The Fed’s reverse repo system sees demand climb overnight

Federal Reserve

Repo overnight demand increases Overnight demand for the Federal Reserve’s reverse repo program surged close to $1 trillion on Wednesday 30th June 2021. Is this a problem? The repo system is an overnight money holding facility for banks and financial institutions. A short term parking system for billions of U.S. dollars. The facility had been met with growing demand since April, as businesses look for ways to temporarily invest excess cash as trillions of fiscal and monetary stimulus continue to slosh through the economy. The Fed The Fed is keen to reduce…

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Record highs for Nasdaq and S&P 500

Gamble

The only way is… up? The Nasdaq reached a record high on Monday 14th June 2021 as investors were tempted back into growth stocks ahead of a Federal Reserve two day meeting due to start on Tuesday 15th June 2021 Nasdaq The Nasdaq tech loaded index climbed 0.7% to an all time closing high of: 14174 clearing the previous record on 26th April 2021. S&P 500 The S&P 500 gained around 0.2% to make another record close at: 4255 boosted by technology sector gains. The Dow Jones Industrial Average slipped…

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Fed fires up, again

Central Bank Stimulus

More stimulus The U.S. Federal Reserve announced it would start buying individual corporate bonds. The Fed said, ‘it will purchase corporate bonds to create a corporate bond portfolio’. The Federal Reserve is stepping things up again after recent comments left investors more than a little concerned about the pace of recovery. The Fed has stated that it remains concerned about the economy suffering a protracted downturn and the latest endeavour is to start the purchase of corporate bonds. Monetary and fiscal stimulus riding to the rescue again.  Encouraging news Investors…

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Did the market get ahead of itself?

Tech stock sell off

Stocks select reverse gear U.S. and global stocks went into free fall on 11th June 2020 as the Dow recorded a 1800 point drop in one session, and as investors mull COVID-19 spikes, the Fed’s outlook and jobless claims data. The Fed promised it will keep interest rates low until 2022. Now this type of statement is usually music to Wall Street’s ears, but not this time, as markets unravel. Outlook not looking so good Did the market get way too far ahead of itself and is it now reacting…

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Gold, a solid investment

Gold Reserves

Gold as a safe haven It is a well known fact that gold becomes a safe haven during uncertain times, and these are uncertain times. So it’s no surprise then that gold has increased in value during this period. At its highest in recent weeks, gold has reached: $1766 per troy ounce. Governments around the world struggle to re-open their closed economies as the coronavirus pandemic wreaked untold damage as it ravaged through nations forcing world-wide lockdowns. Gold, once again became a safe haven. Despite the stock market recovery since…

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Stocks continue upward grind

Stock grind higher

Stocks continue to grind ever higher pushing many indices to reach new peaks as global stocks play catch-up with the U.S. The S&P 500, for example, is now only around 5% from its year high – a remarkable recovery from the March 23rd low. The index is now 40% above its coronavirus collapse. Forward PE multiple has risen to a twenty year high of 22.40 making shares rather expensive – but this isn’t holding it back. Can this recovery continue? Will there be a shock to U.S. GDP in the second quarter? U.S.…

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The shape of things to come

Future recovery

Bounce, Recession or Depression? As economists, traders, investors, politicians and media pundits talk of economic recovery, many countries have already entered recession. The latest being Japan, the third largest economy in the world. The UK, Germany, France and Italy have all entered technical recessions. ‘V’ or not to ‘V’ ? The very same ‘analysts’ also spoke of recovery not of recession. The chatter was about the type of recovery even. Whether economies would see a, ‘V’ shaped (a fast bounce bank to normal), a ‘U’ shape, an ‘L’ and a…

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Strange times – have U.S. markets gone mad?

Financial bubble

Disconnected from reality? Are elevated prices in U.S. markets showing a disconnect from reality? Is the free flowing Federal Reserve liquidity too easily available? Are central banks too eager to please? Are central bank fearful of failure? Do they really need to step in every time economies face a problem? Should markets work it out without so much central bank intervention or interference? Do we now have too much debt, again and… have we built a new bubble – the mother of all bubbles? Bubble busters Take the COVID-19 coronavirus…

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Scheduled market news events 29th January 2020

Scheduled market news events

Scheduled market events U.S. – The Federal Reserve due to announce interest rate decision at: 19:00 GMT followed by press conference at: 19:30 GMT. U.S. current interest rate is: 1.75% – the consensus is for it to remain at 1.75% Germany – consumer confidence survey data due UK – Nationwide house price data due U.S. – home sales data due at: 15:00 GMT German consumer confidence Consumer confidence survey data shows a small increase from previous the reading of 9.7 to 9.9 UK house prices climb in January UK annual…

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The invincible index

Dow record high

Or should that be indices U.S. stocks have shown remarkable resilience in recent years. All rise They have all climbed ever higher, breaking new records despite many uncertainties circling the U.S. economy such as, Trump’s impeachment, allegations of election shenanigans, allegations of model payoffs, recessionary fears, inverted yield curves, drone attacks and an Iranian missile attack and even Brexit – the markets just shrug it all off and keep on climbing. Clearly the Fed’s ultra cheap money has dramatically assisted the rise, especially after the policy pivot of 2019. U.S.…

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