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The dollar is close to hacking, and what about stock markets?The dollar crisis that accompanied the markets throughout 2018 has disappeared in recent months in the background of the US government’s absence from the money markets. All this is expected to change in the weeks when the US administration is expected to raise $ 600-650 billion in a short time. The significance of the markets is enormous, which is why the Fed is eager to lower interest ratesWhile most investors are concentrating on day-to-day fluctuations in the bond and equity markets, money market behavior in the US is getting less attention, even though this is probably the most influential market. This is the market that the US government and major banks are raising the required capital for current operations, and this is also the market that the Fed and the other central banks choose to intervene in recent decades. Understanding this market can easily explain the fluctuations recorded in the past year in the markets. In addition, one can understand why the Fed has been hinting in recent days that it will lower the interest rate at the end of the coming month even though the macro data does not justify it.

In order to understand the current policy of the Fed, it is necessary to return for the past 11 years to the severe economic crisis of 2008. Following the collapse of the major banks during that period, the Fed demanded an increase in the banks’ reserves, which would prevent a liquidity crisis among the banks. The Fed has increased banks’ reserves by making three purchase plans between 2008 and 2014. If this is not enough, for the “free money” received by the banks during this period, the Fed pays interest (IOER interest), with the Fed’s target Is to prevent the rapid depletion of these reserves.In 2018, for example, the Fed paid $ 38.5 billion in interest on the reserves in its account, while US authorities enacted laws designed to avoid unnecessary risks as in 2008 (but the banks easily circumvented it) ).Back to 2018. At the beginning of February, the Fed began to reduce its balance sheet. It is important to emphasize that the Fed’s balance sheet is actually a commitment that the Fed has to the banks, and it is recorded in the banks’ balance sheet as an asset. Therefore, when the Fed’s balance sheet falls, the line of assets in the banks’ balance sheets declines accordingly. In 2018, the banks were required to deal with an unfamiliar situation: on the one hand, their assets began to fall, and on the other hand they were asked to maintain a suitable reserve ratio. The result was a shortage of dollars in the banking system. At the beginning of 2018, this was reflected in the fall of most of the currencies in the emerging markets and the jump in the dollar. And in the last quarter the pressure also spread to the stock markets, with the banks leading the trend.

How was the liquidity crisis of the last quarter of 2018 resolved? The US government, the largest consumer of dollars in the market, was shut down by late December and most of January. When there is no government activity, there are no funding rounds. But it does not end with the downtime, the US government is “out of the game” in the background of reaching the “debt ceiling” that prevents the US from increasing its debt (by taking dollars from other bodies). You can talk a lot about macro data / other news events, but in practice, when there is no dollar distress in the markets, the dollar weakens and the markets rise. That’s exactly what happened in the last year. The effect of reducing the Fed’s balance sheet since the beginning of the year was not felt, because the US administration balanced when it did not take its “part of the pie.”Index Dollar in recent years: Life is much easier when the US government does not participate in tradingAll this is expected to change in the coming weeks, when the US government has no choice but to return to the financing markets. According to our estimate, the “X date” is September 3, when planned vacations for American legislators leave about two and a half weeks for legislators to reach agreement. Let it be clear, the chances of a scenario in which US lawmakers do not reach an agreement and the United States becomes practical to the point of repayment are nil.

Following the expected agreement on raising the debt ceiling, the US is expected to raise $ 600-650 billion, and the largest consumer of dollars in the market is “returning to the game.” In the last few months, Effective Market Jumping (EFFR) and SOFR Interest Rates At the end of the month / large US bond issue, interest rates in the current month are declining (we are already after the middle of the month).The effective market rate (EFFR) currently stands at 2.41%, 5 basis points above the IOER rate (which was supposed to be the ceiling for the effective interest rate). The following graph shows the distance between the effective interest rate in the market and the lower range of Fed funds. The gap today stands atClarida: Fed ‘should abandon the’ data dependent ‘policyA few hours after the speech by Fed Vice Chairman Wilimas, he said the Fed should begin to determine its opinion on future macro data, adding that “when interest rates are near zero, it is important to take preventive action”A few hours after the surprise speech by US Federal Reserve Chairman John Williams that the probability of a 50 basis point cut in the US interest rate at the next meeting jumped to a new record, “This is an academic study that has been conducted over the last 20 years, and this is not a hint of the bank’s next actions at upcoming meetings.” Despite the bank’s clarification, investors seem to be in no rush to change their assessments again, The Fed Chairman, Richard Clarida, who actually argues that the bank should change all of the bank’s policies in recent years.

If the Fed has emphasized in the past decade that it is operating according to the data “data dependent”, the Fed’s vice chairman said last night that the bank should begin to determine its policy according to its beliefs regarding future macro data (ignoring the fact that the bank failed to a large number) Of such forecasts.) In this context, we note that macro data in the US indicated some improvement over the past two weeks, raising doubts about the need to lower the interest rate at the end of the coming month.Asked about the Bank’s optimal monetary policy, Clarida said, “The US economy is in a good place, but uncertainty about the future has increased considerably in the past six weeks, and the ideal monetary policy is to adjust the tools to keep the economy going.”You do not want to wait, and when interest rates are close to zero, it’s important to take preventive action,” he said.Steven Menuchin: “National danger” in virtual currenciesThe blitz of American politicians against the expected launch of the Libra is continuing tonight. At the same time, reports that Democrats are planning to submit a bill that will prohibit technology companies to deal in the field

It seems that this is how one can describe the actions of the US administration in recent days regarding the virtual currency market, especially regarding the expected launch of the “Libra” by Facebook and other giant companies.More articles on:The Ministry of Finance is very concerned about the expected launch of the Libra,” said US Treasury Secretary Steven Menuchin, adding that “Bitcoin is very volatile and speculative, using virtual currencies for money laundering, financing terrorism, And a large number of actions, and investors in the field should act cautiously. “Menuchin concluded: “Facebook has a lot of work to do before the US allows it to launch a currency.”The announcement follows a series of senior administration officials who have expressed their opposition to Facebook’s currency in the last few days, and that if it succeeds, it will cancel the country’s monopoly on money production.

Last Friday, President Trump piped in his Twitter account that “Bitcoin and other krypton coins are not money, and their value is very volatile and air-based.” Cricket assets without regulation can lead to illegal behavior, including drug trafficking and other illegal activities. Virtual ‘Facebook, Libra, will have a low status. He will not be reliable. If Facebook and other companies want to become a bank, they must have a new banking license and comply with all banking regulation, just like national and international banks. We have only one real currency in the United States, and it is stronger than ever, reliable and reliable. It is the most dominant currency anywhere in the world, and it will always be such. It’s called the American Dollar! “Meanwhile, the Reuters news network reported today, according to a bill it has reached in recent days, Democratic lawmakers in the House of Representatives want to ban large technology companies to function as financial companies, and will be prohibited from issuing digital coins. Of $ 25 billion or more, will not be able to enter the field, and that a company will be fined $ 1 million per day.

Oppenheimer recommended Ceragon – a premium of 36% on the market priceCeragon was disappointed in the second quarter of the year, but Oppenheimer believes the company is in a good position to improve revenue and profitAt the end of last week, we met with Ceragon’s management, which dealt extensively with the ongoing challenges in India and the company’s vision for the wireless backhaul market in the years 2019 and 2020 .Highlights of the meetings included (1) new pressures affecting Huawei’s huge competitor in several developed markets and the indirect impact on Ceragon, (2) a delay in orders timing in India, and (3) chip dynamics for Ceragon. While we are positive about the long-term prospects of the company and its distinct competitive advantage for technological leadership, short-term challenges on issues beyond Ceragon’s control, such as orders from India and the timing of the launch of 5G networks, are waiting for a higher level of certainty.Our assessment is that Ceragon has taken clear steps to improve profitability in 4G / LTE equipment, but near-term certainty seems low and the pace of transition between the launch of the 4G networks and the decline in 4G construction in India towards the end of 2020 is not yet clear.” Recent achievements in regions including North America and Latin America Raised the gross margin to a remarkable level of 34% in 2018 (and even 35.7% in the first quarter of 2019), resulting in a adjusted 22 cents per share in 2018.

“In the long term, we believe that Ceragon’s strong technology (highlighted through transactions with CMBM and NEC) and the opportunities in the G5 around the world are beneficial to the company’s ability to generate profitable growth. The launch of the 5G networks in 2020 (an optimistic timing in our opinion) The CRNT share is now trading at a p / e ratio of about 11x for 2020, compared with an average of 13x for the telecom equipment industry (NEC, Nokia, Ericsson). A target of $ 3.50China’s central bank: “The pound must be under our control”In the background to the launch last month of the Libre, it seems that the world authorities are afraid. The Chinese bank said today that “the Libra could disrupt the global monetary system and could lead to currency risks in weaker countries.” At the same time, a hearing for Facebook is scheduled for the rest of the monthf Facebook’s Libra becomes a currency in which to make many international transactions, and it will act as regular money, it will have a material impact on the bank’s monetary policy, and financial stability in the market. Therefore, the libra must be supervised by the authorities. PBOC officials said today, adding that the bank is considering the early launch of its own virtual currency.The bank noted that because the Libra is a virtual currency that can be converted regardless of the country’s borders, the Libra can not be stable without the support and supervision of the central banks. In addition, the Chinese central bank notes that the Libra could disrupt global monetary policy and cause currency risks in weak economies (capital flight from a country). PBOC also notes that Facebook has not yet made clear its commitment to the prohibition of money laundering and the prevention of terrorist financing, nor has it explained how it will protect the privacy of users.

If the pound is pegged to the US dollar, it means that “there will be one boss, the US dollar and the US, which is expected to lead to international political / economic repercussions,” senior bank officials said today. Will prohibit the use of the currency.Maxine Waters, a California Democrat who is now chairman of the House Financial Services Committee, appealed to Facebook last week to stop the development of the Libra so legislators could check potential risks That the digital currency could create global financial stability. It should be noted that the Financial Services Committee is expected to hold a hearing on Facebook on this issue later this month.In the background for today’s events, Bitcoin is back climbing today, trading at $ 12,620 per currency.PepsiCo was in line with forecasts for the last quarter, and the company’s share is responding to declinesThe company today reported revenues of $ 16.45 billion in the fourth quarter, slightly above expectations. At the same time, the company reports that it has repurchased and distributed a dividend of $ 4.4 billion over the past six months

The company reported revenue of $ 16.45 billion in the fourth quarter, compared to $ 16.09 billion in the corresponding quarter last year. The company’s operating profit decreased by $ 2.79 billion, compared with $ 3.02 billion in the corresponding quarter last year. However, the company reported a profit of $ 2.03 billion, or $ 1.44 per share, compared with $ 1.83 billion in the corresponding quarter last year. The improvement in profit is mainly attributed to lower tax payments in the current quarter. The company’s adjusted profit was $ 1.54, slightly higher than the preliminary forecast of $ 1.5 per share.At the same time, the company confirms the forecasts for the rest of the year. The company expects organic growth of 4% in 2019, with earnings expected to reach $ 5.5 per share.Since the beginning of the year, the company has repurchased BUYBACK and distributed $ 4.4 billion in dividends, with the company anticipating that the current rate will continue in the second half of the year. Last year, the company announced a $ 15 billion share purchase plan, expected to end in June 2021. In February, the company announced it was raising its annual dividend per share to $ 3.82.At the end of last quarter, cash in the company’s coffers totaled $ 3.29 billion, with the company having a long-term debt of $ 27.71 billion.Recall that last August the company acquired Sudhastream at a market value of $ 3.2 billion (for the full article).Oppenheimer on Faber: “The opportunity is great, the company is still in its infancy”Fiber that connects freelancers to customers 25% commission; Oppenheimer is offering a target price of $ 32, compared to $ 26 in the market

Faber Israel, managed by Micha Kaufman and traded on Wall Street (Nasdaq: FVRR), develops an Internet platform that is becoming very popular – a link between service providers and customers. That way you can hire a designer in India (low cost), and so a software company can hire an Israeli programmer (an expert in a particular field)The idea sounds interesting, the business model also – charging a commission of about 25% of each transaction. But, of course, there is no market without competition. The big question is whether Faber gives something that others do not have, and whether its advantages are those that place it as a company that is here to stay. Oppenheimer thinks so.This is a company that issued only a few months ago, and its share soared 100% in the first few days before returning all the way down to a current price of $ 26.1, reflecting a value of $ 870 million – a high value for a company that loses more than $ 20 million a year To $ 80 million. But that’s what they said about many Internet companies.Oppenheimer believes that the company’s chances outweigh the risks and they provide a positive recommendation with a target price of $ 32 compared to a current market price of $ 26 – a premium of 23%. More interesting, however, is that they expect impressive growth over the next decade, when they estimate that profit in a decade will reach close to $ 100 million on a turnover of over $ 1 billion (see Oppenheimer’s 10-year forecast in the table below).

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