July 2018

7/31/2018 03:36:00 am
A deal with the EU can be reached by October but the UK is preparing for the possibility of no deal, Brexit Secretary Dominic Raab has said.

He said he would return to Brussels for talks on Thursday and strain "every sinew" to get "the best deal".

But the government had plans in place in case talks did not end well, he told the BBC.

Labour leader Jeremy Corbyn said there must be a "serious stepping up of negotiations" to avoid no deal.

The UK is due to leave the European Union on 29 March 2019, but the two sides have yet to agree how trade will work between the UK and the EU afterwards.

Theresa May hopes the government's plan, detailed recently in the Brexit White Paper, will allow the two sides to reach a deal on relations by the autumn.

Downing Street said on Sunday that cabinet ministers would be promoting the plan across Europe over the summer.

Theresa May would "take the lead" by meeting the Austrian chancellor, Czech prime minister and Estonian prime minister next week.

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7/29/2018 10:09:00 am
The Australian economy has beaten expectations, with very strong 1 per cent growth in the first quarter driving a 3.1 per cent annual increase in GDP.

But economists have warned that may be "as good as it gets" with a range of one-off factors boosting the data and weak household income growth limiting consumer spending, which makes up about 60 per cent of the economy.

The Australian Bureau of Statistics data show commodities exports were the key driver of growth in the March quarter.

"Growth in exports accounted for half the growth in GDP and reflected strength in exports of mining commodities," the bureau's chief economist Bruce Hockman said.

The mining sector's output grew 2.9 per cent, thanks to increases in coal, iron ore and LNG production.

Mr Hockman said this fed through to the strongest increase in corporate profits over the past year, up 6 per cent in the March quarter.

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7/29/2018 10:06:00 am
The economies of the European Union grew at their fastest pace for a decade last year, according to revised figures from Eurostat.

Data from the EU statistics office shows the EU economy expanded by 2.5% in 2017, its strongest performance since 2007 and the start of the financial crisis.

The 19-nation strong Eurozone grew by 0.6% in the final quarter, mirroring growth in the bloc’s biggest economy, Germany.

The numbers offer a “sharp contrast” to the situation in the UK, says The Independent, where the economy grew by 1.8% last year and has been slowing over the past 12 months as inflation stemming from the fall in the value of sterling after the Brexit vote eroded household income.

A stronger global economy has helped the Eurozone to an impressive performance during 2017, but “economists have been particularly cheered by the broad-based nature of growth, which has seen expansions in peripheral countries as well as the core large economies”, reports City AM.

Speaking to the BBC, Investec economist Ryan Djajasaputra attributed the strength of the Eurozone to the European Central Bank's stimulus policies, which have brought down the cost of borrowing in recent years. Rising wages, low inflation and record-level employment have also boosted consumer spending, which has in turn boosted investor confidence, he said.

“After many false dawns, at last some sunlight has fallen on Europe's strongest economies,” said the BBC’s economics editor Kamal Ahmed.

However, Sarah Hewin, chief economist Europe at Standard Chartered, warned that “higher energy prices and a stronger euro may be headwinds to growth this year”.

With uncertainty building around next month's Italian election, Germany struggling to agree a coalition government and the impact of Brexit still to play out, there are fears the recent resurgence could mirror the mini-revival of 2010, which was “followed by years of economic calamity as the financial crisis morphed into a currency crisis and the economic collapse of Europe's smaller, indebted economies”, says Ahmed.

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7/29/2018 10:01:00 am
The US economy grew at its fastest pace in nearly four years in the second quarter, expanding at an annualised rate of 4.1%, official figures show.

The gains were driven by strong consumer spending and a surge in exports as firms rushed to beat new trade tariffs.

US President Donald Trump described the acceleration as "amazing", claiming it as proof his policies are working.

But many analysts cautioned that growth could cool in coming months.

"In one line: Looks great; won't last," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.

What boosted growth?

Friday's report from the Commerce Department showed consumer spending rose by 4% in the second quarter, up from the 0.5% rate seen in the previous three months.

Exports also grew by more than 9%, the fastest rate since the fourth quarter of 2013.

Economists say that figure, which contributed more than 1% to the GDP gains, was inflated in part by farmers seeking to get ahead of new trade tariffs on items such as soybeans.

In July, the US and China imposed tariffs on $34bn of the other country's goods. Canada, Mexico and the European Union also imposed new duties in recent weeks on some US exports in retaliation for US tariffs on steel and aluminium.

Is this "amazing"?

The US economy expanded at an average annual growth rate of 2.2% between 2012 and 2017.

That pace has picked up more recently after a long stretch of job gains that has driven unemployment to near record lows.

President Trump said the White House had to "do a lot of things" to get the economy going again.

He pointed to new tax cuts, de-regulation, increased government spending and the continuing trade negotiations.

"We've accomplished an economic turnaround of historic proportions," he said.

While Friday's report showed the US economy accelerating, the gains were in line with analyst forecasts - and were not out of proportion with some quarters in previous years.

In 2014, for example, the economy rose at an annual rate of 5.1% in the second quarter and by 4.9% in the third quarter.

Compared with the second quarter of 2017, the economy grew by 2.8% in the April-June period.

What's the outlook?

President Trump has said he wants to see GDP growth rise to 3% or more for 2018.

"This isn't a one time shot," he said on Friday. "I happen to think we're going to do extraordinarily well in our next report."

The US hasn't seen full-year GDP growth of more than 3% since 2005, but economists say the rate is within reach this year, due in part to increased government spending, and a $1.5 trillion tax cut that has given businesses and households more money to spend.

PNC Bank is forecasting growth of 3.1% in 2018 - assuming that trade tensions dissipate.

"If the US and its partners do implement substantial tariffs and other trade barriers, US economic growth is likely to be much weaker than this baseline forecast," chief economist Gus Faucher wrote.

After next year, many economists expect growth rates to subside again, as the boost from tax cuts and federal spending dissipates.

What else is notable?

Friday's report revised the estimate for GDP growth in the first quarter to 2.2%, up from 2%.

It also showed that inflation, which has been lacklustre in recent years, rose by 2% according to the Fed's preferred measure, which is tied to consumer spending, except on food and energy.

That is the second quarter in a row the measure, known as core PCE, has hit or exceeded the Fed's 2% target, and is likely to keep the central bank on track with its plans to raise interest rates gradually.

There were some signs of softness, however.

Investment in housing, for example, declined by 1.1%, following a 3.4% fall in the first quarter.

That weakness is a potential red flag, said Lindsey Piegza, chief economist at Stifel.

"Overall, there are clearly a number of factors suggesting the economy is firmly on a solid - albeit far from robust - footing, at least for now," she said.

However, she said the trends in the housing market, as well as the one-off boost in exports in the most recent quarter, call "into question the sustainability of above-trend topline growth looking out to the second half of the year."

Source: BBC
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7/29/2018 09:53:00 am
The economy shrank by 0.2 percent in the first three months of 2018, snapping a run of two years of positive growth, according to data released by the Cabinet Office on Wednesday.

Business investment contracted by 0.1 percent on a quarter-to-quarter basis, and household spending — the largest driver of economic growth — remained flat, demonstrating the weak overall appetite for consumers to open up their wallets in a still-uncertain economy. When annualized, GDP was 0.6 percent lower than the previous quarter.

However, the latest preliminary numbers, often prone to statistical revision, may actually belie a relatively healthy economy on pace for modest growth in 2018, economists said.

“I don’t expect that the results foreshadow a larger downturn in the economy,” said Takuji Okubo, the chief economist at Japan Macro Advisors.”The fundamentals of the economy look robust. We have wage growth of 1.3 percent year-on-year and inflation appears to be edging up.”

The biggest surprise from the release was the slight contraction of business investment, also known as private nonresidential investment, a year after it grew by an inflation-adjusted 3 percent.

“We don’t know whether the drop in business investment is a temporary event or a broader trend,” said a Cabinet Office official.

“But we do know that measures of business investment are initially not the most accurate,” the official added, in reference to the preliminary nature of Wednesday’s numbers. A second, more accurate set of economic data for the first quarter of 2018 is due out in early June.

Okubo appeared confident that business investment is stronger than initial readings indicate. “Japan’s corporations have record-level profits, and I would not be surprised if the revised numbers will eventually show that business investment was instead positive in the first quarter,” he said.

As each component of the preliminary GDP numbers are difficult to measure, particularly business investment, there are often revisions to overall economic growth.

Last week, forecasters from Mizuho Research — a think tank affiliated with the global banking giant — predicted in a research memo that first quarter GDP numbers would show 0.2 percent growth, indicating the picture could become rosier when final figures are released.

Marcel Thieliant, a senior Japan economist with Capital Economics, also expected growth to remain on track, but felt that the downside risks may be larger going forward.

“I think the weakness in the last two quarters of growth indicates that there may be growing risk in the economy,” said Thieliant. “But we still expect growth to remain on track in 2018.”

Global economic growth of 3.9 percent is expected in 2018, according to the International Monetary Fund’s annual spring forecast, although it warned that trade risks could threaten the health of the global economy.

In a sign of positive news for the Bank of Japan, an institution five years into its fight against falling prices, the GDP deflator — which measures the impact of inflation on the GDP during a given year — increased to 0.9 percent year-over-year.

Source: Japan Times
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7/29/2018 09:49:00 am
Bill Lipschutz started trading while attending Cornell University in the late 1970s. During that time, he turned $12,000 into $250,000; however, he lost the entire stake after one poor trading decision, a hard lesson on risk management that he carried throughout his career. In 1982, he began working for Solomon Brothers while he pursued his MBA degree.

Lipschutz migrated into Solomon’s newly-formed foreign exchange division at the same time forex markets were exploding in popularity. He was an immediate success, earning $300 million per year for the company by 1985. He became the principal trader for the firm’s massive forex account in 1984, holding that position until his departure in 1990. He has held the position of director of portfolio management at Hathersage Capital Management since 1995.

Source: Investopedia
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7/29/2018 09:44:00 am
Andrew Krieger joined Banker’s Trust in 1986 after leaving a position at Solomon Brothers. He acquired an immediate reputation as a successful trader, and the company rewarded him by increasing his capital limit to $700 million, significantly more than the standard $50 million limit. This bankroll put him in a perfect position to profit from the Oct. 19, 1987 crash known now as Black Monday.


Krieger focused on the New Zealand dollar (NZD), which he believed was vulnerable to short selling as part of a worldwide panic in financial assets. He applied the extraordinary leverage of 400:1 to his already high trading limit, acquiring a short position bigger than the New Zealand money supply. As a result of this trade, he netted $300 million in profits for his employer. The following year, he left the company with $3 million in his pocket from the trade.


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7/29/2018 09:39:00 am
Stanley Druckenmiller grew up in a middle-class suburban Philadelphia family and began his financial career in 1977 as a management trainee at a Pittsburgh bank. He quickly rose to success and formed his company, Duquesne Capital Management, four years later. Druckenmiller then successfully managed money for George Soros for several years in his role as the lead portfolio manager for the Quantum Fund between 1988 and 2000.

Druckenmiller also worked with Soros on the notorious Bank of England trade, which launched his rise to stardom. His fame intensified when he was featured in the best-selling book, The New Market Wizards, published in 1994. After surviving the 2008 economic collapse, he closed his hedge fund, admitting he was worn down by the constant need to maintain his successful track record.


Source: Investopedia
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7/29/2018 09:34:00 am
George Soros was born in 1930 and began his financial career at Singer and Friedlander in London in 1954 after escaping Nazi-occupied Hungary during World War II. He worked at a series of financial firms until he established Soros Fund Management in 1970. The firm has gone on to generate more than $40 billion in profits in the last five decades.  

He rose to international fame in 1992 as the trader who broke the Bank of England, netting a profit of $1 billion after short selling $10 billion in British pound sterling (GBP). On Sept. 16, 1992 the U.K. withdrew the currency from the European Exchange Rate Mechanism after failing to maintain the required trading band due to Soros' trade, solidifying a day known as Black Wednesday in history. This incredible trade is a highlight of his career and cemented his title of one of the top traders of all time. Soros is currently one of the thirty wealthiest individuals in the world.

Source: Investopedia
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7/29/2018 04:09:00 am
GBP adalah matawang yang sangat mesra dalam perdagangan. Dalam erti kata lain, Business Friendly. Jikalau terdapat sebarang berita tentang perkembangan ekonomi yang positif, ia akan melonjakkan nilai GBP. Maksudnya, kuasa BUY akan meningkat tinggi dalam Forex.

GBP juga adalah berkadar langsung dengan harga tenaga (energy). Kebanyakan negara-negara EU mengimport minyak daripada UK. Jika harga minyak meningkat, negara-negara EU terpaksa membeli lebih banyak matawang GBP dan digunakan untuk membeli minyak tersebut.

Peningkatan harga minyak akan menguntungkan dan menambahkan pendapatan UK dalam sektor tenaga. Kekuatan atau kelemahan matawang GBP dapat dilihat dengan jelas pada EURUSD. Pergerakan pada EURGBP mempengaruhi pergerakan GBPUSD.
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7/29/2018 03:54:00 am
Photo taken from The Guardian
The Bank of England raised the chances of an August rate rise after its chief economist joined two other members of its rate-setting monetary policy committee voting for an immediate hike in borrowing costs.

For the first time since joining the MPC four years ago, Andy Haldane broke ranks with the majority on the nine member rate-setting panel to join Ian McCafferty and Michael Saunders in calling for an increase in interest rates. The move is likely to heighten speculation that Threadneedle Street could be gearing up for a rise in two months’ time.

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7/29/2018 03:50:00 am
Photo taken from Business Reporter
The UK economy grew at a faster rate than initially thought in the first three months of 2018, raising hopes for a pick-up in growth after the sluggish start to the year.

The Office for National Statistics unexpectedly revised higher its third and final estimate for UK growth in the first quarter to 0.2%, after two earlier estimates of 0.1%.

Government statisticians said fresh figures from the construction industry and improvements for measuring the sector had nudged up the growth rate. 

The pound rallied against the dollar on foreign exchanges on Friday, as City traders bet that the revision increased the likelihood that the Bank of England would raise interest rates from as early as August.

Threadneedle Street has consistently argued in recent months that the UK economy is stronger than official figures might suggest, which could support a rate rise to 0.75% from 0.5%. 

Despite the better news for the economy, as Theresa May met her European counterparts on Friday in Brussels to discuss Britain’s exit from the EU, the ONS said household consumption remained subdued and business investment fell in the first quarter. Economists said this confirmed the UK economy remained weak in the first three months of the year.

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7/27/2018 06:54:00 pm


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