Summary for the 26th of March 2019


The index for volatility (VIX) has been showing expectations of low volatility since the beginning of 2019, even with ongoing geopolitical uncertainty (Brexit, trade conflict, etc.)

The expectations of low volatility earlier this year can be seen as a result of central banks’ changes in their monetary policies and of macroeconomic indicators that have been giving few surprises.

All this was up until last week when the Fed and the ECB both have projected lower growth in future outlook, plus the weak PMI from Germany. The PMI data had given doubt if there were temporarily factors that had been slowing the economic growth.

Central Bank Put has become an established term in the financial market in the past few years. Central banks would implement untraditional monetary policies to encourage risk taking in the financial markets, weak macroeconomic data had led to positive response from the financial market, weak data means more expansionary monetary policy from central banks. This doesn’t seem to be the case anymore, more expansionary monetary policy hasn’t led to more risk taking from the market.

Yesterday’s Ifo Business Climate in Germany rose by almost 1% to 99.6. The data from the manufacturing sector though was still weak, sub index for this sector declined for the seventh consecutive months, lowest value in three years. This shows that there are still slow growth in the export sector. The sub index for services and constructions were the main boost in the Ifo index.

The British Parliament has taken control of Brexit from the British prime minister, Theresa May.  The Parliament will vote over a series of Brexit options on Wednesday and will most likely be over the options of revoking Brexit, a new referendum and difference versions of Brexit.

Indices for 26th of March:
Dow: +0.1% (25th of March)
S&P 500: -0.1% (25th of March)
Nasdaq: -0.1% (25th of March)
Nikkei: +2.2% (26th of March)
Chinese indices: -1.4% (26th of March)
STOXX Europe 600 Index: +0.77% (26th of March)

This post is sponsored by my video course in Portfolio Analysis, check it out if you are interested:
Quick and Easy Portfolio Analysis Video Course  (Skillshare)
Quick and Easy Portfolio AnalysisVideo Course  (Udemy)
and Facebook page for other information:
Quick&Easy Financial Economics

Comments

Post a Comment

Popular posts from this blog

Summary for the 2nd of October -Weaker manufacturing outlook

Last week’s flash PMI estimates for the EU area and yesterday’ final PMI numbers are indicating that the weakening in the manufacturing sector isn’t country specific, but rather the weakening is across countries. The decline in Germany’s manufacturing sector is less than expected by the financial markets, while the decline in France is higher than expected. The same goes for Spain and Italy. The UK’s PMI index has increased by 0.9 to 48.3 and is more than expected, though 48.3 still indicates a weaker outlook. The US Manufacturing PMI has increased to 51.1 while the ISM index declines by 1.3 percent to 47.8, the lowest value since 2009. Despite weakening activities in the manufacturing sector for the developed countries, for the developing countries the outlook is still positive. The global PMI value in the manufacturing sector has risen from August to September. Past months’ decline has been due to weaker growth in the global trade. The WTO has updated its global trade forecast
Read more

Summary for the 15th of October

China’s balance of trade shows a fall in exports by 3.2 percent, comparing to a year ago and the imports fall by 8.5 percent, the first fall since May this year. China is the largest contributor to world economic growth, through the weaker imports, China’s economic decline is affecting the rest of the world economy, such as the Euro area. The Euro area’s industrial production for  August has risen by a little more than the markets have expected. The industrial production in the Euro area has been weakening since the start of 2018. Finland is currently holding the council of the EU presidency. At a press conference with the European Council President elect, Charles Michel, the Finnish prime minister, Antti Rinne, says that The EU needs more time to reach a Brexit agreement. Boris Johnson is hoping to seal a Brexit deal before the EU summit on Thursday, so that he will be able to present it to the British Parliament on Saturday for approval, in doing so, he won’t need to postpone B
Read more

Summary for the 21st of October Brexit drama

On Saturday, the British parliament is withholding the final decision of the revised Brexit deal and forcing Boris Johnson to ask the European Council for an extension to the 31 st of January. Instead the parliament has greed on Oliver Letwin’ amendment, which states that there wont be a no deal Brexit until the parliament has agreed on the revised Brexit deal this week. And on Saturday night, Boris Johnson has sent an unsigned letter to the European Council asking for a Brexit delay as well as a personal letter to the Council asking the EU leaders not to delay Brexit. The US stock exchange has closed in negative on Friday after Johnson & Johnson has to recall 33 000 bottles of baby powder in the US after health regulators found trace amounts of asbestos in a bottle purchased online. Boeing has admitted that two of its employers in 2016 misled the FAA about the 737 Max and its technical system. Weaker than expected Chinese economic indicators also contributes to the negative
Read more