CashBackForex
CashBackForex Representative
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There are two other reasons why I doubt the Fed can see the light at the end of the tunnel that illuminates a recovery.
Of primary importance is the rapidly escalating cost of energy. While the Fed's monetary expansion aids the investment bankers who then allocate monies to various asset classes, including commodities, the people on Main Street suffer. For many, their incomes now are less than they were in 2007. Their taxes, if they are working have gone up, and their disposable income is down. Gasoline prices at these levels over a period of time, further reduce the consumers discretionary income, increasing the odds for a recession.
The second reason why the Fed will not be concerned with an exit strategy is Obamacare. Bernanke, remember, has enhanced the objective of the Fed. In this new capacity, the Fed has set a target rate for employment at 6.5%. Giving banks lots of money, however, does not relate to increased hiring. Small business will be the sector where jobs are created. Small business also is now learning about and frightened of the cost of Obamacare.
Does this mean we want to buy the Euro and sell the USD? Not necessarily, because the negative inputs in the US economy will take time to unfold and the single currency has to deal with a major uncertainty now.
In Europe, under the Monti austerity plan as proposed by the EU, the tax rate and collection has increased. That said, it looks like a Berlusconi vote (Italian elections this weekend) because of the weak economy, the austerity plan, and the attempts to modify labor laws will be an anti-euro vote. So, while the US difficulties are longer term in nature, the Italian election uncertainty might mean some pressure on the euro in the near term.
There are trading opportunities in a choppy market, but if you are not careful and get on the wrong side, it gets costly.
We are hopeful the EURUSD (FXE) gives us a rally to the top side of the 1.34 handle where we will try the short side of the pair.
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex and/or CashBackForexUSA
Of primary importance is the rapidly escalating cost of energy. While the Fed's monetary expansion aids the investment bankers who then allocate monies to various asset classes, including commodities, the people on Main Street suffer. For many, their incomes now are less than they were in 2007. Their taxes, if they are working have gone up, and their disposable income is down. Gasoline prices at these levels over a period of time, further reduce the consumers discretionary income, increasing the odds for a recession.
The second reason why the Fed will not be concerned with an exit strategy is Obamacare. Bernanke, remember, has enhanced the objective of the Fed. In this new capacity, the Fed has set a target rate for employment at 6.5%. Giving banks lots of money, however, does not relate to increased hiring. Small business will be the sector where jobs are created. Small business also is now learning about and frightened of the cost of Obamacare.
Does this mean we want to buy the Euro and sell the USD? Not necessarily, because the negative inputs in the US economy will take time to unfold and the single currency has to deal with a major uncertainty now.
In Europe, under the Monti austerity plan as proposed by the EU, the tax rate and collection has increased. That said, it looks like a Berlusconi vote (Italian elections this weekend) because of the weak economy, the austerity plan, and the attempts to modify labor laws will be an anti-euro vote. So, while the US difficulties are longer term in nature, the Italian election uncertainty might mean some pressure on the euro in the near term.
There are trading opportunities in a choppy market, but if you are not careful and get on the wrong side, it gets costly.
We are hopeful the EURUSD (FXE) gives us a rally to the top side of the 1.34 handle where we will try the short side of the pair.
Any opinions, news, research, analyses, prices, or other information contained in this post are provided as general market commentary, and do not constitute investment advice from CashBackForex and/or CashBackForexUSA
