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Forget OPEC The Oil Market Is Rebalancing (Video)

October 26, 2016 by EconMatters   Comments (0)

By EconMatters

We keep getting surprise Oil Inventory reports each week for the last 6 weeks, it seems we are in slight deficit right now, which is unusual for this time of year. We are headed to $60 a barrel regardless of OPEC nonsense.

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Georgia maintains rate, sees 6% rate in next 2 quarters

October 26, 2016 by CentralBankNews   Comments (0)

    Georgia's central bank left its policy rate unchanged at 6.50 percent, saying past rate cuts were not fully reflected in the economy, but it expects to cut the rate to 6.0 percent over the next two quarters.
    The National Bank of Georgia (NBG) has cut its rate four times this year by a total of 150 basis points and said in September that it aimed to cut the policy rate to 6.0 percent in the "medium term" as demand is still expected to remain weak and inflation expectations indicate that the rate has to be cut further to reach a neutral level.
    But the central bank said there had been an increase in demand for variable rate loans denominated in lari, which had helped improve the transmission mechanism of its monetary policy.
    To further improve this transmission, the central bank wants its loosening to have further effect and decided therefore to maintain the rate this month.
    Georgia's inflation rate eased to 01 percent in September from 0.9 percent in August and the central bank expects inflation to return to its target in the second half of 2017.


Hungary keeps base rate, cuts overnight, RR rates

October 25, 2016 by CentralBankNews   Comments (0)

    Hungary's central bank maintained its benchmark base rate rate at 0.90 percent, as widely expected, but continued its policy of easing overall monetary conditions by lowering the overnight lending rate by 10 basis points and cutting the required reserve ratio by 100 basis points..
    The National Bank of Hungary (NBH) last cut its key rate in May but is now limiting the use of its main policy tool, the 3-month deposit facility, to encourage banks to buy government debt and offer cheaper loans to consumers and businesses.
    Last month the NBH lowered the total limit on the use of its 3-month deposit facility to 900 billion forint by the end of 2016, pushing out at least 200-400 billion forints from its facility.
     While cutting the overnight lending rate to 1.05 percent to "increase the banking system's liquidity and ease monetary conditions further," the central bank left the overnight deposit rate at minus 0.05 percent. This resulted in a narrowing of the interest rate corridor so rates on one-week central bank loans fell by 5 basis points to 1.0 percent, the NBH said.
    By cutting the reserve requirement to 1.0 percent from 2.0 percent as of Dec. 1, the central bank expanded the freely available liquidity in the banking system by 170 billion forint.
    "The Bank aims to ease monetary conditions and provide a corresponding degree of support to the economy through a decline in money market rates," the central bank said, adding it considers the limit on its three-month deposit stock and potential future changes "an integral part of monetary policy instruments."
    In a separate move, the central bank said it was offering to accept 150 billion forints of funds from banks in its 3-month deposit facility. At the last unlimited tender in September, banks deposited 687 billion forints in the facility.

    The National Bank of Hungary issued the following statement:

"At its meeting on 25 October 2016, the Monetary Council reviewed the latest economic and financial developments and voted on the following structure of central bank interest rates with effect from 26 October 2016:
Central bank interest rate
Previous interest rate (per cent)
Change (basis points)
New interest rate (per cent)
Central bank base rate
No change
Overnight collateralised lending rate
Overnight deposit rate
No change
In the Council’s assessment, Hungarian economic growth continues to pick up from the middle of the year following the temporary slowdown at the beginning of 2016. There continues to be a degree of unused capacity in the economy and inflation remains persistently below the Bank’s target. Looking ahead, the disinflationary impact of the domestic real economic environment is gradually decreasing.
As the Monetary Council expected, inflation rose again into positive territory in September 2016. The Bank’s measures of underlying inflation continue to indicate a moderate inflationary environment in the economy. Persistently low global inflation is restraining the pace of increase in domestic consumer prices. Inflation expectations are at historically low levels. Whole-economy wage growth remains strong, which is likely to raise core inflation gradually through rising household consumption. Inflation remains below the 3 per cent target over the forecast period, and only gets close to it by the middle of 2018.
Hungarian economic growth accelerated in the second quarter of 2016, and, based on monthly indicators, it picked up further in the third quarter, in line with the Bank’s expectations. The robust expansion in retail sales continued in August. Further growth is expected in household consumption in the coming quarters. Industrial production increased strongly in August. This growth following the decline in previous months is primarily due to the rise in vehicle industry output. Labour demand remained strong, and therefore the number of employees increased again, while the unemployment rate fell further. Both corporate and household lending increased in August. New household loans exceeded repayments for the first time since the crisis. The time profile of this year’s economic growth is characterised by duality. Following temporary slow growth at the beginning of the year, the pick-up in domestic demand, the extension of the Funding for Growth Scheme, the Growth Supporting Programme, the easing measures of monetary policy as well as the Government’s measures will help achieve economic growth of around 3 per cent.
Sentiment in global financial markets has been volatile since the Council’s latest interest rate-setting decision, mainly driven by news related to the oil market and the stability of some European banks as well as by expectations about monetary policy actions by the world’s leading central banks. The forint appreciated against the euro, and short-term money market rates and government securities yields fell overall. Hungary’s strong external financing capacity and the resulting decline in external debt are contributing to the sustained reduction in the vulnerability of the economy. Forward-looking domestic money market real interest rates are in negative territory and are declining even further as inflation rises. However, in the Council’s assessment, a watchful approach to monetary policy is still warranted due to uncertainty in the global financial environment.
At its meeting in September, the Monetary Council set a HUF 900 billion upper limit on the 2016 year-end stock of three-month central bank deposits, which according to the Council’s expectation means the crowding out of at least HUF 200–400 billion liquidity from the deposit facility. The Council considers the limit on the three-month deposit stock and its potential future change an integral part of monetary policy instruments. At its meeting today, the Monetary Council decided to lower the required reserve ratio for banks from 2 per cent to 1 per cent, effective from 1 December 2016. As a result, freely available liquidity of the banking system will expand further by HUF 170 billion. The Bank aims to ease monetary conditions and provide a corresponding degree of support to the economy through a decline in money market rates. The Monetary Council is making every effort to ensure that the limit imposed on the stock of three-month deposits exerts its expected easing effect efficiently.
The Monetary Council decided to leave the base rate unchanged. In order to increase the banking system’s liquidity and ease monetary conditions further, the Council reduced the overnight lending rate by 10 basis points to 1.05 per cent while leaving the overnight deposit rate unchanged at -0.05 per cent. As a result, the interest rate corridor narrowed further. In accordance with this, the interest rate on the one-week central bank loan fell by 5 basis points to 1.00 per cent.
In the Council’s assessment, there continues to be a degree of unused capacity in the economy and inflation remains moderate for an extended period. The disinflationary impact of the real economy is gradually decreasing over the policy horizon. If the assumptions underlying the Bank’s projections hold, maintaining the current level of the base rate for an extended period and the loosening of monetary conditions by the change in the monetary policy instruments are consistent with the medium-term achievement of the inflation target and a corresponding degree of support to the economy. The Magyar Nemzeti Bank closely monitors developments in monetary conditions and markets. If subsequently warranted by the achievement of the inflation target, the Council will stand ready to ease monetary conditions further.
The abridged minutes of today’s Council meeting will be published at 2 p.m. on 9 November 2016."

This week in monetary policy: Hungary, Georgia, Sweden, Norway, Israel, Ukraine, Moldova, Fiji and Russia

October 24, 2016 by CentralBankNews   Comments (0)

    This week (October 23 through October 29 central banks from 9 countries or jurisdictions are scheduled to decide on monetary policy: Hungary, Georgia, Sweden, Norway, Israel, Ukraine, Moldova, Fiji and Russia.
    Following table includes the name of the country, the date of the next policy decision, the current policy rate, the result of the last policy decision, the change in the policy rate year to date, the rate one year ago, and the country’s MSCI classification.
    The table is updated when the latest decisions are announced and can always accessed by clicking on This Week.

OCT 23 - OCT 29, 2016:
COUNTRY       DATE           RATE      LATEST        YTD     1 YR AGO    MSCI
HUNGARY 25-Oct 0.90% 0 -45 1.35%       EM
GEORGIA 26-Oct 6.50% -25 -150 7.00%
SWEDEN 27-Oct -0.50% 0 -15 -0.35%       DM
NORWAY 27-Oct 0.50% 0 -25 0.75%       DM
ISRAEL 27-Oct 0.10% 0 0 0.10%       DM
UKRAINE 27-Oct 15.00% -50 -700 22.00%       FM
MOLDOVA 27-Oct 9.50% -50 -1,000 19.50%
FIJI 27-Oct 0.50% 0 0 0.50%
RUSSIA 28-Oct 10.00% -50 -50 -100       EM

Stocks Are Not Long Term Investment Vehicles (Video)

October 23, 2016 by EconMatters   Comments (0)

By EconMatters

We discuss market theory in this video, and why stocks are not the long term investment vehicles they are purported to be. Pay attention to what phase a stock is in! Everything, i.e., stock prices are determined by fund flows and market structure far more than fundamental valuation concerns. When market participants quote fundamental metrics they are literally staring at individual blades of grass in the larger context of a huge forest.

Every asset right now in modern financial markets is uninvest able from a long term fundamental time horizon basis due to several factors, but namely bizarre central bank policy. Everything is essentially a commodity and is either being accumulated or distributed based upon your chosen timeframe.

Whether you realize it or not everything is a trade in financial markets, when discussing specific timeframes we are really just talking semantics here. You better learn how to trade your 401k`s if you want to keep them from being reduced to 201k`s when the fund flow dynamics change in financial markets.

This is why central banks are so reluctant to raise rates, they realize the capital destruction phase they are inevitably going to initiate in financial markets, and they are trying to stall this inevitable repricing for as long as possible!

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In Financial Markets "Be Like Water" (Video)

October 22, 2016 by EconMatters   Comments (0)

By EconMatters

As a Market Participant you must adapt to an ever-changing Price environment, those who are good at it demand the premium benefits that financial markets have to offer. What separates Amazon from AOL - being able to grow, adapt and thrive in ever changing technology curves.

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The Market Is Really Nervous Right Now (Video)

October 21, 2016 by EconMatters   Comments (0)

By EconMatters

The strong dollar is putting a lot of pressure on asset prices globally, and especially other currencies pegged to the US Dollar, and it moving higher is making market participants quite nervous right here. A lot of Risk Assets rely on a weaker Dollar.

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Voor Acer Aspire V3-771G AC Adapter

October 21, 2016 by laptopbattery   Comments (0)

Adapter geschikt voor de Voor Acer Aspire V3-771G . CE en RoHS gekeurd conform alle Europese richtlijnen voor elektronische onderdelen.De Voor Acer Aspire V3-771G laptop adapter oplader voeding is bovendien grondig getest, uiterst betrouwbaar en voorzien van 12 maanden garantie,60 dagen niet goed.


ECB maintains rates as growth risks tilted to downside

October 20, 2016 by CentralBankNews   Comments (0)

    The European Central Bank (ECB) left is key policy rates steady, as widely expected, but raised the prospect of changing its policy measures in December by underscoring that risks to economic growth "remain tilted to the downside" and it will continue to use all available instruments to ensure that inflation continues to rise.
    The ECB, which in March cut its benchmark refinancing rate to zero, confirmed that monthly asset purchases of 80 billion euros were still intended to run until the end of March 2017, or beyond if necessary to ensure that inflation is moving toward the target of just below, but close to 2 percent.
    But ECB President Mario Draghi said the ECB remained "committed to preserving the very substantial degree of monetary accommodation," a sign the ECB may either extend its asset purchases beyond March next year or adjust it to encompass other securities or loosen some of its restrictions.
     In December the ECB will update its economic forecasts through to 2019 while the governing council will also hear from committees about the options for ensuring that its purchase program is proceeding smoothly, addressing concerns the ECB is running out of bonds to buy.
    Draghi said the euro area economy in the third quarter had continued to expand at a rate that was "around the pace" of the second quarter and further ahead growth should proceed at a "moderate but steady pace."
    In the second quarter the euro zone economy grew by 0.3 percent from the first quarter for annual growth of 1.6 percent, down from 1.7 percent in the first quarter.
    In September the ECB revised upwards its 2016 growth forecast to 1.7 percent from 1.6 percent, but lowered its outlook for 2017 growth to 1.6 percent from 1.7 percent and its 2017 forecast to 1.6 percent from 1.7 percent.
    Domestic demand will continue to be supported by the ECB's easy policy and largely neutral fiscal policy in 2017 but Draghi said the recovery was still being dampened by subdue foreign demand, the necessary adjustments of balance sheets in a number of sectors and the sluggish pace of structural reforms, which he once again called on governments to accelerate to reduce unemployment and boost the potential growth.
    "Structural reforms are necessary in all euro area countries," said Draghi.
    Inflation in the euro area rose to 0.4 percent in September from 0.2 percent in August.
    In its latest forecast, the ECB expects inflation to average 0.2 percent this year, 1.2 percent in 2017 and 1.6 percent in 2018.

    The European Central Bank issued the following statement and ECB President Mario Draghi's introductory statement to a press conference:

"At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases.
Regarding non-standard monetary policy measures, the Governing Council confirms that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today."
ECB President Mario Draghi:

"Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our press conference. We will now report on the outcome of today’s meeting of the Governing Council.
Based on our regular economic and monetary analyses, we decided to keep the key ECB interest rates unchanged. We continue to expect them to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. Regarding non-standard monetary policy measures, we confirm that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. 
The information that has become available since our meeting in early September confirms a continued moderate but steady recovery of the euro area economy and a gradual rise in inflation, in line with our previous expectations. The euro area economy has continued to show resilience to the adverse effects of global economic and political uncertainty, aided by our comprehensive monetary policy measures, which ensure very favourable financing conditions for firms and households. Overall, however, the baseline scenario remains subject to downside risks.
Looking ahead, we remain committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation towards levels below, but close to, 2% over the medium term. To that end, we will continue to act, if warranted, by using all the instruments available within our mandate. In December the Governing Council’s assessment will benefit from the new staff macroeconomic projections extending through to 2019 and from the work of the Eurosystem committees on the options to ensure the smooth implementation of our purchase programme until March 2017, or beyond, if necessary. 
Let me now explain our assessment in greater detail, starting with the economic analysis. Real GDP in the euro area increased by 0.3%, quarter on quarter, in the second quarter of 2016, after 0.5% in the first quarter. The latest data and survey results point to continued growth in the third quarter of 2016, at around the same pace as in the second quarter. Looking further ahead, we expect the economic expansion to proceed at a moderate but steady pace. Domestic demand should be supported by the pass-through of our monetary policy measures to the real economy. Favourable financing conditions and improvements in corporate profitability continue to promote a recovery in investment. Moreover, still relatively low oil prices and sustained employment gains, which are also benefiting from past structural reforms, provide additional support for households’ real disposable income and private consumption. In addition, the fiscal stance in the euro area will be broadly neutral in 2017. However, the economic recovery in the euro area is expected to be dampened by still subdued foreign demand, the necessary balance sheet adjustments in a number of sectors and a sluggish pace of implementation of structural reforms. The risks to the euro area growth outlook remain tilted to the downside and relate mainly to the external environment.
According to Eurostat, euro area annual HICP inflation in September 2016 was 0.4%, up from 0.2% in August. This reflected mainly a continued increase in annual energy inflation, while there are no signs yet of a convincing upward trend in underlying inflation. Looking ahead, on the basis of current oil futures prices, inflation rates are likely to pick up over the next couple of months, in large part owing to base effects in the annual rate of change of energy prices. Supported by our monetary policy measures and the expected economic recovery, inflation rates should increase further in 2017 and 2018.
Turning to the monetary analysis, broad money (M3) continued to increase at a robust pace in August 2016, with its annual rate of growth standing at 5.1%, after 4.9% in July. As in previous months, annual growth in M3 was mainly supported by its most liquid components, with the narrow monetary aggregate M1 expanding at an annual rate of 8.9% in August, after 8.4% in July.
Loan dynamics followed the path of gradual recovery observed since the beginning of 2014. The annual rate of change of loans to non-financial corporations stood at 1.9% in August 2016. The annual growth rate of loans to households also remained stable, at 1.8%, in August. Although developments in bank credit continue to reflect the lagged relationship with the business cycle, credit risk and the ongoing adjustment of financial and non-financial sector balance sheets, the monetary policy measures in place since June 2014 are significantly supporting borrowing conditions for firms and households and thereby credit flows across the euro area. 
The euro area bank lending survey for the third quarter of 2016 indicates some further improvements in both supply and demand conditions for loans to the non-financial private sector. Furthermore, banks continued to report that the ECB’s asset purchase programme and the negative deposit facility rate had contributed to more favourable terms and conditions on loans. 
To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need to preserve the very substantial amount of monetary support that is necessary in order to secure a return of inflation rates towards levels that are below, but close to, 2% without undue delay.
Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. As emphasised repeatedly by the Governing Council, and as again strongly echoed in both European and international policy discussions, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European level. The implementation of structural reformsneeds to be substantially stepped up to reduce structural unemployment and boost potential output growth in the euro area. Structural reforms are necessary in all euro area countries. The focus should be on actions to raise productivity and improve the business environment, including the provision of an adequate public infrastructure, which are vital to increase investment and boost job creation. The enhancement of current investment initiatives, including the extension of the Juncker plan, progress on the capital markets union and reforms that will improve the resolution of non-performing loans will also contribute positively to this objective. In an environment of accommodative monetary policy, the swift and effective implementation of structural reforms will not only lead to higher sustainable economic growth in the euro area but will also make the euro area more resilient to global shocks. Fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the European Union. Full and consistent implementation of the Stability and Growth Pact over time and across countries remains crucial to ensure confidence in the fiscal framework. At the same time, all countries should strive for a more growth-friendly composition of fiscal policies.
We are now at your disposal for questions."

Turkey maintains repo and overnight rate on low lira

October 20, 2016 by CentralBankNews   Comments (0)

    Turkey's central bank left its benchmark one-week repo rate steady at 7.50 percent but surprised financial markets by pausing in its policy of lowering the overnight funding rate, saying "recent developments in exchange rates and other cost factors restrain the improvement in the inflation outlook and thus necessitate the maintenance of a cautious monetary policy stance."
    The Central Bank of the Republic of Turkey (CBRT) has cut the overnight funding rate by 250 basis points to 8.25 percent since March, most recently last month, as part of a simplification of its monetary policy framework and efforts to stimulate demand and economic growth.
    But the benchmark rate, the one-week repo rate, has been maintained since February 2015 as the central bank tries to push down inflation.
    "The Committee stated that the direction and the timing of the next step in the monetary policy simplification process will be data dependent," the central bank said, adding its usual guidance that it will maintain a cautious policy stance and the outlook for inflation will determine its decisions.
    Turkey's headline inflation rate eased to 7.28 percent in September from 8.05 percent in August as food prices declined for the first on a monthly basis since 2003. The CBRT has forecast year-end inflation of 7.5 percent.
     While the exchange rate of the lira has weakened this year - on Tuesday it hit a record low of 3.11 to the U.S. dollar - it rose in response to the central bank's decision today.
    The lira was trading at 3.06 to the U.S. dollar shortly after news of the CBRT's decision to maintain rates, up from 3.07. But it is still down 4.6 percent compared with the the start of this year.
    Turkey's economy decelerated in the third quarter, the CBRT said, noting the decline in tourism revenue and moderate consumer lending. But the central bank said it expected domestic demand to start to recover in the fourth quarter, helped by recent supportive measures and incentives.
   Turkey's Gross Domestic Product grew by an annual rate of 3.1 percent in the second quarter, down from 4.7 percent in the first quarter.

    The Central Bank of the Republic of Turkey issued the following statement:

"The Monetary Policy Committee (the Committee) has decided to keep the short term interest rates constant at the following levels:
a) Overnight Interest Rates: Marginal Funding Rate has been kept at 8.25 percent, and borrowing rate has been kept at 7.25 percent,
b) One-week repo rate has been kept at 7.5 percent,
c) Late Liquidity Window Interest Rates (between 4:00 p.m. – 5:00 p.m.): Borrowing rate has been kept at 0 percent, and lending rate has been kept at 9.75 percent.
Recently released data and indicators regarding the third quarter display a deceleration in the economic activity. Reduced tightness in monetary conditions and the recent macroprudential measures support the overall financial conditions. The lagged effects of the terms of trade developments and the moderate course of consumer loans limit the widening in the current account balance driven by the decline in tourism revenues. Demand from the European Union economies continues to contribute positively to exports. With the supportive measures and incentives provided recently, domestic demand is expected to recover starting from the final quarter. The Committee assesses that the implementation of the structural reforms would contribute to the potential growth significantly.
The slowdown in aggregate demand contributes to the gradual fall in core inflation. Yet, the recent developments in exchange rates and other cost factors restrain the improvement in inflation outlook and thus necessitate the maintenance of a cautious monetary policy stance.
In light of these assessments, the Committee decided to keep the interest rates at current levels. The Committee stated that the direction and the timing of the next step in the monetary policy simplification process will be data dependent.
Future monetary policy decisions will be conditional on the inflation outlook. Taking into account inflation expectations, pricing behavior and the course of other factors affecting inflation, the cautious monetary policy stance will be maintained.
It should be emphasized that any new data or information may lead the Committee to revise its stance.
The summary of the Monetary Policy Committee Meeting will be released within five working days."