German unemployment dropped to record low

The labor market in Germany continues to operate at full speed in March as the unemployment rate surprisingly hit a record low of 5.8% in unexpectedly sharp decline and applications for unemployment benefits.
Applications for unemployment in Germany fell in the third month of the year by 30 000 at the expectations for a more modest decrease by 10,000 after their decline by 17,000 in February.
At the same time the unemployment rate on seasonally adjusted basis fell by 5.9% in February to a new record historic low of 5.8% - the lowest level since the reunification of Germany at the end of 1990. The number of Germans out of work fell in March to 2.556 million from 2.586 a month earlier, holding below the level of 2.7 million for the eleventh consecutive month, as before May 2016 the number had not dropped below this important level since German unification until now.
In seasonally unadjusted terms, the total number of unemployed Germans fell to 2.662 million from 2.762 million in February, while unemployment remained at the February level of 6.3%.
The labor market continues to develop positively. Employment growth continues unabated, the number of unemployed decreased significantly with the onset of spring, and the demand for labor remains strong, analysts say.

The growth of the UK economy accelerated

In the last quarter of 2016 the UK economy expanded at a good pace compared to the previous three months due to solid growth in British exports, but shrinking business investment, showed a final evaluation of official statistics ONS, analysts say.
Gross domestic product in the UK expanded during the period from October to December by 0.7% compared to the third quarter, when increased by 0.5%, confirming previous data on British statistics.
The acceleration of growth was mainly due to British exports, which grew on a quarterly basis by 4.6% against a previous forecast for an increase of 4.1%, after in the third quarter exports declined by 2.1%. Imports did drop by 1.0% after rising by 1.4% in the previous quarter and preliminary data showing reduction of imports late last year by 0.4%.
Meanwhile, business investment in the UK reduced by 0.9% after 0.4% growth in the third quarter, indicating that concerns about already launched Brexit may restrict investment in the future.
On an annual basis, however, the UK's GDP grew in the last quarter of 2016 to 1.9% compared to previous assessment for increase by 2%.
For the full year the British economy expanded by 1.8%, following growth of 2.2% in 2015, confirming preliminary assessment of the ONS.
In a separate study British statistics reported a slight reduction in the service sector in January by 0.1% compared to December 2016, when it was reported expansion of 0.2%. For the three months to the end of January, the services sector grew by 0.6% with expectations for expansion by 0.7% after an increase by 0.8% in the last quarter of last year.

Protective assets are back in fashion (2)

Moreover, in the event of a Trump failure, the sales on the stock exchanges will activate and can be transformed into a tangible drawdown, especially given that the indices fall from record highs. Against this background, players will continue to show interest in the Japanese yen and gold. The precious metal, which rallies over the past six trading days has almost actually played the fall, which started in late February and reached its highs on March 1 at around 1249.33.
The development of the current trend on world markets is able to send gold quotes above 1250, and USD/JPY in this case risks targeting the lows on November 22 last year at 110.25.

Protective assets are back in fashion (1)

These days the prolonged rally of the US stock market was interrupted and resulted in a mass avertion from risky assets in all trading floors of the world. In these conditions, the Japanese yen naturally became the beneficiary and updated the highs of the current year paired with the dollar. USD/JPY has been falling continuously for the seventh day in a row, and today the quotations reached an important support level at 111.00, the breakdown of which will open the way to new records.
Investors are showing concern about the implementation of the plans of the Trump's administration. Tomorrow will be a fateful vote on the abolition of health care reform. And the importance of this event for the markets is that the outcome of the vote will show how successful Trump initiatives will be in the future. Especially the players are concerned about the future of the promised fiscal incentives and tax reform. So, at least until the results of discussion of healthcare reform in the markets are announced, the current tension will remain, and the protective assets will continue to be in demand.

Eurobulls are exhausted

At the auctions in Asia, the dollar rate was under pressure against its main competitors. The euro/dollar for the third time tested the level of 1.0818. The unsuccessful attempt to consolidate above 1.0820 led to a partial closure of long positions and a price drop to 1.0775. By 14.30 GMT, the euro/dollar currency pair revolves around the level of 1.0790.
The participants of the market, apparently, ended in patience. They can not decide whether to buy currencies against the US dollar or sell. The euro does not become more expensive or cheaper, it consolidates in the range of 43 points between the levels of 1.0775 and 1.0818. Negative impact on the single currency has the yield of 10-year German bonds, which fell by 9.13%, to 0.416% from the opening of the debt market in Europe. The yield on 10-year US bonds fell by 0.90%, to 2.412 and partially offset the negative background.
The overall technical picture on H1 for the euro/dollar pair indicates an increase to 1.0818. For this the pair need to pass the level 1,0800. If at the same time the yield of German bonds will increase, and the American yield will decrease, then there is a probability of climbing above 1.0818. The target for the next two days is 1.0849.

Inflation in the UK passed the limit of 2%

For the first time in three years, consumer prices in the UK recorded a growth of 2.3% yoy, as expectations were for 2.1%. Bank of England repeatedly hinted its willingness to tolerate exceeding goal inflation is limited.

On Tuesday the pound recorded strong growth, while GBP/USD rose by 114 pips, closing at 1.2471. The British pound was also supported with the exact date of activation of Art. 50 of the Treaty of Lisbon.

The euro continued to gain against the greenback and the EUR/USD rose to 1.0806 dollars per euro.

The dollar was subject to sales also against the Japanese yen, as USD/JPY fell over 70 pips, closing at 111,777 yen per dollar. According to Japanese analysts pressure on the greenback was due to falling yields on US bonds.
   
On Tuesday, gold rose by 0.85% at the beginning of the Asian session, the precious metal was subject to sales and reached 1226.91, but subsequently rose and closed at 1244.38 dollars per ounce. The gold price is sensitive to interest rate increases, but rate hikes are not expected in the near future, which explains the bullish sentiment of investors and analysts. Since the increase in interest rates last Wednesday, gold has increased by over 45 dollars per ounce.

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Federal Reserve Rates Boost End to Global Policy Mitigation

The Fed's return to higher interest rates could support the central banks of Japan and Europe that were under pressure and signal the completion of a long cycle of monetary stimulus across Asia, as evidenced by the reaction of world regulators, from Beijing to Ankara and London, to a change in US policy.
The widely expected small increase in the Fed rate on Wednesday was only the third since the global financial crisis. However, this happened earlier than investors had predicted only a few weeks ago, and paved the way for two more increases this year amid the strengthening of the economy.
China, the world's second largest economy, on Thursday reacted with an increase in key rates to combat the weakening of the national currency. The same reason forced to tighten the policy of the central banks of Saudi Arabia, the United Arab Emirates, Kuwait and Bahrain within one and a half hours after the announcement of the Fed.
As for the leading economies, the Bank of Japan and the European Central Bank continue to focus on aggressively combating low inflation and growth. And while both regulators are still far from raising rates or turning off asset purchases - which was made clear by the head of the Bank of Japan Haruhiko Kuroda, when the ECB left the policy unchanged on Thursday - both recently became more optimistic, indicating that their hour will soon come.

The US dollar has almost no chance

The US currency remains under the pressure of sellers, despite the publication of a moderately positive value of the consumer sentiment index from the University of Michigan. Recall that the previous value was at the level of 96.3, the forecast was 97.1, the fact is 97.6. In January and December, this indicator exceeded the 98-point mark. Therefore, I can not say that now we have very good value for it, but I would not consider it a signal for selling the US dollar.
However, at the time of publication of the index, demand for the US dollar declined. Within the first 5 minutes after the release, the US dollar index decreased by 0.1%, moving away from the session high by more than 25 points with the average daily volatility of the US dollar index of 59 points (per month) and 67 points in six months. Accordingly, the risk of further weakening of the US dollar paired with major currencies remains very high.

USD/CAD reduces growth against the background of positive statistics in Canada

On Friday, the US dollar reduced the achieved advantage against the Canadian currency after the publication of positive data on sales in the manufacturing sector of Canada, while the "dovish" sentiment of Fed officials this week continue to put pressure on the US dollar.
During the morning trading on US exchanges, the pair USD/CAD retreated from the session high of 1.3346 to 1.3318, keeping this position during the day.
It is likely that the pair will find support at the level of Thursday's two-week low at 1.3274, and resistance at the high of 1.3402, recorded on March 2.

The B20 Minfin Summit is the next risk factor for the dollar

Sales of US currency slowed on Friday. The markets have practically played the insufficiently tough rhetoric of the US Federal Reserve, having switched attention to the G20 summit at the level of finance ministers.
EUR/USD reached 5-week highs in the region of 1.0780, receiving a fresh impetus to growth on ECB's "hawkish" comments by E.Novotny, who hinted on the possibility of raising the deposit rate before the expiration of the asset buy-back program. Having reached this resistance, the euro attracted a profit-taking and went into negative territory.
Now the main currency pair will wait for signals from the G20 summit. And here, we must admit, there are downward risks for the dollar. Participants in the foreign exchange market fear that Washington will again oppose a strong national currency, in which the Trump administration is not interested right now. In addition, in the draft copy of the G20 there are hints of adherence to the goals of preventing competitive devaluation of currencies.
If these risks are confirmed, on Monday the dollar can expect a new wave of sales against most competitors. In this case, EUR/USD could break above the key area of ​​1.08, spurring growth. And USD/JPY, which is struggling to stay close to 113.00, will lose its psychological support first and go to 112.00.

Traders in the foreign exchange markets are looking for higher yields

The dollar continues to give up positions, as the profitability in the US is reduced from the maximum levels after the soft performance of the Fed. Currencies of developing countries have significantly strengthened against the US dollar (this growth stopped on Friday), while the trend for the G-10 currencies was moderate. The general mood is that the market is again in a temperate zone with a predominance of soft monetary policy, on the one hand, and political risk due to slower growth in the US and Europe, on the other. After the Fed left the point charts unchanged, and the "Freedom Party" failed in the elections in the Netherlands, short-term investor's fears were somewhat dissipated. Volatility in the foreign exchange market declined, which again gave investors a reason to look for higher yields.

US exports of oil hits 23-year highs

The United States, a key consumer of oil, surely climb up in the world rankings of largest exporters. According to the latest data last week, the country exported 1.03 million barrels per day of crude oil, which is a record high for the past 23 years. The average volume of exports during the first six weeks of 2017 amounted to 695,000 barrels per day against 450,000 during the same period last year.

US production is increasing, and demand is still low due to the fact that many processing plants were closed for maintenance, analysts say. Oil is available for export, since the agreement of OPEC reduces supply of black gold, they added. In December 2015 the United States had canceled a law that did not allow to do so.

According to forecasts of experts, this year the average volume of exports of crude oil in the US will be 650,000 to 800,000 barrels per day, which is higher than production in December of OPEC members such as Libya, Qatar, Ecuador and Gabon.

NFP

On Friday, the US published long-awaited statistics on the labor market. The figures came out quite decent, but the dollar reacted with a moderate decline. And the main reason is that both the favorable results of the release and the Fed's rate hikes next week are already calculated in price. EUR/USD, which on Friday defended positions above the level of 1.06, having received a fuse on the less "pigeon" rhetoric of Draghi, was trading at new weekly highs, touching the level of 1.0644. Meanwhile, USD/JPY, which previously touched a maximum of 115.50, is slipping towards the 115.00 mark.

In February, the level of payroll employment excluding the agricultural sector, grew by 235 thousand against the forecast of 190 thousand. However, exceeding the threshold of 200 thousand did not come as a surprise to the markets that increased their expectations after a strong ADP report reflecting employment growth in the private sector by almost 300 thousand. As a result, for January the forecast was revised to increase from 227 thousand to 238 thousand. Meanwhile, the unemployment rate dropped from 4.8%, to 4.7% in accordance with the forecast. Something spoiled the picture, as expected, and that was the component of salaries. Average hourly earnings increased by 0.2%, not reaching the forecast of growth by 0.3%. If this indicator turned out to be at or above expectations, the markets would get just an ideal picture of the state of the American labor market.
However, the release did its job and confirmed the appropriateness of tightening the Fed's policy next Wednesday. In principle, the regulator's decision did not depend on Friday's data, but in case of disappointing figures, there would definitely be some doubts among market participants about this.
As for the prospects for strengthening of the dollar, given the already tightened market and further tightening of the Fed policy, the currency growth potential seems very limited, although the subject of the divergence of monetary policy courses has not been canceled, which implies the preservation of the fundamentally strong positions of USD, which could be undermined if the dollar comes up too far and will displease the US administration, which has already resorted to verbal interventions.

The dollar is experiencing problems in the formation of growth against the yen

The dollar was supported against the yen last week, ahead of a speech by Federal Reserve Chairman Janet Yellen. But after her speech the dollar again came under pressure.

Overall statements of the President of the Federal Reserve were favorable for the dollar, but it was not enough for the formation of a stable uptrend in the pair USD/JPY. The Japanese currency is highly dependent on the dynamics of yields on US Treasuries. Yellen's speech gave no clear idea how many times this year interest rates will be increased and with what pace. This information was not enough and 10 year bonds rose by above 2.5 percent. Anyway bullish trend in USD/JPY looks extremely hard.

In the area between 114 and 115 yen for dollar there are active sellers. We must not forget that in Japan the new fiscal year begins on April 1. Before that there is support for the Japanese currency.

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4 lessons for investors on the example of Warren Buffett's portfolio (5)

4. Do not ignore dividends
What is common to 80% of Berkshire's investments in public companies? As you can guess from the subtitle, each of them pays dividends. Yields ranged between 1.59% of the number of shares of 9 Delta Airlines and 3.56% of the number of shares of Coca Cola. However, this principle applies to the majority of Buffett's acquisitions: companies need to return incomes to shareholders, and dividends are one of the best ways to do this.
Buffett's investment style - an everlasting possession - also allows him to take the crop growing dividends. For example, Buffett began investing in CocaCola after the fall of the market in 1987, when the company's shares were at $2.2-2.5 per share. Today, CocaCola, whose shares on Friday at the end of the trading day costed $41.78, annually pay a nominal dividend of $1.38. The company's annual dividend is now giving 26% yield of the shares acquired in the late 1980s, which is an excellent result.
Paradoxically, despite Buffett's love to the dividend itself, BerkshireHathaway do not pay them. Buffett explains it simply: he prefers profits to continue to work in the business, contributing to the growth of the company, giving the ability to make acquisitions and increasing equity of Berkshire. Buffett believes that the long term growth of Berkshire will bring shareholders more revenue than the quarterly dividend.
Warren Buffett himself once said: "When I say that I've learned from experience, I say that the trick is to learn from the experience of others". No doubt, all of us can learn from uncle Buffett.

4 lessons for investors on the example of Warren Buffett's portfolio (4)

3. Do not be ashamed to change the point of view or your preferences
For a long time, Buffett did not hide hostility to airlines after the bad experience of purchase of bonds of US Airways in 1989. He called the airline industry "black spot for investors", and in 2002 gave a brief analysis of the sector:
We have fixed monstrous costs, powerful unions and commodity pricing. This is not the best recipe for success.
However, last September (! Suddenly) Berkshire invested not in one, but in four major US airlines: Delta (NYSE: DAL), Southwest (NYSE: LUV)), American (NASDAQ: AAL) and UnitedContinentalHoldings (NYSE: UAL). Then Berkshire doubled the rate in the last quarter, and now it is investing in the airline industry more than $9 billion, a little more than 6% of the portfolio. Times are changing, and it is natural that as circumstances change, and opinions. Do not be afraid to reconsider your views on the company or on the industry on the basis of new data.

4 lessons for investors on the example of Warren Buffett's portfolio (3)

2. Set rules, but break them if necessary
It is known saying of Warren Buffett, that his favorite holding period is for good, and if you are worried about the idea that you hold shares for 10 years, do not hold them even for 10 minutes. Of course, it is entirely consistent with his personal doctrine to buy good companies and hold them for a long time.
However, Buffett did not hesitate to violate this rule if necessary. In contrast, shares of CocaCola and AmericanExpress (NYSE: AXP), located in Berkshire's portfolio from 1987 and 1964 respectively, the holding has invested in company Deere & Company (NYSE: DE) only for four years - 2012-2016, and then sold the asset, possibly in connection with the decline in agriculture. The holding owned shares in KinderMorgan (NYSE: KMI) only for one year, in 2015-2016, the shares were acquired by Buffett's managers, not by the Oracle of Omaha himself. The Company from time to time from 2009 to 2014. owned shares of ExxonMobil (NYSE: XOM).
Of course, getting rid of the assets - it is rather an exception to Buffett's portfolio, not the rule, but also during tough investment strategy you should be flexible enough to admit mistakes or receive benefit from an unexpected opportunity.

4 lessons for investors on the example of Warren Buffett's portfolio (2)

Here are four lessons to be learned from Berkshire's assets:
1. Diversify carefully
Diversification is considered to be one of the most important components of a reasonable investment strategy that minimizes the overall risk of the portfolio. However, excessive diversification can often harm the portfolio, reducing potential revenue. Although Berkshire Hathaway holding company owns shares in 43 public companies in various sectors of its portfolio is not as diversified as one might think.
In the three major assets: BRK - Heinz (NASDAQ: KHC), WellsFargo (NYSE: WFC) and CocaCola (NYSE: KO) - there is 48% of total assets in public companies, or $71 billion. Ten major public assets make 81% of the portfolio value and twenty - 93%, or $147 billion.
The list of sectors in which BerkshireHathaway is investing, is also limited. Slightly more than one third of the portfolio - 34%, are located in the financial sector, and 31% are producers of consumer goods. Almost two-thirds of the portfolio is invested only in these two sectors. Other sectors with significant participation include technology companies (recently acquired shares of Apple (NASDAQ: AAPL) - 6% of the portfolio - and industry - 5% of the portfolio.
Of course, diversification of assets remains the best way to protect the overall value of the portfolio. However, it is important not to allocate funds too thinly. Probably, the best option to diversify is 15-20 packets in 3-5 sectors.