The US markets are back to work today.

The USA celebrated Martin Luther King Jnr Day on Monday with financial markets closed in recognition of the civil rights activists birthday. The focus will be on the continued release of company earnings and if US companies can meet or exceed what the market expects I would anticipate US stocks and the US dollar to continue to appreciate. 

So keep an eye on the headlines surrounding why US stocks are rising and falling and this will give you a guide as to what the company earnings are. Good bad or indifferent.

LTG GoldRock Director, Andrew Barnett provides a daily report to LTG GoldRock clients each day discussing what is happening in the markets and how he is looking to profit from this Fundamental and Technical data.

North Korean cyber-attack tensions are unlikely to rattle markets.

The tensions between the US and North Korea over the recent cyber-attack on Sony Pictures is unlikely to rattle financial markets unless it escalates into something far more sinister.

The US blames North Korea for the Sony hacking scandal and on Monday North Korea’s entire internet access was switched off and the country was without the worldwide web. The USA has 152,000 internet access service points, North Korea has just 4. Obama said the US would retaliate at a time that suited them and with an appropriate punishment that fitted the crime. Was it the US Government who shut down North Korea’s internet access on Monday? The US won’t admit to doing it but unless it was a group of private hackers playing games with North Korea one would have to assume the US Government had something to do with it.

Don’t be side tracked with financial entertainment and focus on the big picture fundamental trends which are set in place by Central Banks.

LTG GoldRock Insider Report Extract: Tuesday 23rd December 2014

Stock markets surge on US Fed rate suggestion.

The US stock market had its biggest one-day gain for 2014 as the Santa Rally returned in full force. The Dow Jones rose 2.43% or 421 points only needing to rise another 187 points to finish the year on a new high. Thursday was a classic risk on trading session as traders dumped the safe haven currencies of the Yen and Swiss Franc and piled back into the US Dollar and Pound. The US economy got another piece of positive economic news overnight with weekly jobless claims falling by 6,000 to 289,000.  

Andrew Barnett is Co-Founder of LTG GoldRock, a boutique financial education and investing company located on the Sunshine Coast, QLd Australia.

Keep an eye on the US weather particularly in the East.

First quarter growth in the USA this year was nowhere near what markets expected and much of this had to do with a freezing cold winter that froze business activity and spending in much of the North East. Buffalo which is in the north east of the USA received its annual snow fall in 48 hours last week.

If the US experiences a cold start to winter and an unusually cold snap early then I would expect traders to use this as an excuse to speculate on lower GDP in the fourth quarter for the USA.

Each Day Andrew Barnett the Senior Trader at LTG GoldRock reviews and discusses the latast Forex News and World Events that could potentially impact Forex Markets. Go to www.ltggoldrock.com for more information.
 

We live in an unbalanced economic world that at some point will need to correct its self. #ltggoldrockreviews

LTG GoldRock Senior Trader, Andrew Barnett reviews his thoughts on the Economy and the state of the economic climate.... I will give you an example of the Aussie economy being unbalance first and then look at other parts of the world so you can appreciate the unbalanced economic world we live in.

A perfectly balanced economy is rare but the role of Central Banks is to maintain price stability which should maintain a reasonably balanced economy. If a country becomes too reliant on one sector of the economy to perform (e.g. The mining sector in Australia) then when that sector softens it puts increased pressure on other sectors to make up the slack and if they are not able too then you have an unbalanced economy where inflation and interest rates are low, unemployment and the currency rises in the case of Australia but certain sectors such as housing can rise beyond normal levels and cause bubbles that burst.

While a country is trying to rebalance its economy we can often see budget deficits rise substantially and debt bubbles are created that can often take years to pay off or reduce. This can cause a rise in bond yields and cause economic mayhem if not kept under control.

In part what I described above is happening in Australia. We were heavily reliant on the mining sector and China to keep Australia out of a recession through the GFC but the economy became unbalanced and now that the mining boom is over the RBA is struggling to balance the economy once again. The RBA's big lever is interest rates which normally would substantially lower the Aussie dollar when they put rates down, (since Sept 2011 rates have gone from 4.75% to 2.5%)  increasing domestic growth and helping our tourism and export sectors which would rebalance things. Inflation would normally rise and with a bit of luck unemployment would not rise and may even go down. But this is not happening. The Aussie Dollar is rising, inflation is low, unemployment is set to rise in the next 12 months, job ads are dropping, the government’s debt is growing and housing because of lower interest rates is starting to rise too quickly. Things are not balanced and the RBA is running out of options and if the US Fed does not taper until mid 2014 I suspect the RBA will need to put interest rates down one more time as it is one of the only options that it has left to try and rebalance things.

Here are some other examples of an economy that is completely unbalanced. In the USA the stock market is at all time highs and the housing sector has risen between 8% and 20% in the past 12 months. But the US Federal Reserve is completely responsible for these rises in value in both sectors of the economy which is Wall St and every day Main St.  It is pumping $85 Billion dollars of money it does not have, that it magically created into the economy to try and keep interest rates low and drive growth and jobs. It worked for a while but it’s no longer working and the US economy is now like a drug addict, hopelessly reliant on the US Fed to keep growth going, hopelessly reliant on the US Fed to prop up the stock market and hopelessly reliant on the US Fed to try and create jobs of which is no longer happening.

The USA is a classic example of a hopelessly unbalanced economy and Australia whilst not in the same boat thankfully, is sailing on the same unbalanced ocean.

2014 could be the year financial markets need to correct themselves because the UK in my view is getting unrealistically too far ahead of Europe, Europe is once again going backwards ever so slightly and the UK cannot shine like a diamond without Europe glistening in the morning sun.

Australia and New Zealand who normally grow in line with each other are out of whack (the Kiwis are beating Australia in just about all facets of economic growth) and when you do the research on Asia, India is a basket case, Indonesia is not far behind and China has its own issues to deal with, and will do so extremely well because they are a communist country and effectively have better control than everyone else, like it or not that is a fact.

I am an optimist at heart but I am just warning you now that if you fall in love, love can often be blind and when it comes to money falling in love with a position or direction can be very costly if you close your eyes.