Tuesday , December 1 2020

Investors believe the real collapse of the dollar will continue



The dollar corresponds to almost all world currencies. On Thursday, Green said it supports the weakening of the president of the US Treasury, Stephen Mnuchin.

A new blow unexpectedly hit the American business newspaper The Wall Street Journal and stopped increasing Trump's rates for invading the Federal Reserve System and calling for the Fed to Yeni calm down Yeni.

Investors responded immediately, but analysts say: The real collapse of the US currency still continues, RIA Novosti.

Harder, harder

The US stock market in October shook major sales. The S & P 500 broad market index decreased by eight percent, high-tech Nasdaq fell by 9.2 percent. The domino effect in Europe and Asia was: the cumulative losses were close to five trillion dollars. One of the main reasons for the sales of American stock exchanges is the investors' concern about increasing interest rates.

The tightening of the monetary policy of the Federal Reserve Bank led to an increase in the yields of long-term US government bonds, an increase in mortgage rates, and consequently a decrease in the volume of real estate purchases.

This year, the American regulator has increased the lock rate three times and does not seem intent on stopping. Goldman Sachs, one of the largest US investment banks, estimates that by the end of 2019, the Fed is doubling the market as it expects twice. Basic arguments: The American economy is recovering and therefore should not be a trace of a stimulating policy.

The increase in interest rates increases the inflation rate. According to scientists at Yale University, a period of growth begins in the inflationary cycle of the United States, including the sharpening of trade contradictions.

According to Stephen Roach, a senior university researcher and former president of Morgan Stanley Asia, the US inflation will rise to 3-3.5% next year. And that means the Fed will have to raise the rate.

Trump turned against Fed

The American leader does not agree with the current policy of the financial regulator. In October, Trump described the Fed as the main threat to the economy. He also complained that the Fed, acting as the central bank, was an independent structure and exerted pressure on the White House.

When the Fed increases interest rates or applies other measures to tighten monetary policy, the da cheap money d in the financial system becomes smaller.

The higher the interest rates, the higher the cost of borrowing for a job. This means that entrepreneurs do not raise their salaries, invest less, and make less profit for shareholders. As a result, the shares of the companies lose their appeal.

The enterprise actively used low rates for expansion and acquisition agreements of other companies. Accordingly, when the rate moved upwards, the debt service was very difficult.

First victim

According to OECD statistics, the number of; zombie companies i that do not make profit and live in the borough has increased to 6 percent in recent years, and this is a very alarming sign, says Andrei Kochetkov, a leading analyst at Otkritie Broker.

One of the victims of a steady increase in rates has already become one of the largest US companies – General Electric.

Ina Only the financial performance of the giant has deteriorated significantly, while capitalization has fallen to less than $ 110 billion in corporate debt. Companies will have less money because they will have to spend significant amounts to reduce the amount of debt. Accordingly, economic growth will slow down et – explains Kochetkov.

Dangerous growth

The rise in interest rates contributes to an increase in the Fed's ten-year treasury bond, in which treasury bills, in particular bank loans and mortgage interest rates, are linked. Accordingly, the purchasing power of the population is decreasing.

High profitability allows more money from emerging markets to the economy. But there is a downside.

In Bank of America, Merrill Lynch has already warned: the rise in interest rates in the US could trigger a new crisis. All this year, investors are selling emerging markets. The reason is the Fed's rate hike that strengthens the dollar.

The current situation is very similar to the bank's analysts, which occurred twenty years ago, when investors emerged massively from the risky debts of emerging economies.

balance

Now, when Trump was backed by the country's biggest business newspaper in his attacks on the Fed, the dollar ran toward a sales-close. But this point, of course, is not in this publication.

Dı After the tax incentives were exhausted and the US economy began to decelerate, the small weights, such as statements by officials and experts, began to decline in favor of lowering the Fed's rate hike rate. Andrei Vernikov, executive vice president of investment analysis at Zerich Capital Management, aggravated the opposition, which led to a weakening of the US currency.

In addition, last week, Fed Vice President Richard Clarida told CNBC that "there is some evidence" in favor of the slowdown in global economic growth. As a result, the rate of investors who thought that the Fed meeting would be held in December fell.

As reported by the "Country", the US Federal Reserve left the base rate at 2-2.25% per annum in November.

In October, global stock indices were already falling. Trump said it was the fault of the Fed fed doubt.


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