Today US FED RESERVE meet is scheduled.
The Fed has already indicated last year that they want to raise rates three times in year 2017. If it starts raising sooner rather than later, financial markets could become nervous. Trump’s main policies are probably going to get delayed.
Further, inflation expectations are gearing up. US inflation rose to 1.6% in the 4th quarter of 2016 — the highest rate in over two years. That’s why the Fed will probably want to raise rates soon. They don’t want to be blamed for causing a stock market bubble.
Brexit is about to send major shock waves through financial markets. we’re looking at a 10–15% stock market correction…and it should start any day now. Remember, when the US market falls, we tend to follow the US stock market — the largest in the world.
Moreover today NIFTY PE reached 23.27 and it is expected to rise further this month. Remember NIFTY has crossed 24.51 last time in 2010(went high of 25.23 in october) and all time high(since 1999) of Dec,2007(26.55) and Feb,2000(27.12). So be aware if it crosses 24.50 to be specific.
The Guardian reported yesterday:
‘Theresa May’s Brexit bill is likely to pass through the Commons without major amendment next week, as Conservative rebels are backing away from supporting changes proposed by Labour or other opposition parties.
‘A band of Tory MPs fighting against a hard Brexit are indicating they have been largely satisfied by the prime minister’s promise of a white paper, which they believe could be published as early as Thursday.
‘Labour and the Liberal Democrats now believe there is very little chance of getting enough cross-party votes for amendments. They had hoped to win support on issues such as guaranteeing the rights of EU nationals, and a more meaningful vote at the end of the two-year negotiations or protections in the House of Commons.’
In other words, while it won’t be an overnight process, Brexit is on track to get the green light before 31 March. That should kick-start a two-year negotiation process to leave the European Union (EU).
It has been a long time coming…
The UK voted for Brexit on 23 June last year. It was a crazy time for punters. Here’s what happened to the NIFTY following the vote:
NIFTY went 343 point red and made low of 7927. The stock market plummeted. The dead-cat bounce (a temporary recovery in share prices after a substantial fall) that followed was impressive…
If stock markets did that last time, what about this time?The Guardian reported yesterday:
‘MPs are due to start debating the bill in parliament on Tuesday. The legislation would give May the power to invoke article 50 and start two years of negotiations to leave the EU. The Commons will debate the bill for two days before a vote expected on Wednesday night. More detailed scrutiny involving proposed amendments to the legislation will begin next week.I recommend noting those dates in your diary. The process should happen right alongside Trump’s policies getting delayed and the Fed eyeing higher rates.
‘The government announced on Monday that peers would debate the legislation after the February parliamentary recess, after it clears the House of Commons on either 8 or 9 of the month.
‘It will then be introduced for scrutiny by the Lords, where the government does not have a majority, on Monday 20 February, before completing its passage through the House of Lords probably on 7 March. If peers make any amendments, it would have to return to the House of Commons, where MPs would debate whether to keep the changes or get rid of them.’
Pondering the worst-case scenario for Brexit, even if the bill is passed between the lower and upper houses a few times, it will probably be finalized by the end of March. That’s Theresa May’s self-imposed deadline for triggering article 50.
It gets better…or is that worse?
Nicola Sturgeon, the leader of the Scottish National Party, gave Theresa May a two-month deadline to compromise over Brexit. Scotland wants to stay in the EU’s single market. And, if it doesn’t get what it wants, Scotland has suggested that it will call a second independence vote. That could happen before the end of March.
The mainstream’s probably going to run an ‘alarmist’ bandwagon campaign soon. Remember, similar to Trump’s election campaign, the mainstream painted a dire picture of Britain heading into the vote. It said the country would fall back into recession and costs hundreds of thousands of jobs.
As the turbulence shapes up across financial markets this month, expect to see more ‘alarmist’ headlines on Trump’s ‘reckless’ policies, the Fed turning bullish, Brexit, and Scotland. The combination will probably drive the market into meltdown.