Prices Likely to Spike for Common Goods as Geo-Political Tensions Rise

 

Today’s Global Economy The Food Crisis

In today’s global economy, what happens in one part of the world – sometimes in one specific country – can set off a chain reaction likely to have far-reaching effects for consumers everywhere. When Panama Disease hit and peaked in Central America in the 1950s, for example, it wiped out thousands of acres of banana plantations that caused a worldwide shortage of the fruit, even forcing growers to abandon their favored cultivar and go in search of new types. Today, most of the world eats an entirely different kind of banana – the Cavendish – because of this.

Like bananas, global products of all kinds are not immune to the effects of global markets. Recent announcements and economic policies have U.S. markets and consumers poised for a price hike for common steel and aluminum products. From soda cans to new cars, hundreds of industries are likely to see costs go up. Yet these products are far from the only ones being impacted by global geo-political tensions and sharp changes in demand and consumer preferences.

Food

Global food prices are hitting new highs as demand for meat, dairy, and wheat from countries with expanding populations continues to surge. U.N. food agency data shows global food prices are up 7 percent from a year ago and ahead 17 percent from a low set in early 2016. According to analysts, there has been a growing global demand for meat, particularly for beef. So strong is this demand that global meat has outpaced most other major food commodity groups, according to U.N. data.

Common Household Goods

Yes, even toilet paper is not immune to drastic price hikes and consumer panic. Just this week, a spike in the price to produce toilet paper in Taiwan cause panic to a point where lines formed outside of local grocery stores as people snapped up toilet paper and paper towels in bulk. The mess began on February 23rd when, according to The Economist, Taiwanese retailers, including several supermarket chains, said that toilet-paper producers would increase prices by as much as 30 percent in March because the cost of raw pulp had gone up.

Pearls

Political uncertainty in the South China sea has forced the price of pearls upward, much to the dismay of traditional brick-and-mortar and online retailers throughout the U.S. Leon Rbibo, who runs two of the top pearl websites in the U.S., The Pearl Source and Laguna Pearl, says military escalations in this part of the world can drive costs up “literally overnight,” since a large portion of the world’s favorite gemstone is imported from this area. Add to that the implications of Brexit, which is destabilizing world currencies, and you have a recipe for higher costs.

Gas and Other Fuel Types

There was a brief respite from the pump for many U.S. consumers over the last year, but don’t bank on that trend continuing, analysts say. According to AAA and the transportation industry, more than half of the country is likely to see a significant spike in the average cost for a gallon of unleaded gasoline. According to AAA, there are numerous reasons for the hike:This year “has seen fluctuating crude oil prices, strong gasoline demand and new U.S. oil production records creating a volatile gas price market from month to month for consumers,” Jeanette Casselano, AAA spokeswoman, said. “Typically, March brings more expensive pricing as days get longer, weather gets warmer and refinery’s gear up to switchover to pricier summer blends.”

Bourbon (and Other U.S.-Produced Spirits)

New U.S. tariffs have other countries considering raising duties of their own. The European Union could choose to retaliate by going after peanut butter, orange juice, cranberries, and yes, even that world-famous Kentucky bourbon.

The European Union is the first trade partner to offer specific steps and products if the U.S. is to proceed with certain proposed tariffs, including on steel. Canada has also promised countermeasures. And Mexico, China and Brazil are said to be weighing options.

 

 

 

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How Will Exiting Iran Deal Affect the US Dollar and Business

Iran Deal Under Review By President Trump

Since Donald trump came to power in 2016, there have been tensions between the US and various other countries which have caused economic and political shockwaves around the world. At the start of the year, tensions between the US and North Korea seemed to be escalating rapidly, and relations with China were stretched with talks of a trade war occurring.

Most recently, Trump’s decision to withdraw from the Iran deal drew widespread condemnation from global leaders, suggesting it was a controversial and potentially consequential move. Here are some of the ways this may affect the dollar.

Volatility

The tensions between the US and Iran may well cause volatility in the dollar, given that it is a controversial move which will greatly restrict economic relations between the two countries. Some even believe that other countries may benefit from this, as they try to bypass US sanctions and pay for Iran’s major export, oil, in their own currencies rather than the dollar.

This could end the era of the petrodollar, which has benefitted the US for many years. As such, the dollar’s value may well sink as other countries race to take advantage of this.

Sanctions

By withdrawing from the Nuclear Deal and putting sanctions on Iran once again, the US may well find that some businesses suffer as a result. Those which were previously dealing with Iranian companies will now find it much harder to do business with them, which could, ultimately, lose them profit.

This may well lead to a dip in their profits, potentially affecting the value of some company shares. Some groups may even need to use the services of investment advisors like Wellington Management Funds before choosing stocks to invest in, so that they can navigate some of the stocks which may lose value as a result of recent events.

Oil

The price of oil has already shot up to over $80 a barrel since the US placed sanctions on Iran once again, meaning that the sanctions themselves may well have had the opposite intended effect (given that the oil industry is a major part of Iran’s economy).

This could be bad news for US consumers, as it may well make a number of commodities (such as petrol) more expensive, and potentially drive down consumer spending, once again harming the dollar’s value overall.

The US withdrawal from the Iran Deal has caused a great deal of tension globally, and the full effects are yet to be realised. There will no doubt be further developments to come, many of which may have a bearing on the dollar’s value and fortunes, at least in the short term.

 

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The Impact of Cyber Attacks on the Banking Industry

 

There have been increasing numbers of cyber attacks reported in recent years across all industries and it is costing the United States an absolute fortune in cyber security. Obama announced that $19 billion was to be dedicated to the ongoing fight against cyber criminals, highlighting the gravity of the threat it now poses to businesses and even households.

In 2016 there were widely reported attacks on PayPal, Twitter and Spotify to name a just a few of the big companies that have been targeted. The number of cyber attacks across the world is increasing and businesses are spending more and more money in deterring the crime.

Banking Sector Most at Risk

Of course, the banking sector is one of the industries that are most at risk, given the nature of the data that they hold. This means that banks have had to dedicate significant funds on developing their digital infrastructure to strengthen their cyber security. The banking world has long been seen as a very profitable industry and for many banks that still remains to be true. Investment banking experts like Fahad Al Rajaan demonstrate that the banking sector can still be a very effective way of making money. It is therefore vital that banks are protected from cyber-attacks.

Preventing Cyber Attacks

As well as spending more on software to reduce the chances of an attack, companies now spend more on resources dedicated to preventing cyber-attacks. This means that extra IT personnel are required, extra training for all staff and more resources allocated to analyzing their cyber security and performing risk assessments.It also means that more robust policies and processes must be introduced. This can vary from developing and delivering online training for staff to raise awareness about the risks of cyber security, to employing a whole team of experts to audit the processes. It is certainly becoming a very costly affair.

Cyber attacks not only cost businesses from the initial financial sting, they are also impacted by the reputational damage that the attacks can cause for years to come. If somebody feels that their money isn’t safe with a bank, then they are likely to close their account and go to another one that they feel will protect their money better. The more publicity that a cyber attack attracts, the higher the reputational damage will be.As mentioned before, the government is committed to driving down and eventually eradicating the threat of cyber attacks. Greater cyber security laws are being ratified and harder punishments will be a deterrent for many would-be cyber criminals.

 

Finding a Solution

It is unfortunate that such huge amounts of money are being spent on cyber crime, both by the government and by businesses. Until a solution is found, it looks like this trend will continue and the threat of cyber attacks will dominate how businesses setup their IT structures and policies.

 

 

 

 

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Is Bitcoin’s Slow Dominance of the Internet a Good Thing?

Back in 2008 when Bitcoin was first conceived and began making its entry into the world of currency, there was a great deal of speculation as to whether or not this digital currency could (or would!) take the power of finances away from central banks around the world that have always held the keys to wealth. Over the past 8 years Bitcoins have surged in value from their humble beginnings at a value of $0.01 per coin to over $1200 per coin in 2013 and then back down again to just about half that value where they are currently valued at. Even though this currency is highly speculative, there are those who question whether their slow dominance of the Internet is a good thing – or not. Here are some thoughts on the issue.

Difficult to Use without Being Valued against other Bitcoins

As a peer to peer currency that is really valued by supply and demand, it should also be realized that there are only so many Bitcoins that will ever be made. The supply is finite, which to some, gives them value because of the old ‘supply and demand’ rule of finance. When it comes to wagering on online games such as poker, it becomes difficult to use them as a currency because it is difficult to break them down into smaller units that can be used as a wager and also, hard for ultimate values to be assessed as the value is even more volatile than many of the leading currencies on the market. It is far easier to use a major currency against another major currency than it is a digital currency against a major currency. In short, they are not yet fully understood by the masses and computations are highly complex. Too complex for the average financial transaction online.

The #1 Concern – Digital Anything Is Open to Hackers

Then there is the concern that since Bitcoins are a digital currency, hackers can literally take over a person’s supply with no one being the wiser as they can also create bogus Bitcoins that may be passed as authentic. The current level of online security appears to be inadequate to keep up with the type of security needed for digital currency so the slow dominance of the internet in this regard is actually a good thing. The longer it takes for this particular currency to gain in popularity and use, the longer cyber security teams will have to find ways to secure sites that accept Bitcoin payment.

In the end, the faster anything at all gains dominance over a market, the quicker it can come tumbling down. When people like online gamers are wagering bets, the money they are playing with needs to have real value. There is nothing ‘tangible’ about an online game as there would be such things as ordering articles from an online merchant and with the hopes of winning, that money being wagered becomes all the more important. It’s just that – a wager, a bet. With nothing to say that other digital currencies won’t hit the market, lowering its value and no sure way to protect against hackers at this time, slow dominance is indeed a very good thing.

 

 

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Robots That Teach Each Other

 

There is new breakthrough technology that is reshaping the robotic world in terms of robots that teach each other to grasp everyday objects and learn different environments.

They are using the cloud to upload data that the robots are learning so other robots can gain the same information. Researchers are calling it the “Robo-Internet” and they feel it will reshape the robotic world as we know it today.

Most robots are programmed to be able to do one job and allowing them the ability to learn from other robots will bring to them other skill sets to be able to perform in unstructured environments such as homes and health care facilities. The robots scan and rescan everyday objects such as hairbrushes and water bottles and learn how to pick up the objects and maneuver them around. They also learn the layouts and designs of new environments that help them maneuver through without hitting objects and people.

RoboEarth

The Robo-internet is a collective database of web apps that is used for robotic knowledge base where other robots in different locations can enter to gain knowledge from other robots. RoboEarth is one example of a cloud-based platform in which robots learn about different environments from other robots.

These scientists have created a cloud-based database where robots teach each other how to learn new skills and be able to perform new jobs without ever having done it before. One robot moves around a new environment scanning the entirety of the space and uploads it to RoboEarth where another robot can ping it at any time to learn what the first robot shared.

“Million Object Challenge”

The Million Object Challenge is based on Stefanie Tellex’s research out of Brown University where she is using her robot named Baxter to learn how to pick up everyday objects and teach other robots how to be useful in everyday life. For robots to learn it takes extreme repetition so pushing their learned behavior throughout other labs that have robots learning the same concepts saves time and money.

Tellex states that there are over three hundred different “Baxter’s” around the world in different labs and they are collectively learning together to be more useful in everyday life. They share coded information online through researcher driven mathematical data that is created using the robots infrared sensors on their bodies and cameras on their arms that scan different objects to learn how to grasp them and pick them up.

Robotics today is growing by leaps and bounds because of the ability that is gained through the use of the internet and the sharing of information that is gained through its use. Robots teach each other via uploaded information to the cloud where other robots can gain the same learned data without ever doing the actual task before. This gives a great boost to researchers who can share with each other what they have learned and collectively propel their robotic knowledge into the future.

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INTERNATIONAL COMPANIES CUTTING COSTS – Wall Street

Over the next few years, a large majority of international businesses are expected to experience a cost cutting drive in order to adjust to lower prices, increasing competition and an unpredictable economy. There are many reasons as to why international businesses are deciding to embark on huge cost cutting drives, with one of the most significant being as a method to significantly transform the company and work towards development and growth. So, how are international businesses choosing to cut costs? Here are just some of the most common cost-cutting methods that those working for international companies can expect to see.

Performance Tracking

Many companies are taking on the lean method of business as a way of cutting costs over time. This involves ongoing performance tracking, something which is laid out as one of the key components of six sigma certification (see 6 Sigma for more information). This type of ongoing performance tracking will help international companies to better determine which costs are necessary, and which are not. Ongoing tracking and evaluation of performance gives businesses a better chance to discover which product lines and/or services are not profitable enough, so that they can cut the cost of these as soon as possible.

Employee Training

Smart employee training is going to see a surge as the cost cutting drive continues for many international businesses. As more and more businesses realize that employee training on a regular and ongoing basis is a smart investment to make, there will be less costs as employees are better equipped to deal with their tasks or any problems which might arise that are not a standard part of their day to day tasks. Although this method of cost cutting may seem more like an extra expense, smart business owners internationally are realizing that in order to cut costs, it is often necessary to make some investments.

Increased Efficiency

International businesses worldwide are attempting to increase efficiency significantly in order to be in with the best chance of effective cost-cutting. Increased efficiency using methods such as replacing manual labour with machines, is likely to speed up hundreds of different business processes, reduce wages, and allow more to be completed in a shorter amount of time. Because of this, investing in methods to create more efficiency in a business is expected to increase among many international companies as the cost-cutting drive continues.

Why Cut Costs?

For a business which is experiencing a positive cash flow, it’s often still necessary to cut costs. This could depend on a number of different reasons, for example the business’ future predictions, their current sales trends, and whether or not there are simply any costs in existence which are unnecessary to the running of the business and can be gone without. This allows businesses to cut as many costs as is possible in order to keep profitability at the maximum.

Is your business planning a cost-cutting drive? Why, and how do you plan to cut costs? Join the discussion in the comments below.

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Gold Could Soar Ahead – Wall Street

 

 

Gold has been an interesting commodity to watch as of late, and for good reason. While market conditions and economic conditions have been improving as of late, gold continues to fly. In fact, year to date, gold has outperformed the S&P 500 with 2.4% gains in the S&P and about 3% gains in gold.  However, the gold bugs are lighting up as many believe that we’re just seeing the beginning. In fact, some believe that gold could have a dramatically positive year as all factors seem to be aligning perfectly. Pointing to inflation, a weaker USD, and coming rallies due to jewelry and gold decoration sales, the bulls are looking for great times ahead.

Inflation Is Headed Up – A Good Sign For Gold

One of the many factors that are important to pay close attention to with regard to the price of gold is inflation. At the end of the day, increases in inflation generally lead to gains in the values of globally traded commodities.  Most recent figures show that inflation is on the rise in the United States, which is a great thing for gold. In the month of December, year over year growth in inflation came in at 2.1%. While the news caused gold prices to fall slightly at the time, strong inflation generally leads to strong gains in commodities over time, which we’ve seen from gold in the first 3 months of 2018.

Inflation on The Rise in The US

Most recent figures show that inflation is on the rise in the United States, which is a great thing for gold. In the month of December, year over year growth in inflation came in at 2.1%. While the news caused gold prices to fall slightly at the time, strong inflation generally leads to strong gains in commodities over time, which we’ve seen from gold in the first 3 months of 2018.

A Weaker USD Is Likely To Help Push Gold

Another factor that the gold bugs argue is going to push the price of the commodity through the roof is a weaker USD. In general, a weaker USD in comparison to other global currencies makes gold more accessible around the world. This is the result of the fact that gold is generally priced using the USD mixed with changes in currency exchange rates as the USD weakens.

While the USD started the year off on a relatively strong note, over the past three months, the value of the currency has weakened against others, helping gold to outperform the S&P 500 thus far this year. Many believe that Donald Trump’s Presidency will likely continue to lead to weakening in the USD. At the end of the day, Trump has been clear that a strong dollar isn’t necessarily good for the United States. Therefore, the gold bugs say that his policies will likely continue to weaken the USD, helping to prop up the value of gold and other commodities.

Now Is The Time For Gold Jewelry And Decoration Demand

On top of the data surrounding inflation and the USD, the gold bugs point to one more positive. At the moment, we’re entering a season when gold jewelry and decoration demand starts to hit tremendous highs. Pretty soon, the wedding season in India will begin, and with gold being a key piece of any wedding in the country, demand for the precious metal is going to fly in the region. In general, this starts what we know to be the “Love Trade” in the gold industry with the Indian wedding season starting in September and the season of gold demand going through the Chinese New Year in February.

Gold Is Poised For Growth

Moving forward, there are several points of support for gold. With strong signals coming from inflation, the USD, and jewelry demand, we could see strong gains in the value of the precious metal ahead!

March 29, 2018 at 10:02pm
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Prices Likely to Spike for Common and Uncommon Goods as Geo-Political Tensions Rise

 

In today’s global economy, what happens in one part of the world – sometimes in one specific country – can set off a chain reaction likely to have far-reaching effects for consumers everywhere. When Panama Disease hit and peaked in Central America in the 1950s, for example, it wiped out thousands of acres of banana plantations that caused a worldwide shortage of the fruit, even forcing growers to abandon their favored cultivar and go in search of new types. Today, most of the world eats an entirely different kind of banana – the Cavendish – because of this.

 

Like bananas, global products of all kinds are not immune to the effects of global markets. Recent announcements and economic policies have U.S. markets and consumers poised for a price hike for common steel and aluminum products. From soda cans to new cars, hundreds of industries are likely to see costs go up. Yet these products are far from the only ones being impacted by global geo-political tensions and sharp changes in demand and consumer preferences.

 

Food

Global food prices are hitting new highs as demand for meat, dairy, and wheat from countries with expanding populations continues to surge. U.N. food agency data shows global food prices are up 7 percent from a year ago and ahead 17 percent from a low set in early 2016. According to analysts, there has been a growing global demand for meat, particularly for beef. So strong is this demand that global meat has outpaced most other major food commodity groups, according to U.N. data.

 

Common Household Goods

Yes, even toilet paper is not immune to drastic price hikes and consumer panic. Just this week, a spike in the price to produce toilet paper in Taiwan cause panic to a point where lines formed outside of local grocery stores as people snapped up toilet paper and paper towels in bulk. The mess began on February 23rd when, according to The Economist, Taiwanese retailers, including several supermarket chains, said that toilet-paper producers would increase prices by as much as 30 percent in March because the cost of raw pulp had gone up.

 

Pearls

Political uncertainty in the South China sea has forced the price of pearls upward, much to the dismay of traditional brick-and-mortar and online retailers throughout the U.S. Leon Rbibo, who runs two of the top pearl websites in the U.S., The Pearl Source and Laguna Pearl, says military escalations in this part of the world can drive costs up “literally overnight,” since a large portion of the world’s favorite gemstone is imported from this area. Add to that the implications of Brexit, which is destabilizing world currencies, and you have a recipe for higher costs.

 

Gas and Other Fuel Types

There was a brief respite from the pump for many U.S. consumers over the last year, but don’t bank on that trend continuing, analysts say. According to AAA and the transportation industry, more than half of the country is likely to see a significant spike in the average cost for a gallon of unleaded gasoline. According to AAA, there are numerous reasons for the hike:

 

This year “has seen fluctuating crude oil prices, strong gasoline demand and new U.S. oil production records creating a volatile gas price market from month to month for consumers,” Jeanette Casselano, AAA spokeswoman, said. “Typically, March brings more expensive pricing as days get longer, weather gets warmer and refinery’s gear up to switchover to pricier summer blends.”

 

Bourbon (and Other U.S.-Produced Spirits)

New U.S. tariffs have other countries considering raising duties of their own. The European Union could choose to retaliate by going after peanut butter, orange juice, cranberries, and yes, even that world-famous Kentucky bourbon.

 

The European Union is the first trade partner to offer specific steps and products if the U.S. is to proceed with certain proposed tariffs, including on steel. Canada has also promised countermeasures. And Mexico, China and Brazil are said to be weighing options.

 

 

 

 

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How Is Bitcoin Marketing Itself

As a result of the Greek economic downturn and financial crisis as a whole, Bitcoin found itself at the centre of the news debate. Due to its natural characteristics, its decentralised platform, and ultimately its fascinating make-up due to the blockchain technology on which it is based, Bitcoin offers an exciting new wealth of opportunities. With the development of the bitcoin gambling casino which has introduced provably fair gaming to the online world and implementation by brands such as Subway and Steam, the cryptocurrency is continuing to grow. Despite numerous restrictions being placed on Bitcoin, the debate around its potential is continuing, and in turn the cryptocurrency has begun to market itself. Here, we’re taking a look at how.

The Characteristics Of Bitcoin

There are numerous exciting opportunities which Bitcoin provides, and a lot of these come from the characteristics behind the blockchain technology which makes up the cryptocurrency. Firstly, the decentralised element to the Bitcoin offers numerous advantages which is actually leading to disrupt numerous financial institutions. Despite its unpredictability and its evolution under the auspices of a nebulous entity, it is this challenging nature which is actually attracting numerous investors. The cryptocurrency is almost completely anonymous, and as such, many users feel protected when making purchases.

The blockchain technology itself is also exceptionally secure, with fraud being somewhat deterred by the make-up of the cryptocurrency. All of these characteristics have gradually marketed themselves, and with the boom in investment, more individuals are turning to this cryptocurrency as an alternative payment method.

Price Performance

A major indicator of the cryptocurrency’s growth is its price performance, and with the huge amount of investment going into the currency in recent months, it’s unsurprising to see that the price has boomed. Despite many critics believing that the currency remains unstable, the Bitcoin is marketing itself as a well-performing investment opportunity for many. While many are concerned about the regulations which are beginning to be imposed, these will only stabilise the cryptocurrency, further opening opportunities for use.

 

Fear By Financial Institutions

One of the major marketing aspects for Bitcoin is the fear it has imposed in some traditional financial institutions, which may now have to evolve their techniques in order to keep up with this ever-growing technology. While traditional financial institutions may see this as a negative, consumers and individuals will see this as a positive, as banks will now have to adapt their methods in order to keep funds as secure, yet accessible, as possible. Some financial institutions, such as Barclays, have already started to adopt cryptocurrency and blockchain technology, and have begun discussions with regulators on how to bring this technology into play more efficiently. With big brands such as these, alongside the likes of Subway, Microsoft, PlayStation and more embracing this technology, Bitcoin is being marketed in more ways than ever before.

While many associate Bitcoin with having an image issue, in modern times, this is very much the opposite. With increasing regulations being implemented, Bitcoin is only going to stabilise more efficiently, and as a result grow with more investments. Since the boom, Bitcoin’s marketing has been handled by the news and simply by word-of-mouth.

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What Is Going on in Equities Markets Around the World

 

Global stock markets are agonizing through some of the worst selloffs in recent history. The performance of the Dow Jones Industrial Average, the NASDAQ Composite Index, and the S&P 500 has been nothing short of disastrous heading into the month of love. Equities traders, speculators, economists, and media talking heads have used every conceivable adjective in the book to describe the torrid time that markets are enduring. Equities traders have used terms like writhing convulsions to meteoric drops, bearish markets, corrections, and worst multi-year performance.

This begs the question:  Where are markets headed?

It’s important to take a step back from the current grim reality before simply weighing in on the otherwise lackluster performance of global markets. If we look at the following major indices, we can appreciate how well they have performed, and how significant the current market movements are:

  • The Dow Jones Industrial Average is currently down 6.58% over 1 month
  • The S&P 500 Index is currently down 6.05% over 1 month
  • The NASDAQ composite index is currently down 5.75% over 1 month

When we extrapolate further, we can see that the Dow Jones has a 52-week trading range of 20,061.73 on the low end and 26,616.71 on the high-end. Clearly, the current level of 23,715.44 (Friday, February 9, 2018) is firmly in the middle. The S&P 500 index has a 52-week trading range of 2,296.61 on the low end and 2,872.87 on the high-end. The current level is 2,583.74 – again right in the middle. The tech heavy NASDAQ composite index has a 52-week trading range of 5,685.15 on the low end and 7,505.77 on the high-end. It is currently trading at 6,744.55, 1,000 points above its 52-week low.

Why Are Markets Convulsing Right Now?

Major investors, and everyday folks are scared that runaway inflation and rising interest rates could hurt stock market investments. It must be remembered that the fundamentals of the US economy are sound – there is no questioning that. According to Olsson Capital trading guru, Edward Bronstein:

 

‘We have to appreciate the bigger picture here. The Fed has been pushing to raise interest rates ever since the US economy turned the corner. By December 2015, we started to see incremental increases to the federal funds rate in 25-basis point intervals. Come Wednesday, March 21, 2018, we are likely to see yet another rate hike if stock markets stabilize and employment numbers continue to shine and inflation keeps rising.

 

According to the CME Group FedWatch tool – a great barometer of sentiment for interest rate movements, there is a 71.9% likelihood of a rate hike of 25-basis points in the region of 1.50% – 1.75% in March. Unfortunately, stock markets don’t like rate hikes, especially when they are part of a series of ongoing rate hikes. When the monetary authorities decide to raise interest rates, the value of stocks declines. The thinking is that consumers have less personal disposable income, companies are paying more in interest, and naturally this is going to lead to lower demand for company products and services, and ultimately to lower prices.

 

So, to be safe, investors take their money out of stocks and put it into safe-haven assets like gold, gold ETFs, treasuries, and interest-bearing accounts. They are also going short on derivatives trading options like CFDs and spread betting. Is the stock market going to continue its massive selloff? Probably not. But for now the safe money is on a market correction before the value-investors jump back into the markets to pick up bargain deals on top stocks.

 

While the year to date gains have been erased from major bourses around the world, we should take pause and see what US inflation figures will be before determining whether Fed action is warranted. Meanwhile, German, US and UK bonds have reacted with high volatility to current economic conditions. Oil is down, gold is down, copper is down, and the USD is down. The current trajectory of financial markets is attributed to bearish sentiment.

 

 

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