Dow Jones Industrial Average: the danger of collapse at today’s trades

Grinspen hampers for the growth of Dow Jones Industrial Average

In brief: Grinspen spoke about new dangers for the U.S. stock market. The level of support the U.S. Dow Jones Industrial Average remained stable.

Immediate danger is currently bidding for Dow Jones Industrial Average and other U.S. stock indices. So, the markets in recent days were still observed optimism, but lead to a significant growth market, he can not – no new “drivers”. The Dow Jones rose yesterday, only 0.24%, to 10434. Euro-dollar has been able to update the maximum today at around 1.2416, but in general in recent days remained in the range 1.2350-1.2410.

And last night there was a slight folding of optimism because of the negative data on the U.S. economy. Industrial Index Philadelphia Fed in June had fallen from 21.4 to 8.0. Initial applications for unemployment in the U.S. went out worse than forecast, rose from 460 thousand to 472 thousand rate moves in the area of these figures since December, and does not show the slightest improvement, which raises doubts that the U.S. labor market is restored. By the way, the data from the ADP Employment Agency in this sense was more reliable than the component Nonfarm Payrolls in the private sector and generated little optimism. But the more demonstrative of the fact that the current consensus forecast from Bloomberg on Nonfarm Payrolls for June shows now -60 thousand (for a component of private sector forecast yet). Recruitment of enumerators for the census, apparently, is over. The worst thing is when all the enumerators will be dismissed, and then we will see data on the order of -400 thousand Nonfarm Payrolls. However, while the forecast for the June employment data from the agency ADP in the private sector shows 55 thousand, against the previous 55 thousand, it is still not a recession. But in circumstances where the effect of stimulus packages in the U.S. comes to naught, we are not surprised that the data on the private sector, too, will soon show the decline. And the U.S. would again have to stimulate the economy through government spending. Otherwise, again starting a new wave of crisis and deflationary contraction of the economy.

However, former Fed Chairman Alan Grinspen does not think so. Yesterday, he urged the U.S. to the structural changes in fiscal policy. “Perceptions of U.S. capabilities to withstand a large amount of debt are wrong” – he said in an article published on the website of the newspaper Wall Street Journal. In his opinion the current (relatively low) rates on long-term debt mask debt problems of the United States. “Long-term interest rates could rise with unpredictable surprise,” – said Grinspen. The same phenomenon was observed at the turn of 1979-80, when 4 months revenue rose 4%.

On the other hand, Grinspen refuted fears that deficit reduction will cause problems for reviving the global economy. This point of view of Greenspan at odds with the position of U.S. Treasury Geithner, who this month at a meeting Dvadtsadki said that budgetary restrictions are necessary in the “medium term”, but for now must focus on the recovery of demand in the private sector.

If Geithner can understand that it is not clear that he wanted to say Grinspen. After all, to drastically reduce U.S. national debt is still not able to. It turns out, Greenspan argues that the collapse of the U.S. national debt is essentially inevitable (and this is what happens if rates on debt in the U.S. will grow by 4% at the current level of public debt to GDP). All that the U.S. can do in the current situation – it is just to continue to occupy and maintain its economy through loans “to the last” until the return does not really take off. And if so, the dollar until the fall should not, we should see a continuation of the European crisis.

Anrey Torbinski
2010-06-18 15:23, Economics.

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One comment к “Dow Jones Industrial Average: the danger of collapse at today’s trades”

  1. asdf Says:

    Terrible english…

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