Stock Market: 3 Things Under the Radar This Week

♦ Stock Market This Week ♦

Stock MarketStock markets cheered the much-anticipated signing of the phase one trade deal between China and the U.S. But there are many more trade questions that could either take the deal as a model or see it as a warning sign. The EU and the U.S. may be next in the headlines.

Meanwhile, the Federal Reserve is getting applause it may not want, with its repo action catching the attention of those against quantitative easing. And while the Fed’s Beige Book showed a strong economic recovery continuing, there are always pockets of weakness.

Here are three things that flew under the radar this week.

1 Trade Deal Moving East to West?

The Sino-U.S. trade deal has been signed, putting an end to the hostilities between the two economic powerhouses, at least for now. U.S. President Donald Trump initiated the conflict and is basking in the spotlight surrounding this outcome. Should the EU now expect a similar playbook?

EU Trade Commissioner Phil Hogan stated Thursday that he had a positive exchange of views in Washington with U.S. Trade Representative Robert Lighthizer. He was hoping to persuade the current administration not to impose punitive tariffs on the EU.

The meeting is a step forward in addressing long-standing issues such as a French digital tax and aircraft subsidies, soothing some concerns over a possible escalation in trade tensions between the two hefty trading blocs.

A significant factor that could limit the desire of the U.S. authorities to start another trade dispute this year is the November presidential election,

“The upcoming elections will limit Trump’s risk appetite,” said Nordea analyst Tuuli Koivu, in a research note to investors, “and we expect a flow of small hindering measures between the two economic blocs but not a full-blown trade war.”

But this would probably change if he was reelected.

“Trump has been speaking in favour of protectionism for most of his career, we expect him to be ready to push hard on new trade agreements and if necessary to implement tough measures on China as well as on the EU during his possible second term,” added Koivu.

As far as the other side is concerned, it’s tricky at this point to judge the views of the Democratic Party’s nomination given the candidate has yet to be selected, but the current favorite Joe Biden is seen as being supportive of trade negotiations.

“We expect he would be less aggressive on China than Trump or the left-wing Democrats and especially to promote cooperation with the EU,” said Koivu. “And even if Elisabeth Warren and Bernie Sanders want to reform the global trade system and are more pro-active on topics like workers’ rights, their view would hurt China much more than the EU.”

That said, this view is not universal.

“People are very bullish,” said analysts at MUFG Bank. “They are kind of acting as if Trump is going to be a very different creature when it comes to trade this year.”

“The crusty cake of protectionism that sort of enveloped the global economy is still going to be there.”

2. Traders Cheer Repo Rally Extension

Traders have been fraught with worry for weeks about when and how the Federal Reserve will end efforts to prop up overnight lending markets, which many believe have played an instrumental role in pushing stocks to their current record highs.

But the U.S. central bank indicated this week that it planned to continue its liquidity boosting efforts, known as repurchase-agreement (repo) operations, into mid-February.

Powell has stressed that the Fed’s repo program – aimed at keeping the federal funds rate within the 1.50% and 1.75% range – is not quantitative easing.

“Growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis,” Powell said last year.

The Fed has been buying Treasury bills at a pace of $60 billion a month since October to avoid a repeat of the cash crunch in September, when short-term rates spiked 10% sending markets into turmoil.

But traders are not convinced. They see any expansion of the Fed’s balance sheet as a form of quantitative easing.

The moves in the market seem to validate that there may be parallels between repo operations and quantitative easing in pushing stocks higher.

Since the Fed started buying T-bills, the S&P 500 has gone up by almost 1% for every 1% increase in the Fed’s balance sheet, Deutsche Bank said last month.

3. The Few Weak Beige Book Spots

The Federal Reserve said in its Beige Book this week that the U.S. economy continued to expand at a modest pace.

That was not surprising, but it gave the market a little more assurance that the Fed would have no reason to raise rates this year.

But there were some outliers.

In the Richmond Fed area “tariff and other trade policy uncertainties continued.”

Hiring and activity was subdued in the New York area, while wages grew just modestly.

In Kansas City “manufacturing activity and sales in the transportation sector continued to decline. Economic activity in the energy and agriculture sectors also remained weak.”

Looking on the plus side was Boston, which seemed to still jump.

“Software and IT services firms cited relatively strong growth; manufacturers and retailers also reported revenue increases from a year earlier. Residential real estate markets saw continued inventory shortages. Labor market tightness persisted. Outlooks were positive.”

♦ Eurozone Bond Auctions ♦

Stock Market News — Records have tumbled across eurozone bond markets this week as investors queue to lend to governments, betting that interest rates in the currency bloc will stay at rock bottom for the foreseeable future.

Spain amassed €53bn of bids for its new 10-year bond on Tuesday — the most ever for any euro bond — in a sale that raised €10bn. Italy came close to breaking that record with €47bn of orders for its new €7bn 30-year bond, while Belgium, Cyprus and Ireland have all racked up their biggest-ever order books in recent days.

Fund managers have piled in to all but the lowest-yielding debt, calculating that Christine Lagarde, the European Central Bank chief, will stick with the stimulus policies, including negative interest rates and buying €20bn in bonds a month, introduced by her predecessor Mario Draghi.

“It seems likely that interest rates will stay at this level for a very long time,” said Mark Dowding, chief investment officer at BlueBay Asset Management. Mr Dowding, who favours higher-yielding eurozone debt issued by Italy and Greece, said that investors had to pay punitive negative rates to store their cash with custodian banks in the euro area.

“We don’t want to sit on cash, so we need to find ways to earn a bit of yield. It’s in that context that people are putting their money to work at the start of the year.”

Despite a flurry of bond sales in January, usually the busiest month for markets, 2020 as a whole is expected to see the smallest net issuance of new debt in the eurozone since the financial crisis. Some investors are rushing to snap up the plentiful supply of new bonds while they can.

“What is striking is that we have seen better demand than 2019, which was already an exceptional January,” said Pierre Blandin, a senior debt banker at Crédit Agricole.

Public debt managers have been keen to take advantage of the benign market conditions. “We saw this as an opportunity in terms of the rate environment to lock in rates for a big amount [of debt],” said Maric Post, director of Belgium’s debt agency, which sold €6bn of 10-year bonds on Wednesday at a yield of 0.11 per cent.

But buyers have been notably less enthusiastic about the lowest-yielding debt. Two recent auctions of German bonds, known as Bunds, which serve as a benchmark for the entire eurozone and mostly trade at sub-zero yields, met with weak demand as an easing of tensions in the Middle East led investors to shun the very safest assets.

Investors are betting instead that stable interest rates will allow them to eke out gains by buying bonds that offer some extra yield, or spread, above German debt.

“Everything that has some extra spread compared to the Bund will get bought,” said Mr Post. “We are profiting from that.”

What investors are not forecasting is a repeat of 2019, when rate cuts in the US and eurozone fuelled sweeping gains for holders of both haven bonds and riskier debt

“It’s probably a year of not much happening with central banks,” added Andrew Wilson, global head of fixed income at Goldman Sachs Asset Management. “That is a pretty good backdrop for spreads.”

◊ Plus500 Review 2020 ◊


• Business & Financial News – Stock Market News Today •

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Plus500 is a streamlined broker that focuses on trading in a wide range of financial markets with relatively low spreads and no commissions but without offering many extra services. Plus500 has been in the forex and CFD business since 2008. They are registered in the U.K. and licensed by the Financial Conduct Authority (FCA).

The company offers access to a comprehensive product line including forex, stock indexes, equities, commoditiescryptocurrencies, ETFs and options. Plus500 is the first broker to introduce a bitcoin CFD in 2013. The company does not charge commissions on any of its trades.

All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platformPlus500 Ltd. (PLUS.L) is a publicly traded company on the AIM section of the London Stock Exchange since 2013 with a £1.73 billion ($2.25 billion) market capitalization and clients in more than 50 countries around the world. Plus500 offers access to more than 2,000 trading instruments.


Trust … the company is registered with the Financial Conduct Authority (FCA), CySEC, ASIC, FSCA, FMA, MAS, and the ISA, which provides good accountability and visibility. The company is required to take steps to ensure client funds are not comingled with corporate funds – ensuring that client money and assets are protected in the unlikely event that Plus500 becomes insolvent – by holding those funds in segregated accounts at regulated banks.

If Plus500 defaults, any shortfall of funds of up to £50,000 may be compensated for under the Financial Services Compensation Scheme (FSCS). If the custodian bank holding client funds goes into liquidation, any shortfall of funds of up to £85,000 may be compensated for under the FSCS.


Plus500 also offers Negative Balance Protection, ensuring that clients cannot lose more than they have put into their account. Guaranteed stop losses can be used on some instruments depending on market conditions but they are subject to a wider spread.

The company does not charge commissions on any of its trades. All costs are contained within the spread for each of more than 2,000 trading instruments offered on Plus500’s WebTrader platform. Large volume traders do not get a trading discount at Plus500 and the spread is the same whether you trade one lot or 1,000 lots.

There are no charges for normal withdrawals or terminating an account. However, inactivity fees kick in after an account has been idle for three months. Beginning traders can open an account with as little as £100.

Traders can qualify for a “professional” account, which offers a higher level of maximum leverage, but the costs are the same. Investors with a professional account may increase their maximum leverage ten-fold, from 1:30 to 1:300.Spreads at Plus500 were some of the lowest in the market.

Plus500 also offers access to options trading on many markets. These are very similar to plain call and put options traded on exchanges, but they are not standardized which means that the option premium can be customized for your risk tolerance and strategy objectives.


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⇑⇓ History of Plus500 ⇓⇑

Plus500 is an international financial firm providing online trading services in contracts for difference (CFDs), across more than 2,000 securities and multiple asset classes. The company is headquartered in Israel and has subsidiaries in UK, Cyprus, Australia, Singapore and Bulgaria.

Plus500 is authorised and regulated by the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC), the Australian Securities and Investments Commission (ASIC), the Monetary Authority of Singapore (MAS), and the Israel Securities Authority (ISA). It is listed on the London Stock Exchange with the ticker “PLUS” and is a constituent of the FTSE 250 Index.

Plus500 Review

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Plus500 Withdrawals

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History: Plus500 Headquarters in Haifa, Israel. The company was founded in 2008 by six alumni of the Technion – Israel Institute of Technology: Gal Haber, Alon Gonen, Elad Ben-Izhak, Shlomi Weizmann, Omer Elazari and Shimon Sofer), with an initial investment of $400,000 contributed by Gonen.

The initial platform was based on a Windows OS. In 2010, Plus500 launched a web based version of its online trading platform, allowing Mac and Linux users to trade online. In 2011, they launched their first app for iPad and iPhone users. In 2012, Plus500 introduced its Android-based trading platform for Android smartphones and tablets.

In 2014, the company launched its Windows app. In 2016, the Israeli operating subsidiary of company, Plus500IL Ltd was one of a small number of companies to be granted a Trading Arena Licence by the Israeli Security Authority (ISA). In that same year, Plus500 released an app for Apple Watch to trade and view account details directly from Apple’s wearable.

In early December 2017, Plus500SG Pte Ltd, the Singapore subsidiary of Plus500, was granted a Capital Markets Services license by the Monetary Authority of Singapore (MAS) for dealing in securities and leveraged foreign exchange trading.

In June 2018, Plus500 launched its Economic Calendar, covering major financial events and indicators from all over the world, which are provided by Dow Jones & Company, a subsidiary of News Corp. Plus500’s calendar includes a list of the most highly-affected instruments for each economic event.

In July 2018, shares of Plus500 were listed in the main market of the London Stock Exchange.

Operations… Plus500 trading apps are supported in 32 languages, including English, German, Greek, Italian, Spanish, French, Finnish, Danish, Swedish, Estonian, Russian, Romanian, Hebrew, Arabic, and Traditional and Simplified Chinese.[18] It has been reported that 40% of the transactions were made by either Smartphones or tablets.[2]

In December 2017, European and UK announced details of planned restrictions on the spreadbetting and CFD sectors. Plus500 CEO Asaf Elimelech said “the board believes the proposals are unlikely to have a material adverse effect on the group’s business, thanks to its highly flexible business model”.


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