The biggest asset class that could be impacted by the global financial crisis is money markets, according to a report by forex analyst Brian Shulman.
In a recent article for the Wall Street Journal, Shulmann said forex investors have been “hurt badly” by the financial crisis and are looking for ways to mitigate the impact.
“Forex is really hard to understand and understand when the central banks are printing money,” Shulmen said.
“If we were to make some small adjustment to our capital and liquidity, and some monetary policy adjustments, we could stabilize the markets, and that could actually be the way out.”
Forex markets have been on a tear over the past year, reaching a record high on Friday.
The Dow Jones Industrial Average was up 6,051 points or 7.4 per cent to 18,746.30, the S&P 500 was up 1,500 points or 3.2 per cent at 2,639.20 and the Nasdaq Composite was up 5,200 points or 2.6 per cent.
The biggest threat to stocks in the coming year, Shullman said, is the increase in inflation that has already been a major drag on the economy, especially since the Federal Reserve’s stimulus plan ended in mid-2014.
“The Fed is already doing something to stimulate the economy,” he said.
The Fed’s $85 billion stimulus program, which included asset purchases to spur inflation, has been a disaster for stocks.
The Fed is expected to cut its benchmark interest rate in 2018 to 0.75 per cent and to begin raising it again in 2019.
The dollar has been in a near-zero territory against the euro for years, but a global financial slowdown has caused the price of oil to drop sharply.
The price of gold has dropped to a level it has not seen in years.
Shulmans comments suggest that if the global economy does start slowing down, it could impact the value of forex assets.
“I think if the world starts to go into recession, it’s going to make a lot of money for the Fed,” he told the WSJ.
“What we have seen is that if we have a lot more central bank support for forexes, it has been really strong.”
It’s a very attractive asset class for the central bank to put a lot pressure on, so that they can make some adjustments to their monetary policy and their capital position.
“Forests and other assets could be hit particularly hard if the US economy starts to slow down or the euro falls.
Forex assets in the United States have been hurt by the recession and the US government is trying to help forex firms deal with the economic slowdown.
The US Department of Treasury said it was trying to support forex companies in the US, including forex hedge funds, by giving them loan guarantees.
The US government has also encouraged banks to increase lending to forex entities, and has also imposed new regulations to help prevent banks from using derivatives.
Shulman said that the Federal Open Market Committee, the central bankers monetary policy committee, and the central banking regulator could be able to do more to help the markets.”
They could have a more direct hand to help these markets.
We could see a lot less of this kind of stuff happening if they did have more influence,” he explained.”
We don’t know how the markets are going to recover.
We don’t have any idea how much they will recover.
“However, the markets have shown that the Fed has a lot to work with.
They could have been doing something about that for a long time.
It’s not like the market is in a panic right now.”
The global financial system is a complex one, with a lot going on, but there is a lot we don’t understand.
We have a system in place that allows the Fed to intervene in the market, but we don.
Shullmans comments were echoed by others.
In an interview with CNBC, Mark Suster, managing director at asset manager E-Trade Advisors, said: “If the Fed doesn’t act, we see a collapse of the global system.
If the Fed does act, it will lead to a huge increase in volatility and that will have a huge impact on the markets.”
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