Powell: Balance between the risks of overheating and the need to maintain the growth

In one of his first speeches as the Fed leader, Jerome Paul talks about the need to balance between the risks of overheating the US economy and sustaining growth.
This confirmed that Powell would continue to pursue the Fed's policy of smooth interest rates hike, which was also led by Janet Yelan.
The rise in interest rates is expected to become a reality despite the addition of incentives resulting from tax cuts and government spending.
The Fed is expected to raise interest rates three times this year, as Powell made no further comments to drive investors and analysts the view that we can see more increases in interest rates.
The Fed will continue to look for a balance between avoiding overheating and bringing inflation to 2 per cent on an annual basis, Powell said in his first report to Congress as the head of the largest central bank in the world.
Powell commented on the good performance of the world and US economies in particular, as well as the fact that the level of inflation is still below 2%.
According to Powell, a gradual rise in interest rates in the future would be good for both Fed goals - to reduce the risk of overheating and to return inflation to target levels.
The Fed is expected to resort to the first interest rate rise under Powell over the next month.

J. Gundlach: If you want to know where the market is going, watch the bitcoin

The popular investor Jeffrey Gundlach has a message to investors: if they want to know where the stocks and indices are going, look at the bitcoin.
Strangely, but the bitcoin seems to be a child of social and market moods, said Gundlach in an interview with CNBC's financial magazine. According to him, if the shares are headed for a new stroke, this will be preceded by a decrease in the cost of the bitcoin.
Earlier this week, we witnessed extremely volatile stock market volatility, which momentarily took the indices into a correction phase. These sales, however, were preceded by a depreciation of the bitcoin.
We had a vertical rise in the bitcoin, which started at 4,500 and led the cryptocurrency to levels of about $20,000. The bitcoin found its peak in December and then collapsed. This collapse, to a certain extent, predicted the forthcoming volatility of the stock markets. If the shares are expected to suffer a new serious drop, it would be preceded by a depreciation of the bitcoin, according to Gundlach.
Even strange, Gundlach defines this dependence as quite convenient to use to predict market movements. In fact, the sentiment on the bitcoin and other speculative assets can be used by investors to predict future market movements, according to the legendary investor.

M. Carney: The Bitcoin Has Failed

The bitcoin failed as a currency and is neither a way to preserve value nor a convenient way to buy things, said Mark Carney, the head of the British Central Bank.
According to him, it can be said that, to a great extent, the bitcoin has failed so far in terms of traditional aspects of money. It is not a means of preserving value because of its extraordinary volatility. No one uses it as a asset for goods exchange, said Carney to students at a London university.
However, crypto-technology that stands behind the bitcoin may still be useful as a way to verify financial transactions, Carney said, answering a question.
The head of the British Central Bank also said that in order to move as smoothly as possible to leaving the EU in March 2019, British regulators intend to give financial institutions the benefit of suspicion to the last minute.
The movements of the British pound are largely determined by speculation about the UK's leaving the EU's borders and how smooth this process will be.
According to Carney, everyone is focused on BREXIT. However, this is unlikely to be a difficult and legally binding process. Still, if 28 leaders unite for something that has a legal text related to it, what the exit agreement will be, then that will be good enough, said Carney.
Carney's comments became reality in a series of questions and answers, in a speech in which he called for financiers not to be motivated in their decisions, only driven by profits.

The gold with the biggest loss last week since the beginning of the year

Gold fell on Friday, focusing on its biggest weekly decline since the beginning of the year, following the rise in the dollar. The US currency rose from its three-year low two weeks ago as a result of higher interest rates on US government bonds.
The spot price of gold fell 0.1% to 1 330.5 dollars per ounce, which was its fifth consecutive losing session of six sessions. The precious metal futures are traded without substantial change at a level of $ 1,332.90 per ounce.
The spot price lost 1.4% of its value this week, or the biggest weekly decline since early December. This happened after the failed resistance break at $1,360 per ounce.
Stock market volatility rose substantially this month, largely contributing to the appreciation of the metal. However, expectations for higher inflation and three interest rises, respectively, had a negative impact on gold and supported the US dollar.
On the physical market, gold purchases were weak after the Chinese New Year passed, commented more market observers.

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Natural gas futures fell during the US session

Quotations of natural gas futures fell during the American session on Monday.
On the New York Mercantile Exchange NYMEX, natural gas futures for March delivery were trading at $2,564, down by 0.23%.
The minimum of the session was $2527. Natural gas found support at $2,530 and resistance - at $2,623.
As for other products traded on the NYMEX, WTI futures for delivery in April rose 1.35% to reach $62.38 per barrel, while fuel oil futures for March delivery rose 1.33% to a level of 1.9359 dollars per gallon.

Gold futures fell

Quotations of gold futures fell during US trading on Monday.
At COMEX, a division of the New York Mercantile Exchange, gold futures for April delivery fell to a price of $1.348.90 per troy ounce, down 0.54%. Gold found support at $1.319.10 and resistance at $1.364.40.
Futures on the USD index, showing the ratio of the US dollar to the basket of the six major currencies, rose by 0.06% and is trading at around 89.08 dollars.
As for other commodities traded on COMEX, silver futures for March delivery grew by 0.55%, reaching $16.620 per troy ounce, while copper futures for March delivery fell by 1.25%, reaching a level of $3,208 per pound.

Oil prices rise fourth consecutive session

Oil is growing in price during the fourth consecutive session against the backdrop of growing demand for risky assets.
The price of April futures for Brent crude on the London Stock Exchange ICE Futures rose by $0.38 (0.59%) - to $65.22 per barrel.
The cost of the WTI futures contract for March in the electronic trading of the New York Mercantile Exchange (NYMEX) increased by $0.41 (0.66%) to $62.09 per barrel.
According to experts, oil prices could again shift to a decrease if another weekly report from the US Department of Energy indicates an increase in oil production in the country. At the same time, the volume of oil produced in the States is already at a record high in history.
At the end of last week, the oil service company Baker Hughes reported an increase in the number of operating oil drilling rigs in the US for the fourth week in a row - to 798.
The indicator mainly reflects the recovery of production at shale deposits. It is expected that by the next month, production at the Permian field will grow to a record 2.99 million barrels per day. With this indicator, the region could take the fourth place among all the OPEC countries.

5 main events of the week

1. Next week, the attention of global financial markets will be focused on the protocol of the last meeting of the Fed. Market players are hoping to get additional tips about the pace of further interest rate increases this year.

2. At the next shortened working week in the US, the main report for investors will be the report on the volume of sales of houses in the secondary housing market. On Monday, the US markets will be closed in honor of the Presidential Day.

3. In the UK, market players will be interested in the revised value of economic growth, which will allow to assess the state of the economy of this country and the likelihood of an increase in the interest rate by the Bank of England this year.

4. Market players will analyze the latest research data on business activity in the euro area to understand how they will affect the pace with which the ECB will decrease the bond repurchase program.

5. Important inflation data will be published in Japan. Investors want to assess the strength of the Japanese economy and get clues about when the Bank of Japan will begin to decrease its financial stimulus program.

Assumptions that the leading central banks of the world will begin to tighten monetary policy at a faster pace than predicted by experts, after the release of data on the acceleration of inflation led to government bond sales this year. At the same time, the yield of treasury bonds of the USA, Europe and Asia sharply increased.

Experts: The decline in US indices is not over

US indices may have registered their 5th consecutive day of increase, but not all experts believe that the downtrend is over.
Trader Kenny Polkari is not so convinced that the downturn is behind us, although the Dow Jones blue chip index has returned above the psychological level of 25,000 points.
According to Michael Yoshikami, founder and CEO of Destination Wealth Management, index growth has been predetermined by purchases of investors who are afraid of failing to return to the market.
His point was that there was this tension that is happening when investors believe that a 10% drop is a blatant opportunity for purchases. This attracted people who had cash on hand. And that's when the upside pressure begins.
Growing interest rates and fears of inflation triggering an eruption of the volatility index led to a record fall in US indices.
According to Nicholas Collas, founder of Datatrek Research, fears of inflation and rising interest rates will be the major issue this year. This, he says, will trigger more volatility in the markets.
Collas recalls that the VIX volatility index has reached peak in February only once since it was created in 1990.
According to trader Peter Costa, the market should see a rise in markets of between 5 and 6%.

The bitcoin tested $10,000

In the last two days, the bitcoin and the other cryptocurrencies have risen. The largest in terms of market capitalization cryptocurrency went back over the psychological limit of $9,000 and was on the brink of testing the key level of $10,000.
From the outcome of this test will depend the future direction and movement of the bitcoin, according to market observers. On the one hand, an unsuccessful breakthrough and retention above $10,000 can restore the drop in full force.
On the other hand, if we see the psychological limit of $10,000, the increase in cryptocurrency may continue and even we could see $12,000 in the mid-term, according to technical analysts.
Otherwise, the bitcoin reached yesterday a 11-day peak, at a level of $9,725. After reaching the lowest value of just over $6,000 at the beginning of February, the cryptocurrency is in a sustained phase of increase.
Investors' concerns about potential interference and regulation of cryptocurrencies have lowered, which in practice has contributed to the rise of the bitcoin.
On Tuesday, Peter Boockvar of the Bleakley Financial Group was another investor who described the bitcoin as an "absolute bubble" in an interview with CNBC's financial magazine.
For other cryptocurrencies, the ethereum increased by 4.7% to 891 dollars, and the bitcoin cash was up 3.8% to $1,296. Lighthcoin was the biggest winner among the cryptocurrencies, after rising from 23 percent to 196.95 dollars, while the ripple added 3 percent to its value to 1.07 dollars.
Statistics, however, suggest that investors may have missed the rise of the bitcoin by nearly 50 percent of its bottom, given the record low trading volumes that are the lowest since July 2017.

50 Cent earned $200 million from his stake on VIX

Do you remember the trader "50 Cent"? No, it's not the rapper, it's the trader with this nickname and known for his constant call-options on the VIX volatility index. In the past year, these stakes had a constant loss, due to the record low volatility.
However, it turns out that patience is rewarding, and after the recent outburst of volatility, the trader is already ahead with $200 million!
In fact, among the biggest winners of last week's fall in US indices was the trader named on the famous rapper. He has earned about $200 million in total from his stake on the volatility index, thanks to his $400 million instilling of his investment, and it's only for a month.
At one point, 50 Cent turned into 30 Cent because of the depreciation of his traditionally traded options. In early February, however, the time for retribution for the trader came when he was rewarded for his patience, commented market observers.
It is unclear, however, whether the price of this profit was "not quite salty." Because, according to many market observers, it is possible that the stake in call-options on the volatility index was a pure sample of hedge or high volatility insurance. But such may have done much more damage than the $200 million profit, the same experts said.

Inflation expectations in the US have fallen

Inflation expectations in the US declined over the past month, according to a report by the New York Fed, published yesterday. Financial markets traditionally look at these reports as evidence of what inflation will be.
The survey of consumer expectations indicates a further gradual rise in interest rates. However, inflation is expected to be 2.71% next year compared to 2.82 the previous month.
The three-year value of expectations was 2.79% in January, which was also down from 2.89% previously. Both values ​​last month were the highest in a long time.
Data largely contradicts the government's January wage increase report, which raised inflationary expectations of the market as well as expectations for interest rate hikes from the Fed.
The Fed raised interest rates three times in the past year, despite the fall in inflation. At the same time, the reserve is expected to do so three more times this year.
In addition, the Fed is expected to begin gradually reducing its record balance, which will also exert an upward pressure on interest rates.

Citigroup: Oil could rise to $ 80 a barrel

Oil prices, rising on Wednesday after US oil drops, may continue to grow to $ 80 a barrel. This is predicted by Citigroup Inc.
The reason for these expectations is the geopolitical risks largely unrelated to the Middle East, as well as the uncertainty of President Trump's policy.
Oil prices have risen heavily as OPEC countries have taken a policy extension to curb their production by the end of this year. Subsequently, the price was further supported by the riots in Iran.
Last week, however, oil has suffered heavy losses as a result of massive sell-offs on world stock markets, which has led many investors to close their long oil positions to reduce risk or lock their profits.
And yet, as the most systematic risk to the raw material remains President Trump, according to analysts of the State Bank.
If the US imposes sanctions again on Iran, the third largest oil producer in OPEC, the price of oil could rise by $ 5 only as a result of this action, the Bank's analysts said.

D. Gartman: The decline in US indices is not over

The collapse of US indices since the beginning of the week mobilizes an army of analysts and experts who are struggling to give an advices to investors.
Their opinions are quite opposite, some of them recommend investors to sell because we can see a further decline in the market, while the other part advises investors not to panic and not to close their positions.
The Dow blue chip index lost 1 841 points in two sessions, or nearly 7% of its value.
Some investors sell because they fear higher interest rates will affect the profits of US companies.
Others are dropping stocks because they expect further weakness in stock markets, or because they just have algorithms that sell when the majority sells, and so the decline is on the rise.
What are the predictions?
"The last few days are just the beginning of what may be a more serious bearish market," according to investor-veteran Dennis Gartman.
"We are now in the nine years of the bullish market, so will we see an adjustment of 12, 15, or 17% over the next few months?" - the expert continued.
Of course, investors should keep in mind that Gartman is traditionally a counter-investor. He has been warning of a correction for months, in an environment of growth and an increase in indexes to new and new records.
Of course there are experts who are in the opposite opinion. For example, according to Jeremy Siegel, one of the most prominent bulls in the market in recent years, which is also a warning of a potential correction, a 500-point drop in Dow could provide a good starting point for investors to buy stocks.

Carl Icahn: The bitcoin and the other cryptocurrencies are ridiculous

The last expert to comment on the bitcoin and the other cryptocurrencies is investor activist Carl Icahn. He said, that the bitcoin and the other cryptocurrencies are ridiculous and he would not approach them.
"Maybe I'm too old for them," Icahn said. "But I would not have touched these things."
The negative comments of the billionaire investor became a reality in front of the CNBC financial magazine.
"I'm not playing the cryptocurrencies, maybe just because I do not understand them," added Icahn in the special TV interview. "How are these currencies regulated?"
"Maybe I'm too old for them," Icahn explained, "but I just would not touch those things."
The bitcoin recovered from its three-month minimum on Tuesday, reaching levels of about $7,000. Earlier in the day, cryptocurrency dropped momentarily below the psychological limit of $6,000.
Despite the great popularity of the bitcoin, more and more well-known investors and analysts are critics of the bitcoin and other cryptocurrencies.
During the Davos Economic Forum in Switzerland last month, the bitcoin was severely criticized by many business leaders.
Jamie Dimon said the bitcoin would never be a major competitor to the dollar. According to him, however, blockchain technology can serve for greater efficiency in financial transactions.
Last month, billionaire investor Warren Buffett said he believed that the recent madness of the bitcoin and the other cryptocurrencies would not end well.
At the end of last year, Icahn said that the bitcoin "looks like a balloon."

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Oil is falling sharply

Oil prices dropped yesterday, driven by rising US production and the recent US dollar strenght. In addition, downward pressure on oil prices is also evident from the weakness of stocks and commodities in recent days.
Brent futures lost 1.12 dollars, or 1.6% to 67.46 dollars a barrel. US crude oil fell by 1.53 dollars, or 2.3% to 63.92 dollars a barrel.
US employment data, which was posted at the end of last week, indicated an accelerated growth in the US economy, above analysts' expectations.
This triggers a rise in the dollar, to which the price of oil is inversely dependent.
And while oil price volatility has some signs of rising, it is still close to its lowest levels in three years.
The latest data from the US Energy Ministry indicated an increase in production in the world's largest economy, over 10 million barrels per day in November, which is the first such since the 1970s.
In addition, US shale deposits have risen for the second consecutive week, the previous one, the data show.

Shock sale for US indices - Dow loses more than 660 points

Yesterday was extremely heavy for investors on US stock markets. The blue-chip index Dow Jones Industrial Average lost the devilish 666 points in its largest decline since June 2016.
The broad S&P 500 Index fell 2.1 percent to 2 761.91 points, or its lowest level since January 10. The European Stoxx Europe 600 reduced its value by 1.4%, bringing its weekly loss to 3.1%.
The rise in interest rates on US bonds, owing to expectations of further interest rates in the world's largest economy, largely predetermined the decline.
Investors had no place to hide in the stock market, as the 11 major sectors of the S&P 500 index declined. The five-day fall in the broad index took 3.9% of its value, the first such drop from a record 404 days. Energy companies lost 4.1% after the results of companies in the sector continue to disappoint, the price of oil has fallen.
Sales of technology companies declined, with the Nasdaq 100 Index down 2.1%. For the week, the index fell by 3.7%, or the most since February of 2006. Even the record price appreciation of Amazon.com Inc. could not soften the indicator's cut. It's at its lowest levels since October.

Fed kept the interest rate unchanged

Fully expected, at its last meeting, as head of the Fed, Yellen and the reserve kept interest rates in the US unchanged, paving the way for their further rise by her deputy. Most likely the next interest rate rise will be made by Jerome Powell in March.
The decision did not have a significant impact on the dollar trading levels, which, after its brief rise at the start of the week, again went down against the rest of the major currencies.
Later this week, Janet Yellen's mandate ends. She will be replaced by President Trump's nominee - Jerome Powell. The latter, also supports the policy of the reserve for a smooth increase in interest rates. Federal interest rates have been raised six times since the end of 2015.
In 2014, Janet Yellen became the first woman to become the head of the Fed. According to a number of magazines, she has even become the most influential woman in the world.