signal of weakness, conclusion

hello,

In front of us a very interesting week. Minutes of the Federal Reserve and the annual meeting of central bankers in Jackson Hole. This time, however, they will be even more under the influence of the "scandal" voiced by Russia Today last week.

Russian TV news has issued on the German gold in the vaults of the Fed. Germany store there a half of its reserves and under the influence of the Bundesbank recommendation of the Supreme Court decided last year to move them to Frankfurt. And here began the problems. Fed said to Germany that such an operation would take for safety reasons almost a decade. In response, the Germans demanded an audit. Finally, the Fed sold the German delegation showing the unmarked gold.

The case is suspect for several reasons. Firstly, it gives a basis for speculation that the Fed does not have as much gold as he declares. If so, the consequences of the reliability of the most important markets of the institutions, which is based on the modern financial system, would be disastrous. Reference is made to the recent example of Goldman Sachs, who sold investors certificates on gold, which did not have. If they will do the Fed (conspiracy theory holds that the gold was sold or stolen long ago), the belief in the stability of the financial system could be eventually lost.

Surprising but also "timing" reminder of this problem. The case was already publicly publicized several times this year, but only Russian TV clip made ​​a sensation on the world. The same reaction: the weakening of the dollar, the decline of trading the S & P 500, rising gold prices - also raises many questions. If the market actually scared of this story, immediate reaction would be everywhere. Meanwhile, stock market on Thursday, losing by the day, gold rocketed up at 17.30 and EURUSD woke up only at 19.00 Warsaw time. The case has been going on for almost a year, but the Fed - after such a buzz - you will not be able to afford to continue ignorance. The pressure to explain the problem, and the meeting in Jackson Hole, where you will also be guests from Europe, only turns up the atmosphere.

When it comes to data undoubtedly play a key role preliminary PMI for the euro area and China. In the first case we have another two months for positive surprises. The third one month confirmed investors in anticipation of recovery in Europe. Data from China will be no less important to the slowdown that threatens the prosperity of the entire world economy. Details will be announced on Thursday. In the U.S., data on home sales (Wednesday and Friday), a preliminary PMI and weekly data from the labor market (Thursday). It's not much, but investors will still be focused on the Fed. Remind that last week publications from the labor market was very strong, further increasing the chances of reducing QE.

best regards,

oscarjp