The session will be marked by the expectation of today’s meeting of the Fed. If nothing significant occur regarding oil prices, investors will adjust their portfolios to the US Federal Reserve meeting. Whereas many investors had set up short positions (sellers) in the equity markets (and particularly the most vulnerable sectors such as oil and mining), it is possible to occur a buying pressure, as these investors may close their positions.
The more cyclical sectors and more dependent on the weakness of the Euro (such as automotive, industrial, etc.) should register a over-performance. In terms of indices, the DAX is the most benefited from the weakness of the European currency. The mining sector recorded a sharp appreciation in the Asian session but if such a move be extended during the European session, the recovery is likely to be volatile and once again dependent on oil prices.
The decision of the Central Bank started a new cycle in US monetary policy. For six years, benchmark interest rates remained at historically unprecedented levels in a range between 0% and 0.25%. Now, with the increase decided on Wednesday begins a new upward phase of the interest rate, which is supposed to be more gradual than the previous. Typically, increases in interest rates are considered unfavorable to equity markets. However, the history of stock markets reveals a different pattern.
Today’s session will serve to clarify how much of the fall of Friday is due to the maturity of derivatives and how much was due to the weakness of the market.
As long as the SP500 remains above the zone of 1994/2000, the possibility of a rise by the end of the year still remains.
Tomorrow begins the period that corresponds to the so-called Santa Claus rally. This period includes the last five sessions of the year and the first two of the new year. Over the past 29 years, the S & P had a positive performance 26 times, with an average gain of 1.74%.
Happy Holidays!
Merry Christmas and a Happy 2016!
This week will again be shorter due to the celebration of the New Year. Today, the trading volume, which is traditionally lower, will also be conditioned by the closure of the London stock exchange (“Boxing Day”). In business terms, the news are not relevant at the beginning of week. An highlight to the Swiss banking sector, after having informed Reuters that four Swiss banks will pay more than 178 M.USD to the US Justice Department to avoid possible charges for helping tax evasion to US citizens.
Yesterday, North American market recovered from lows during the session, despite having ended in negative territory. However, given the low trading volume this recovery becomes negligible, and it is not possible to anticipate with more certainty a positive trend.
A member of the Conference Board said that consumers remain positive on the current state of the economy, particularly as regards the labor market: slightly increased the number of people who anticipate an increase in jobs in the coming months, while which decreased the percentage of consumers who expected fewer jobs.
It was a pretty profitable year! 
The forum was a great help.
Which you all a Happy 2016!
After the oil has fallen about 40% over the past three months, the positive consequences should begin to emerge and perhaps to influence investor decisions. Some macroeconomic studies indicate that a decrease of 60 USD / barrel crude price moves about 2000 000 M.USD from producing countries to consuming countries. In recent months, investors focused on the negative impact that the oil is falling in countries like Saudi Arabia, Brazil, Russia, etc. However, there is a flip side and the main beneficiary is Europe. In fact, the European Union is one of the largest importers of oil and at a time when its economy has not yet reached a ‘cruising speed’, the fall of oil could be the missing driver. In fact, if one considers that the European Union imports about 30% of the world’s oil, so a drop of 60 USD / barrel will generate an income of about 660,000 M.USD to this region.
If European markets close higher today, many investors who have opened selling positions in the market will resort to derivatives to protect their capital and might close their positions. In addition, recent declines have made some stocks interesting from a fundamental point of view, which could attract the interest of the so-called value Investors. When a financial asset goes through a very prolonged and steep downturn, where many investors have opened selling positions (short), recoveries are usually quite quick and sharp. However, if today’s behavior of European equities is weak investors who bought yesterday, as well as potential buyers will be discouraged.
Today US oil reserves will be released. In recent weeks, there has been a fairly volatile and distant readings forecast of economists. Despite this volatility is possible to trace a pattern, characterized by a much smaller increase in oil reserves and a sharp increase in gas reserves. Economists estimate that crude oil reserves have increased 2.6 M.USD and gasoline 1.9 M.USD.
For a more enduring reversal of investor sentiment, the statements of Mario Draghi do not seem to be enough. To attend a recovery of stock markets, it should be confirmed any of the following conditions:
– The decline in fears about a devaluation of the Yuan (which has already been happening)
– The stabilization of the Chinese markets
– The oil recovery
he value of crude oil was undoubtedly the main catalyst of Wall Street’s rise on Friday. Oil posted the largest daily increase since August of last year valuing up 9%.
From a technical point of view, while the S & P stays above 1800 points, there remains a reasonable probability that the stock markets entering into a recovery.
The meeting of the Fed today will not bring major changes in relation to what was broadcast to the market at its December meeting. Last month, the oil retreated over 25%, with a negative impact on inflation and hindering the task of driving the Fed to levels close to 2%. Given this trend, investors will monitor the reference of the Fed for inflation, it is not excluded the minutes to reveal the apprehension of the members of the Central Bank, which would lead investors to believe not only that the Fed will not raise rates at the March meeting as the number of increases may be smaller than anticipated by the Fed members (4 increases of 0.25%).
In the European session will be the scene of two opposite forces: a negative reaction from Wall Street to the Fed decision and the appreciation of oil in the New York session.
Asian markets closed with sharp gains, due to the somewhat surprising decision by the Bank of Japan. Challenging economists’ forecasts, which point to an extension of the asset purchase program, the Bank of Japan decided to reduce the interest rate on deposits which the Nipponese banks have with this institution to -0.10%. This measure is not innovative but takes the surprise character in that Governor Haruhiko Kuroda recently to have shown skeptical to the adoption of negative interest rates.