Wednesday May 25, 2022

Mon shares will grow. But at first it is not good

In 2009, they recorded more than twenty percent growth. Last year, their price rose by an average of another 12 percent, regardless of the parents with the debt crisis in the eurozone and fears of its possible collapse. When it comes to stocks, their price has been rising lately, and anything is happening.

In recent years, we have become accustomed to the fact that the increase in the price of promotional events with the distance of several months blc is better in the real economy. The reason was simple. The boom and the growth of indebtedness pushed not only to increase consumption, but thus the volume of investment, the economy received new stimuli for expansion, companies grew sales, and this increased the attractiveness of their actions. It was at this time, not the central banks, for fear of rising prices, that they were raising the year’s rates and crushing the canal.

By doing so, they have potentially reduced long-term access to cheap debt, and existing debt has increased the cost of servicing old debt, leading to reduced consumption and investment.

A typical example was the mortgage crisis in the US, when the euphoria from cheap pensions and the boom in the US housing market was replaced by a rather harsh, following a series of American households finding that it was unable to meet its obligations at a record low of one percent to 5 percent. , 25 percent.

However, as it turns out today, even after a very fast two years, during which shares in the US registered 35 percent, the situation in the worlds of the economy is not improving dramatically. The unemployment rate in the USA is only slightly below ten percent, and even Europe is not very good at it. For example, in Spain, 20 percent of the people are now unemployed, ie by a percentage and more, not by the arrest of 2010. Moreover, fears of a deepening debt crisis are beginning to force governments to dispute this year. not likely until next year.

So for what reason was the action so unfavorable even for the real economy? There is no answer to this question. The policy of central banks, which continued to flood the financial markets with new pensions last year, helped me in particular. An example is the central bank of all the most powerful – the US Federal Reserve System (Fed). She announced in November that she would buy US government bonds for $ 600 billion. This swept not only the bondholders, but also other financial assets such as shares. It draws a lot of valuable money from the market, which would otherwise have to be absorbed by banks and other investors. They now have less offer available, which is naturally higher than the price they will be willing to pay for these securities.

So what to expect from the event in 2011? The coming year will probably be fully in line with the monetary policy changes of central banks. For example, the US Fed does not yet know in any way that it is going to launch an entry strategy from its two measures in the near future. The exact opposite is true.

In a recent interview for 60 minutes on CBS television, Fed Chairman Ben Bernanke said that he could not exclude any additional volume of bonds purchased in the next month. The European Central Bank is not behind. In an effort to calm the situation on the European bond market last month, it sharply increased the volumes of purchased bonds, which it has bought for more than 73 billion euros since last May.

The impact of new pensions on the financial markets therefore continues, and I continue to support the rise in share prices. If their price rises sharply again in the first year, it will not be the result of a better economic situation and an expanding economy, as was the case in previous years. It will be further proof that the missed measure does not work, but even so, they are still used in a desperate attempt to work hard.

Back to Top