The Bitcoin is climbing over $ 9,200, and Facebook will launch its own currency.
Market reports that Facebook has signed agreements with MasterCard, Visa, PayPal and Ober, and plans to launch its own digital currency, send Bitcoin to the ups
The Bitcoin is now climbing above $ 9,200 as reports that Facebook is expected to unveil its own digital currency this week, adding to optimism about the wider adoption of digital currencies worldwide.
Last week, details were published that Facebook will launch a digital currency program on June 18, when the company reportedly signed agreements with a number of large companies – including Visa, MasterCard, PayPal and Auber – which are supposed to back up the project. Separately, the Facebook spokeswoman confirmed reports that Ed Bowels, a representative of the banks in England, joins the company, but declined to elaborate.
“The digital currency program may be one of the most important initiatives in the company’s history to open up new involvement and revenue streams,” said RBC analyst Mark Mahany. The analyst, who ranks Facebook in “over-yield”, did not appreciate the potential of the move.
Back to Bitcoin, the digital currency posted an increase of more than 130% in 2019, and the Bloomberg Crypto Galaxy Index almost doubled in the background to a long list of reports of companies looking to deepen their involvement in the field. Some investors said that recent reports that Facebook plans to launch a digital currency in the next few days are pushing people toward Bitcoin.
In anticipation of the opening of trading on Wall Street, here is what awaits us this week
The tensions between the US and China and the global macro data pointing to an economic slowdown will continue to be the focus, as are the questions about a possible reduction in interest rates.
The trading week on Wall Street will open today against the background of the slight declines on the last trading day, while the focus will continue to be the tensions between the US and China and the global macro data that continue to indicate a sweeping economic slowdown.
This week the following data will be published:
Monday, 20:00 The President of the European Central Bank, Mario Draghi, will deliver the opening remarks at the ECB forum in Portugal. Draghi will also speak on Tuesday at 11:00 and Wednesday at 5:00 PM (closing speech).
Wednesday – In the US, the Fed’s interest rate decision will be announced at 21:00.
Friday – European Purchasing Managers’ Indices (10:15) and Germany (10:30)
“There is no expectation of a change in the interest rate, but it is not clear how the Fed’s interest rate forecast will change in terms of growth, inflation and interest rates.” In the previous forecast in March, the Fed spoke of no change in the interest rate This year and one interest rate hike in 2020. It is important to see how many of the Fed’s 17 members expect a rate cut this year, with six out of 17 expecting to expect a cut in interest rates this year, while the long-term interest rate is expected to fall to 2.5 percent from the previous forecast of 2.75 percent “In recent years, the Fed has gradually lowered its long-term interest rate.”
“The capital markets always like drama, and when a narrative takes shape, the capital market usually adopts it to the end in a way that usually leads to an out-shot in both directions.” The dominant narrative over the last few weeks has become the economic slowdown in the US Serious, the trade war intensifies and the risks of recession grow. The solution – the Fed’s interest rate cut that has also recently been traded – FED INSURANCE RATE CUT. In other words, the Fed will act to cut interest rates soon as an insurance act to ensure continued economic expansion.
In fact, the retail and industrial production figures released at the end of the week should be moving away from the July interest rate cuts as they were better than expected and signaled that private consumption Will probably grow at a healthy rate of about 3.0% in the second quarter of the year. “
“With regard to the trade war, the Fed members have already said that they are monitoring the developments, but it is not possible to rush to conclusions about the effect on the economy, mainly because it is not yet clear which direction it is headed in. The basis for speculation therefore as long as the direction of the trade war is not very clear, early interest rate reduction may be a policy mistake.
“We will add that if there is a significant escalation that will increase the risk of the US and the world entering a recession, the Fed will not cut the interest rate once or twice, but will reduce it quickly many times. To date, this is still not the main scenario. “
“We have been talking about the economic slowdown in the US for a long time, but we believe that the data are not yet weak enough to make the Fed work. The problem is that the contracts give an 85 percent probability of a reduction in the interest rate already in July and actually embody three 25-basis-point cuts by the end of the year, which appears to be a less likely scenario. The Fed, which reached a level characterized by crises and not just a slight slowdown. “,
“The inflation environment in the US, which is reflected in the consumer price index and in the producer price index, continues to be moderate and continues to raise expectations in the market for a reduction in the Fed rate in one of the upcoming decisions,” said Gil Michael Baffman, chief economist and Dudi Reznik. However, the weakness in prices is not in itself sufficient reason at the moment for the Fed to cut interest rates at next week’s Fed meeting. “
“Against the background of the trade war, it seems that the Chinese authorities will accelerate the increase in credit to the private sector, with an emphasis on the business sector, and will try to accelerate the growth of domestic activity, which has slowed down due to efforts to reduce the large leverage in the private sector, .
“The weakness of industrial production in Europe continues, and the early May evidence suggests that the Eurozone industry remains weak, with business surveys such as PMI weak and consistent with further declines in production.”
Why is the “debt ceiling” issue likely to be a big event this coming September?
The US debt ceiling will rise at the end of September, as has been done in the past decade, but can the banking sector absorb the large supply that comes after that? Given this, the Fed is likely to have to launch a QE program in the coming months
Despite the drama in the bond markets last month with the fall in US bond yields, the main story in the market is expected to occur next September when the US government will have to decide on the “debt ceiling.” The US debt ceiling will eventually rise, In the past decade, but it is not certain that the banking sector will be able to withstand such a large supply of bonds that will be released immediately thereafter.
In recent months, we have published on the site the sharp rise in the positions of the primary dealers on short US bonds, the primary dealers are those large banks that directly buy US bonds in the issues and market them in the secondary market to the rest of the investors. 2 Possible explanations: The first explanation was that the large banks believed that the Fed would
have to cut interest rates, and then they would be able to cut a nice coupon on the investment, and the second possible explanation was that the Treasury was having difficulty issuing bond issues in the background, Take an active role in order to prevent failure of IPOs. The second explanation is much more problematic. Today, Zoltan Pozar, a director of the Credit Suisse research group and a former adviser to the US Treasury Department, claims that the second explanation is the increase in positions. “The Fed may have gone too far and should prepare to launch a mini-procurement program if it wants to avoid big problems,” Posar said today.
Posar claims that the sharp drop in bank reserves, caused by a reduction in the Fed’s balance sheet (nearly $ 600 billion), has led to an increase in the cost of buying long-term US bonds. “On the part of investors from Europe and Japan, the yields provided by the US 10-year bond are significantly lower than the minimum investment since last fall.” As a result, Posar claimed that the dealers had to take a larger share of the issues, Short-term loans. The dealers’ move is responsible for the sharp rise in the effective interest rate (EFFR) in recent months, which forced the Fed to lower the IOER rate at the last meeting.
How does this all relate to the issue of debt ceiling?
The US has not increased its debt over the last few months, but once it does (if it does not want to get to DePault), the market will be flooded with US bonds. By raising the debt ceiling in 2013, the US government’s debt rose by $ 464 billion in just five months. In 2015, the US debt jumped by $ 650 billion, and in 2017 the debt jumped $ 723 billion in a similar period. If Posar’s description is true, US banks will have to pay a huge amount of supply in the last quarter of the year, further lowering bank reserves.
Recall that in September the Fed is expected to switch to a net buyer of government bonds, which may help to finance the large supply, but it is difficult to see how this action alone prevents the problems to the banks.
If we add to the fact that the reports of the largest US banks are likely to be significantly hurt if the Fed actually reduces the interest rate as the market estimates until the end of 2019, we can understand that the situation of the US banks is much more problematic than any “debt ceiling” In recent years.
Bank of America’s sensitivity analysis of the interest rate change from the large reports: a big problem if the forecast actually occurs
As of today, the Fed is expected to cut another $ 120 billion from its budget by the end of September, further exacerbating the banks’ problem. The Fed’s only way to avoid particularly big problems in the last quarter of 2019 is to announce an earlier end of the process of reducing the balance sheet, and the beginning of increasing the balance sheet. Some of the responses to the Fed’s next moves will be received this coming Wednesday.
Wall Street: Goldman Sachs lost 2.3%, oil fell 4.2%
The indices closed at moderate price declines of up to 0.4%. Sales pressure was felt in the banking sector: Wells Fargo lost 2.9%, Morgan Stanley shed 2.4%. Teva lost 4.1% in volatile trading. The dollar jumped
The Wall Street trading day closed at moderate price declines of up to 0.4%, with market volatility rising in the last two days. In the background of trading, the factors that led to the sharp rally in the past two weeks are expected to fade in the next two days. At the same time, recent events in Hong Kong clouded sentiment in the market.
Indices on Wall Street
S & P 500 -0.16%
Dow Jones -0.07%
The leading indexes on Wall Street ended a six-day sequence of consecutive gains, during which the leading indices completed gains of up to 9%, with some of the indices re-trading at all-time highs. As we reported in recent days, the main factor driving the sharp rally was a significant increase in US dollar supply in markets, which is expected to change in the coming days as the US government and the Fed are expected to withdraw close to $ 140 billion from the markets by the end of the month. Is expected to increase the financing crisis again, and as a result, market volatility is expected to rise again in the near future.
In light of the upcoming moves, sales pressure was felt tonight in the banking sector. Goldman Sachs (Nasdaq: GS) and Morgan Stanley (MS) fell 2.4%. Wells Fargo (WFC) lost 2.9%. Bank of America (BAC) lost 1%, and the troubled Deutsche Bank (DB) shed 1.3%.
Another event that is affecting money markets around the world is the escalating protests in Hong Kong over a bill that would allow state authorities to extradite suspects to China. Millions of people have demonstrated in recent days, and aside from the expected economic impact of the shutdown, the financing market began to show signs of nervousness this morning. Interbank Offered Rate (HIBOR) for a month jumped 87 basis points this morning, the sharpest daily jump since December 2018. At the same time, the Hong Kong dollar is currently trading against the US dollar at its highest level since last December.
In the commodities sector, oil lost 4.2% this evening and fell to the psychological level of $ 50 per barrel. Gold climbed 0.5% to $ 1,336 an ounce.
In the background of the drop in oil prices and fears of a further slowdown in global economic activity, yields on government bonds are falling again, yielding 2.12% for 10 years and a yield of two years falling to only 1.89%. At the same time, the yield on 10-year German bonds fell to 0.24%, with inflation expectations in the European Union coming to a new low today.
Meanwhile, inflation data in the US continues to disappoint The Core CPI rose by 0.1% in May, compared with expectations of an increase of 0.2%, on an annualized basis, this is a price increase of 2%, compared with expectations of an increase of 2.1%. Today, following the data in recent weeks, we are paving the way for Fed to lower interest rates in the coming sessions.
In the center
BONDMIT (NYSE: BYND), the latest hit on Wall Street, is likely to continue to focus on the background of sharp volatility this past week. The company’s share jumped 12.5% tonight, while the company’s share plunged 25% after closing at the beginning of the week, more than 600% since the IPO in early May. In the wake of the correction in the past two days, JP Morgan lowered its recommendation yesterday From “extra weight” to “neutral”, with a target price of $ 120 per share.
Teva (Nasdaq: TEVA) fell 4.1% in volatile trading today and back at record lows. Recall that the rating company Fitc downgraded the company’s debt rating last weekend