Market prediction based on macroeconomic indicators - page 16

[[Deleted]]

Vladimir:
I welcome the alternative prediction: technical vs fundamental analysis. Let's see which is right.

Yes.

The chart shows the status at the close of the market at 22:59 on Friday 07.08.2015.

[Stanislav Korotky]

Vladimir:

There is no reason for interest rates to rise. My model predicts that the Fed will not change interest rates this year. But since interest rates are decided by people who make mistakes, you can't trust mechanical predictions of these rates.

Politics rules everything. Economic feasibility takes a back seat. The same situation is likely to occur with the interest rate - it will be raised because it has to be that way. Is it possible to be wrong on purpose?

[Vladimir]

Stanislav Korotky:
Politics rules everything. Economic expediency takes second place. It is likely to be the same with the interest rate - it will be raised because it has to be. Is it possible to be wrong on purpose?

Why should it be so? Where are the signs of rampant economic growth and inflation in the US? Inflation and the economy are growing as planned, 2-3% per year. The dollar is getting stronger against other currencies. Exports are suffering. Look what China is doing, downgrading its currency for the second day in a row. Iran is allowed to sell oil, which is already abundant on the market. Oil companies, especially those producing high value oil, are suffering. Predict that the Fed won't raise rates.

[sibirqk]

Vladimir:
Why should we? Where are the signs of rampant economic growth and inflation in the US? Inflation and the economy are growing as planned, 2-3% per year. The dollar is getting stronger against other currencies. Exports are suffering. Look what China is doing, downgrading its currency for the second day in a row. Iran is allowed to sell oil, which is already abundant on the market. Oil companies, especially those producing high value oil, are suffering. Predicting that the Fed will not raise rates.

The Atlanta Fed's GDP Now forecasting model - GDP Now - which is considered one of the best, gives an estimate for Q3 of only 1% growth, which from the FOMC perspective is of course catastrophically low, and could be a reason not to raise rates this year. So you are not alone in your predictions. I too think that they are unlikely to raise rates this year, even by a symbolic 0.25%.

[forexman77]

There are, of course, doubts about an increase because of China. Why would they start lowering the renminbi if there is a chance of a rate hike in the autumn. Maybe they already know something...?

Or they might have decided to drop their currency too much to have a cumulative effect before the hike.

But I still think that at some point the Fed will make money on the difference between the "old" and "new" Treasuries.

[Mykola Demko]

forexman77:

There are, of course, doubts about an increase because of China. Why would they start lowering the renminbi if there is a chance of a rate hike in the autumn. Maybe they already know something...?

Or they might have decided to drop their currency too much to have a cumulative effect before the hike.

But I still think that at some point the Fed will make money on the difference between the "old" and "new" Treasuries.

China is dropping the currency because their electricity and gas consumption is falling, which means the economy is winding down. Before the process reaches stagnation (where the Chinese don't know how to manage the economy yet), they have decided to increase the need for business and people by dropping the currency. A very effective measure if the timing is right.

[Дмитрий]

Nikolay Demko:
China is dropping its currency because their electricity and gas consumption is falling, which means the economy is winding down. Before the process reaches stagnation (where the Chinese can't manage the economy yet), they have decided to raise the level of necessity for businesses and people by dropping the currency. A very effective measure if the timing is right.

Genius idea! There you go....

And I thought that in any export-oriented economy, the devaluation of the national currency allows to further increase the price competitiveness of export goods in the global market........

And it turns out that these p.d.s don't burn enough light and gas....

[Дмитрий]

Nikolay Demko:

Although, on the other hand, their gas is imported and they buy it with dollars, and the devaluation of the yuan makes gas more expensive in yuan......

It does not dance here - less expensive gas will be sold, of course!

[Mykola Demko]

Дмитрий:

Although, on the other hand, their gas is imported and they buy it with dollars, and the devaluation of the yuan makes gas more expensive in yuan......

It does not dance - they will burn less expensive gas, though!

When people start to live rich they do not want to work, and the Chinese economy is built on manual labor, which is cheaper than robots. When you drop the currency, the level of necessity rises and you have to work harder. Consumption of electricity and gas is not an end in itself, but a macro indicator that sheds light on the state of affairs.

By the way, British scientists have proved that busy people who have no time to raise their heads are less likely to rebel and are busy surviving (for the Chinese rulers).

The Americans are no exception, their taxes are so balanced that the average citizen is forced to run around like a squirrel in a wheel, once he stops, he's bankrupt.

[Дмитрий]

Nikolay Demko:

When people start to live rich they don't want to work, and China's economy is built on workers who are cheaper than robots. By shedding the currency, the level of necessity rises, we have to work harder, and in macro terms this translates into higher GDP. Consumption of electricity and gas is not an end in itself, but a macro indicator that sheds light on the state of affairs.

By the way, British scientists have proved that busy people who have no time to raise their heads are less likely to rebel and are busy surviving (for the Chinese rulers).

The Americans are no exception, their taxes are so balanced that the average citizen is forced to run around like a squirrel in a wheel, once he stops, he's bankrupt.

How does the "loss of currency" in China raise the "level of necessity"?