Advfn.com morning market bulletin is a useful source of info to keep your eyes and ears on the game as market zig zags around like a banana boat albeit on calmer shores of late.
The markets have eased off over the last few days with the FTSE in particular slipping from the 5860 range to test the 5700 floor recently.
There is much commentary about what the FED will do with regards QE3. My own view is that any effort by the FED surely has to be supported by Mario and co (ECB) plus a few good measures from China too. It’s a bit like a game of chicken as each party involved does not want to line another’s pockets. The burden of ‘recovery’ should be shared. So perhaps the market view is not just on the FED but also on Mario. Will he become Super Mario on Sept 6th and will the German’s hold hands with everyone on the 12th?
The pattern of key dates couldn’t have been timed better. The Jackson Hole meeting appears to be the starter, with main course coming from Mario on 6th and then both involved with the dessert on the 12th/13th.
The only delicate thing for the FED near term is the US elections. Any easing before the US election battle really kicks off might be construed as support for Obama which does not fair well with an impartial Fed Reserve.
But action is required with or without a US election – otherwise whoever wins the race for US Presidency could find themselves locked into another austere 4 to 5 years of office.
Advfn morning bulletin update…
- All eyes turn to Bernanke
- Mining stocks wanted early on after recent losses
- Redrow Chairman makes takeover approach
Stock markets across Europe have been rather subdued over the past few days and the opening hour of Friday’s session was no different as investors continued to show caution ahead of a speech by Federal Reserve Chairman Ben Bernanke later this evening.
The big question on everyone’s lips - “will Bernanke hint at another imminent round of quantitative easing (QE3)?” - will be answered tonight as the Fed frontman takes the stage in his keynote speech during the meeting of central bankers at Jackson Hole, Wyoming.
During the lead up to the event, Bernanke was widely expected to announce a new raft of easing measures. However, as Michael Hewson, the senior market analyst at CMC Markets UK, explained this morning, the “buoyant nature” of recent US economic data may have eased the Fed’s concerns about the economy and could limit the room for manoeuvre.
“Whatever Bernanke does say it remains quite likely that once the markets have absorbed the focus will inevitably shift towards the next Fed meeting which is scheduled for September 12th and 13th,” he said.
Markets will also be looking ahead to a European Central Bank (ECB) meeting on September 6th and the German Constitutional Court ruling on the European Stability Mechanism on September 12th, all labelled as“risk” events by analysts at UniCredit yesterday which could lead to significant volatility on markets.
In other news, following the meeting between German Chancellor Angela Merkel and Italian Prime Minister Mario Monti in Berlin yesterday, Merkel has requested that Italy delays its request for aid, according to Spanish newspaper El Mundo.