is likely to be an autumn, not a summer event.

Sunday, 23 July 2017

Citi: Trump's impeachment risks have risen

For investors, President Trump's impeachment option seems unlikely. Citi Bank, however, warns that the likelihood of this has risen.
The comments from the banks became reality after Donald Trump Jr., tweeted emails detailing his greetings, after sources identified as related to the Russian government have disclosed compromising emails to President-elect candidate Hillary Clinton.
Markets have reacted negatively to this information, with the Dow Jones Industrial Average index losing 129 points of its value immediately before recovering all its losses.
Impeachment is unlikely given the complexity of this process and the lack of sufficient evidence of a "serious crime," according to Citi analysts.
The bank also commented that such a solution would require serious political pressure, and Republicans who control Congress at the moment would hardly allow this to happen.
On the other hand, and despite many unknowns in Trump-Russia relations, Citi analysts believe that the risk of impeachment for the US president is now higher than before, although this is still not a baseline scenario.

B. Gross: Danger of recession if banks are aggressive in their policies

Highly leveraged world economies, including the US, are at risk of recession, if central banks around the globe are approaching too aggressively in terms of their interest rate policy, believes the "bond king" Bill Gross.
In his latest letter to clients, Gross who is managing $2.1 billion in the Janus Henderson Global Unconstrained Bond Fund, said that the Fed and other central banks around the world should not rely on historical interest rates in a world of "extraordinary monetary policy."
"The attachment of Yellen, Bernanke, Draghi and Kuroda, as well as the other central bankers to the standard economic models, have destroyed the capitalism we have known. There is a danger of the occurrence of unknown consequences in the coming years," Gross said in his letter.
Gross refers to Yellen's predecessor Ben Bernanke, ECB chief Mario Draghi and the Japanese central bank Haruhiko Kouroda to make a warning.
According to Gross, over the past 25 years, three US recessions have matched flat yield curves between quarterly and 10-year US bonds.
"In view of the current 80 basis point spread, which is still far from the spread of 0 points, economists and some Fed officials do not see the danger of recession," Gross said.
Monetary policy, however, following Lehman Brothers bankruptcy in 2008, was "unconventional" and failed to stop buying bonds, despite warnings that a collapse in bonds is "around the corner," said Gross.
"While governments and the US can afford the extra cost of this policy, leverage companies and US investors can not," said Gross.

Saturday, 22 July 2017

What can we expect for oil in the second half of the year?

For most of the first half of the year, it seemed that oil had found its balance about $50 a barrel of American sort. OPEC respects the mining constraint, with Saudi Arabia dropping its production below 10 million barrels per day. The change occurred only when stocks in the US began to grow in the second quarter. And the price of oil fell to 42.50 dollars.
Achieving a balance of the oil market remains an open question for the second half of the year. US companies report a reduction in shale oil production costs, resulting in increased drilling and production.
According to some analysts, oil is likely to reach levels of 45-55 dollars. Expectations are for this range to be maintained by the end of 2018, notably until the OPEC and Russia agreements are in force. But the fact that the price of oil comes down in a lower price range does not mean that there is a tendency for a strong depreciation of the raw material.

What can we expect for gold in the second half of the year?

Gold recovered part of the decline that registered in the fourth quarter of 2016. For the first half of 2017, gold has appreciated within 3%. This growth retention is mainly due to the appreciating euro - the currency has reached its highest levels in the past two years. Stock increases also contributed to maintaining the price level.
This means that precious metals are for the time being accepted mainly as insurance against falling stock prices. Their function as protection against inflation and global risks is secondarily.
In the second half of 2017, there is likely to be a change in the movement of gold because the risk of correction of developed stock markets is on the agenda.
If stocks fall, the precious metal may reach a level of $ 1,400 per troy ounce by the end of the year.
The current question for investors is whether it is now profitable to include gold in their portfolio as insurance from a drop in stock markets. Experts believe that it is currently appropriate to invest or retain shares of gold-funded or ETF-listed companies representing such companies. Shares of these companies are growing faster than the price of gold, so investors will have the chance to balance stock market events. For example, in 2016 the largest fund representing the shares of gold mining companies (GDX) has increased its price by nearly 53% compared to the price change of gold for about 10%.

Friday, 21 July 2017

Will the ECB keep zero interest rates for at least another year?

Europe struggles successfully for the leadership of growth and will gradually shift the US as the engine of the world economy in the second half of the year.
The difference will not be significant, but it shows the advantage of zero interest rates and the cheap euro. The slowdown in US growth does not just come from the process of normalizing of interest rates.
Their change is still insignificant, but the economy is entering the late stage of growth, which will be characterized by a slowdown in investment activity and industry. Consumption remains the most serious factor behind GDP growth, backed by low unemployment and low inflation.
Negative trends in industry and construction do not stop the Federal Reserve in raising interest rates because the slowdown in these sectors is not strong enough. Does this mean that raising interest rates is intended to stop the stock market turning into a bubble? More likely, because the deflationary processes have not passed and the economy does not overheat. In this case, the question arises when the US stock market will become aware of the risks of expensive stocks and of rising interest rates.
According to some analysts, the risks to growth in Europe are much less than the barriers to the US economy. Inflation worries remain in the background, with the European Central Bank holding zero interest rates for at least another year. Political risks are weakening, but tensions between Brussels and London will have economic consequences for both countries, which will gradually increase in 2018.

Sunday, 16 July 2017

Tom Lee: The bitcoin can rise to 20,000 by 2022

The boom of the crypto-currencies and its record-high appreciation is largely at the expense of gold, said Tom Lee, managing director of Fundstrat Global Advisors.
The strong appreciation, from 172% in the bitcoin and over 3200% in the ethereum, is largely at the expense of gold, according to the expert.
For the last time, the bitcoin is traded at just over $2,600, and the ethereum at $266. The first cryptocurrency recorded historical records at levels of about $3,000 in June, and the second at a level of nearly $400.
Lee added that the number of new added bitcoins slowed down significantly in the past year, to 4.4% of the total, compared with 9.3% a year earlier. There is a further delay in the supply of the bitcoin, which may trigger an even greater increase in the future.
On the other hand, Lee adds that the supply of gold has grown "seriously" since 2009. At present it is at a record 3,100 metric tons.
Lee has a very optimistic forecast for investors in bitcoin. According to the analyst's baseline scenario, it is possible that the value of the bitcoinship will rise to $20,000 by 2022. In the most optimistic scenario, however, the bitcoin can rise to $55,000.
A potential factor that could lead to an outburst in the value of cryptocurrencies may be potential purchases of cryptocurrencies by central banks. The total capitalization of bitcoin is currently about $42 billion. And if it rises to $500 billion, it's entirely possible central banks to include in the game, Lee said.

Ray Dalio: The end of the central bank era is coming

The head of the largest hedge fund in the world - Ray Dalio - has announced the end of the central bank era.
Commenting on LinkedIn Social Network, Dalio said that central banks clearly and understandably signaled an end to their nine-year policy of ultra-interest rates. Banks are changing their strategy and focusing on raising interest rates in a way that they believe the growth and inflation will not be hurt.
According to Dalio, however, the change in politics entails risks of having to return to their old practices if they mistakenly judge.
In May, Dalio published a comment in which he expressed his anxiety about the future as well as the magnitude of the next downward impulse that can be produced. Such, he says, will cause much greater political and social repercussions than previously observed.
On Thursday, Dalio said aggressive stimulus policies had contributed their own, and the banks have to fight seriously to be implemented.
Dalio ended by saying he did not see a big "debt bubble" that would burst, but there is a growing focus on big collapse.

Saturday, 15 July 2017

Shares may collapse unless Yellen produces a miracle

The Fed has confirmed its position that it will begin to reduce its record $4 trillion balance sheet this year. This, however, did not bother particularly the stock markets, as the Dow blue chip index this week set a new record.
Are investors thinking that the Fed can withdraw liquidity from the market without affecting the companies? Obviously yes...
Otherwise, they would have to worry, not to buy shares "as the last one." Investor memory has proven not once and twice that it is short-lived and quickly forgets.
The traders apparently forgot what the asset redemption program is, which is the main reason for the Fed's record balance.
The question arises if the incentives triggered strong and parabolic growth for the indices, why not take the opposite - a reduction in the Fed's balance sheet could lead to a strong correction for US indices?

EUR/USD may fall to 1.04, and GBP/USD - to 1.20

The euro has risen to levels close to the psychological limit of 1.1500, but not all experts are convinced of further growth for the single currency.
The US dollar seems ready to shake off losses after Donald Trump's election victory, according to Amherst Pierpont.
The weak dollar may be ready to make a "U-turn" now that there are confirmations of interest rates rise.
Since the beginning of the year, the dollar has fallen by 8% against the euro and by 13% against the Mexican peso.
Analysts say, however, investors are starting to look beyond Washington for support for green money. The US currency should follow interest rates on government bonds that have risen.
In addition, the Fed is expected to begin to reduce its balance sheet, which in itself will cause a further rise in short-term interest rates and, accordingly, should make the dollar more expensive.
According to Amherst Pierpont's strategists, from now on we will see a return to the dollar-positive environment. They expect the dollar to rise by between 3 and 4% in general, the euro to move to 1.04 against the dollar and the pound to 1.20.

Wednesday, 12 July 2017

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Saturday, 8 July 2017

Trump: Everyone is 'getting rich' from the stock market except for me

President Donald Trump found time during his visit to Warsaw to comment on the recent US indexes.
In his speech, Trump noted that the recent rally in the stock markets makes "everyone else rich".
"And the United States is doing very well — very strong. We've taken off restrictions and people are really moving hard. So when I say that the stock market is at an all-time high, we've picked up in market value almost $4 trillion since November 8, which was the election. Four trillion dollars — it's a lot of money. Personally, I picked up nothing, but that's all right. Everyone else is getting rich. That's OK. I'm very happy," Trump said in his speech.
Trump, not once and twice, turns to historical record highs of US indices of previous weeks. According to him, the media do not pay enough attention to this to fact.
"Dow hit a new intraday all-time high! I wonder whether or not the Fake News Media will so report?", the US president said on Monday in his Twitter.
And while the Dow Jones industrial index was recording an intraday peak, it eventually ended at a record closing level of June 19. At the same time, the tecnological index Nasdaq is already around 200 points from its peak on June 8.
With regard to Trump, the administration of the president said that the new president had liquidated all his shares in June 2016.
According to Trump, USA have, at the moment, the lowest unemployment rate since 16 years.

Fed members disunited

The report of the previous Fed meeting on monetary policy shows a serious disunity amongst the members of the Monetary Policy Committee about the rise in interest rates.
Details of the summit, on which FED voted to raise interest rates indicated that several members of the committee asked the balance of reserve bonds to start declining by the end of August. Others, however, have said that this is more appropriate to be done later this year.
And while most of the FOMC members believe that the observed slowdown in price increase is a temporary phenomenon and a consequence of seasonal and casual factors, some have expressed concern if this is not the beginning of a new trend.
Fed members also seem to be worried why the recent rise in interest rates has not led to a contraction in money supply, and why financial markets have continued to grow.

Friday, 7 July 2017

Marc Faber: Another financial crisis in my lifetime

Marc Faber, or the more famous under the nickname "Dr. Doom" analyst, has made another scary warning for investors. According to him, we will see another financial crisis within his life.
There are two possible options: either Faber expects to live long, or predicts that we may soon experience a new massive financial crisis.
One thing is certain, Faber is far more moderate in predicting massive crises then before. Normally, his forecasts were something like "be prepared next year for a new financial crisis".
Given the fact that he warned of this for three years, a time when the market has been steadily upward, apparently Faber has decided to change tactics.
Just a week ago, Fed leader Janet Yellen calmed down the market that we would not see a financial crisis similar to that of 2008 in our lives.
In an interview with CNBC, however, at the beginning of the week, Faber said: "I'm 71 and for sure in my lifetime, unless I have an accident tomorrow, I will see another financial crisis and a massive one".
Faber is particularly worried about the world's record debt levels.
"We have a colossal credit bubble in the world. Can it expand? Yes, but it cannot expand forever. One day there will be a limit and one day there will be another huge crisis because the debt level today is higher than it was in 2007", adds Faber.
Mr. Catastrophe warns of a serious decline in US indices and believes he has a "bubble everywhere".
Faber added that he was less bearish than what he was, and that's worrying.
Faber recommends international then the US stock markets.

Ron Paul: 25% correction of the markets and 50% growth for gold is not excluded

In an interview with CNBC, Ron Paul, a former GOP president, said the US economy is probably not as strong as everyone expects and the situation could become "ugly" by October.
According to him, if the market drops by 25% and gold is rising by 50%, it would not be a shock.
Such a scenario would take the broad US S&P 500 index to a level of $1,819 and gold to $1,867 per ounce relative to current levels.
Paul is known for his bearish expectations and open-ended critic of the Trump administration. He also often criticizes the Fed for maintaining interest rates at too low levels for too long.
This, of course, is not the first time that Paul predicts an adjustment. He did the same on June 28 2016, or just a year ago. Since then, the S&P 500 index has risen by 21% and Dow has added 24%. Technological Nasdaq is traded with an increase of 34%.
Paul, however, continues to hold on to his thesis.

Thursday, 6 July 2017

GS: The bitcoin can collapse before it raises to $4,000

The period since the beginning of the year was good for the crypto-currencies. The bitcoin has risen from nearly $1,000 to $3,000 before ending the second quarter at $2,500. Or, it registered an increase of 168% in the first half of the year.
The strong rise in bitcoin levels has created serious controversy between Wall Street analysts and the technology world, whether the virtual currency is a "bubble".
Goldman Sachs, the state-owned investment bank, said the bitcoin could adjust seriously before rising to a new record high.
In a letter to clients of the financial institution, Sheba Jaffari, head of the US Banking Technical Analysis Unit, said the bitcoin had not exhausted its decline, which could take it to levels at least $1 857, which is a decrease of 25% of its current levels.
However, enthusiasts should not be bothered by the correction, but rather look at it as a good opportunity to buy bitcoins.
Because the correction, according to Jaffari, will be followed by a new strong appreciation of the crypto-currency, which would bring it to at least 3,212 dollars, with a potential for $ 3,915.

Sunday, 2 July 2017

Oil with the worst performance for the first half of the year since 1998

The weakness of the dollar and weaker production in the US have triggered a rise in oil prices over the week. However, this did not prevented the raw material from registering its worst performance for the first half of 1998.
Brent finished the first six months of the year, at levels of nearly $49 a barrel, and US crude at $46.30 a barrel.
Thus, since the beginning of the year, the Brent has lost 15% of its value, and US crude oil - nearly 18%. This is also their biggest decline for the first six months since 19 years, statistics show.
The start of the sharp decline in oil has happened surprisingly after the decision by the OPEC countries to continue their production cuts by March next year.
The effect of the decision, however, was largely offset by the data that producers such as Nigeria and Libya virtually increased their production in May of this year.
In addition, data for a faster-than-expected growth in US production also had a negative impact on oil prices. Increased production is also present with other non-OPEC producers - including Brazil and Canada.

The dollar with the worst quarter for years

The president Donald Trump goes firmly to his goal - the US dollar has finished its worst quarter for years.
According to Trump, any weakness of the dollar is a major goal of his administration. The president's logic is that the weak US currency will stimulate companies and, accordingly, the country's economy.
Green money rose to a peak of 14 years in December, but since then it has become cheaper as a result of expectations for measures by the new administration.
In the second quarter, the dollar index, measuring the performance of the US currency against other major currencies, fell by 4.6%. This was its worst quarter since the third quarter of 2010.
The disappointing data on the US economy, coupled with good European data, helped to guide the dollar in the direction desired by Trump.
In addition, central banks around the world have expressed the view that it is time to change the course of their current stimulus policies. Including in Europe. This gave an extra boost to the euro.
The only weak link, at this stage, remains Japan. There the incentives are expected to last longer than in the rest of the world.