Newly re-elected, left wing Prime Minister of Greece, Alexis Tsipras announced that Greece must “quickly implement” the terms of the EU bailout agreed upon in July. During his first Cabinet meeting, Tsipras stressed that his aim is to have steered the country out of its crisis by 2019 when his four-year mandate ends.
“We are aware of the difficult points of the deal… we know how to find the right antidote where there are side effects,” Tsipras said today. “This mandate is translated into one word; work.”
A review by the lenders will be conducted in late October to determine if the reform program has been implemented.
Tsipras highlighted another crisis for his country, saying that the government’s task was made into an even greater challenge by Europe’s migrant flows.
Greece has become the main point of entry into Europe for those fleeing war and poverty in the Syria and war torn Africa, most of whom then head by land to richer EU countries further north.
Chinese President Xi Jinping landed in Washington D.C. Friday where President Obama welcomed him and his wife to the White House. Despite the pleasantries, tensions were high between the world leaders over allegations of Chinese cyber spying, territorial disputes between China and its neighbors, and Beijing’s economic policies.
Chinese and U.S. officials do hope the world leaders can cast aside their differences to talk about one area of cooperate, the global fight against climate change. However, the cooperation was overshadowed by major disagreements.
President Obama reassured the Chinese President that the U.S. would continue to discuss its differences with China.
“We believe that nations are more successful and the world makes more progress when our companies compete on a level playing field, when disputes are resolved peacefully and when the universal human rights of all people are upheld,” President Obama said in his welcoming speech.
Xi gave a similar statement during his speech, stating that the two countries would have to use respect and compromise to improve relations.
Despite the speeches, experts report that the relations between the two countries are at its most adversarial in decades. This is due to allegations of cyber attacks between the two nations, the territorial disputes in the South China Sea, China’s economic situation, and China’s violations of human rights.
The Dow Jones Industrial Average rode a roller coaster Thursday afternoon following the announcement that the Federal Reserve would be holding interest rates at their current level.
Within minutes of the announcement, the Dow fell almost 90 points in a span of two minutes before gaining all of it back in the next six minutes. The Dow then jumped about 30 minutes later to almost a 200 point gain on the day before slowly tumbling to finish the day 65 points lower at 16,674.74.
The S&P 500 followed a similar track to the Dow, falling in the minutes after the announcement and having a huge peak around 3 p.m. before ending the day down 5 points at 1,990.20.
The NASDAQ also road the roller coaster but because of early gains in the day only dipped into the red during the initial post-announcement fall. The NASDAQ composite finished the day 4.71 higher at 4,893.95 to continue a week of steady gains.
The Federal Reserve announced Thursday afternoon that they will be holding the line on interest rates, extending to 10 years the amount of time since the last increase of the key interest rate.
The Federal Open Market Committee (FOMC) statement said they see “economic activity is expanding at a moderate pace. Household spending and business fixed investment have been increasing moderately, and the housing sector has improved further; however, net exports have been soft.”
The FOMC also said they focused on the slight increase in employment totals but also inflation below expectations and declines in energy prices and the cost of non-energy imports.
“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the FOMC statement read.
The Fed did increase their view of the economy for the year. They predict a 2.1% increase this year, up from a 1.9% prediction.
For the first time this year, the vote was not unanimous. Richmond Fed President Jeffrey Lacker voted to raise the rate.
The Market hit a flat track today as U.S. stocks rebounded a bit after the Dow plunged more than 200 points in the late afternoon on Wednesday. The Dow Jones industrial average ended up 77 points, or 0.5%, after initially bouncing in and out of positive territory.
This roller coaster has put investors in a jumpy frame of mind while most braced for next week’s Federal Reserve meeting on interest rates.
The Dow, which typically moves about 150 points between peak and tough throughout the trading day, has experienced average daily swings of more than 400 points since August 19.
The market ride was punctuated by the Dow’s 1,000-point nosedive on August 24, its largest one day point decline on record.
The Chinese government has quietly been depleting their reserves of foreign currency in an attempt to prop up their stock markets and overall economy.
Government data released Monday showed the government used just under $100 billion in the last month, a record amount. China still has $3.56 trillion in foreign currency at their disposal.
“[The outflows of capital] are unprecedented and have no comparison to any period in the past,” Nikolaos Panigirtzoglou, global market strategist at J.P. Morgan in London, told the Wall Street Journal. “There could potentially be even more over the coming year, as the market tries to gauge the extent of the devaluation of the Chinese currency.”
Many analysts say the use of the currency was inevitable after the central bank devalued the country’s currency twice in two days this month.
“Frequent intervention will burn foreign reserves rapidly and tighten the onshore market liquidity,” said Zhou Hao, senior economist at Commerzbank in Singapore, to Reuters.
The news of the government’s spending of foreign currency comes as the stock market took another significant fall Monday. The Shanghai market closed down 2.5 percent in what traders there termed a “volatile day.”
The drop comes as China’s Central Bank Governor Zhou Xiaochuan told a meeting of economic leaders of the world’s top 20 economies that the Chinese market correction was almost over. Chinese equity markets have fallen 40 percent since June.
International Monetary Fund (IMF) leaders are warning the world to prepare for a massive slowdown in the Chinese economy.
“As the Chinese economy is adjusting to a new growth model, growth is slowing — but not sharply, and not unexpectedly,” Christine Lagarde, managing director of the International Monetary Fund, said Tuesday in Indonesia, according to prepared remarks. “Other emerging economies, including Indonesia, need to be vigilant to handle potential spillovers from China’s slowdown and tightening of global financial conditions.”
The trouble with the Chinese stock market and manufacturing slowdowns has impacted more than just the major U.S. stock markets. Oil prices have tumbled; commodities markets such as copper have also been falling significantly because of the downturn in production.
Asia has been predicted by the IMF at the start of the year to drive world economies but they are now backing off from that position. They are calling for “moderate” growth while admitting the growth “pace is turning out slower than expected.”
The U.S. says they’re watching to make sure the Chinese government is not attempting to manipulate their currency or stock market in an attempt to maintain a global economic leadership position.
“We are going to hold them accountable,” Treasury Secretary Jacob Lew told CNBC.
The stock markets ended one of the worst months in three years by starting September in a nose dive.
The Dow Jones Industrial Average fell almost 470 points and ended at 16,058. The drop of just over 2.8% was the single worst opening day for a month in the market since March 2009. The Dow has fallen 12.5% from the all-time high in May.
The Standard & Poor’s 500 also had their worst first day of trading since March 2009, falling almost 3 percent to 1,913. Only three stocks in the index showed gains on the day: Cablevision, American Airlines and a chemical company, Sigma-Aldrich.
The NASDAQ had its worst opening day of a month trading since October 2011. It’s now 2% lower for the year.
Most analysts attributed the stock fall to continuing fears about the Chinese economy and volatility in the Chinese stock market. Two major reports from China today showed significant slowing in the country’s manufacturing.
Many of the American stocks that took heavy hits in today’s trading have strong connections to China such as Apple and Qualcomm.
However, the U.S. gauge for manufacturing also turned in a dismal result Tuesday. The ISM manufacturing index fell to its lowest level since May 2013.
ISIS has announced the creation of their own “gold dinar” with an aim to take down the American economy.
The move is being called the “second blow” to the U.S. in a newly released video. The first blow was the 9/11 attacks.
The video, titled “The Rise of the Khilafah and the Return of the Gold Dinar”, was released Saturday. The video says the goal is to end “the capitalist financial system of enslavement, underpinned by a piece of paper called the Federal Reserve dollar note” along with installing the monetary system “intended by Allah.”
“One of the great forms of corruption that the world came to witness was the dark rise of banknotes borne out of the satanic conception of banks which mutated into a fraudulent … financial system of enslavement orchestrated by the Federal Reserve in America, a private corporation and system that would, through the use of deceit and force, deprive people of their due by imposing on them the usage of the piece of paper that came to be known as the dollar bill,” the narrator states.
The video shows minting of gold, silver and copper coins and then terrorists handing them out to people in the streets.
“We are witnessing the return of days, like those during the time of the prophet,” says one shop keeper who hugs and kisses the terrorist.
The terrorist group is considered one of the richest in history because of oil fields they control and their smuggling of oil. U.S. official say the group generates as much as $3 million U.S. dollars per day.
After two days of massive losses that triggered worldwide economic downturns, the rally of the Chinese stock market is leading investors and analysts to suspect government manipulation of the market.
The Shanghai Composite Index has been in free-fall over the last three months. The index fell 11.8% in August. A five-session selloff drove the Chinese market so low that markets around the world tumbled in response.
Then suddenly Thursday, the Chinese market jumped 5%.
And again Friday.
Investors began to suspect government intervention in the market, with the government quietly buying up stocks with newly printed money from the Chinese Central Bank. The Chinese government is promoting a big celebration for the 70th anniversary of World War II next week and analysts believe they wanted investors in a good mood ahead of the events.
The market is closed September 3-4 for a national holiday.
“If the government sustains buying there are terribly negative consequences, such as impact to [People’s Bank of China’s] credibility and yuan credibility…Any bank can create money out of thin air, which is why confidence is so important,” David Cui, a strategist for Bank of America Merrill Lynch, told Marketwatch. “So if they keep printing money to buy high valued stocks, it will damage yuan credibility.”
“What’s happening is an act of desperation by China and it starts dragging down other countries with it,” said Bill Stoops, chief investment officer with Dragon Capital, told the L.A. Times. ”China’s police state economic model is falling apart.”