The western hemisphere seems to be slowing down everyday. Even though there was no trading on Labor Day, the last four trading sessions have been volatile, responding to a barrage of macroeconomic news.
On Tuesday, the Swiss National Bank stated that it would attempt to cap its currency’s value against the Euro. Considered to be a safe-haven like precious metals, the Swiss Franc quickly drove down equity markets. Wednesday was a pretty quiet day and markets rallied slightly.
On Thursday, Ben Bernanke and Barack Obama delivered speeches. Bernanke outlined his opinions of the American economy and further stated that the Fed will not be pursuing another round of quantitative easing. He did say, however, that the Fed will do whatever is necessary if a catastrophe occurs. Obama spoke mere hours later, and explained his idea to create jobs to the nation. The proposal is valued at around $450 billion; congressional republicans were not happy with its terms while congressional democrats were satisfied.
On Friday, the European Central Bank’s Jurgen Stark resigned. As the only German on the board, his sudden departure did not sit well with investors, who started pulling funds out of the Euro. To make matters worse, rumors started circulating that a Greek default is imminent this upcoming weekend. Global markets started to deteriorate on the news. Despite an official statement from the Greek government, markets continued to decline throughout Friday.
Investors need to be on top of news in order to better shield their portfolios. It helps to understand global dynamics and correlations. For example, US equity markets are sometimes correlated with the Euro and sometimes with the dollar. To predict where securities are headed next, investors need to have access to all the knowledge they can in order to make the best decision possible.
News Desk Ninjas