Gross Domestic Product (GDP)
in the UK
rose just under 0.8% in the third quarter of 2013. Figures for the fourth
quarter are out this morning and are eagerly awaited. The reason for this is
that if they are as good this time round it will complement very nicely the pleasant
surprise that was granted by the figures for employment last week, which caused
a surge in Sterling .
One of the most interesting aspects of the GDP figures for the third quarter is that all sectors of the
economy made a positive contribution. Agriculture, manufacturing, construction
and services all came to the table with positive numbers. A repeat of this type
of outturn for Q4 will possibly see Cable (GBPUSD) move in breakout mode
through the 200 period SMA on the monthly chart, which has defined its upper
limit since the dramatic falls that took place at the outset of the Great Financial
Crisis in late 2008 (see chart below).
Stocks and the real economy
As we reported recently, a new voting
member of the U.S. Federal Reserve, Mr. Fisher of the Dallas Fed, is on record
as saying:
“'Were a stock market correction to ensue while I have
the vote, I would not flinch from supporting continued reductions in the size
of our asset purchases,' He said 'as long as the real economy is growing,
cyclical unemployment is declining and demand-driven deflation remains a small
tail risk, I would vote for continued reductions in our asset purchases, with
an eye toward eliminating them entirely at the earliest practicable date.'
The current turmoil in the
equity markets and emerging market currencies is nothing more or less than a
return to normality after the crisis. The measures taken to avoid recession and
depression were what drove up equities and those same currencies in the first
place, so when the stimulus measures are withdrawn it is only reasonable to
expect that they, too, will also reverse.
We can be confident that Mr.
Fisher’s sentiments are shared by most if not all of his colleagues on the US
Federal Reserve. The current fun and games represent a transition stage that
will work its way out. What we have to do in the meantime is to keep our powder
dry for when the turmoil is over. In the meantime we watch and wait.
In particular, we will be
keeping a close eye on both the USDJPY and USDCHF pairs to with a view to them
beginning to appreciate in the not-too-distant future. Both JPY and CHF have
been safe haven currencies in the last few trading days, at a time when safe
havens should not really have been needed.
Here hoping. But your algorithmic strategy does not take into consideration of the dismal unemployment rate and the cost of fostering those who depend on the social structure and support to stay alive. should there not be a base line for the standardization of the constant cash expenditures to level the field and give a true reading about the actual contributions and the valuation of any forward contributions.
ReplyDelete