Business
The capital market in Israel
Indifference in Israel, vigilance in the world: What will the announcement of capital market elections do?
The dissolution of the Knesset is also not expected to affect the capital market.
The world, on the other hand, is pinning hopes on an aid package in the United States, but is following the dollar with concern, while the growth forecast also indicates an imbalance and it seems that the rises on Wall Street have been exhausted. Amir Kahanovich from Excellence Investment House with the review
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Wednesday, 02 December 2020, 09:11
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Ganz: "Blue and white will vote tomorrow in favor of the proposal to dissolve the Knesset" (Photo: GPO, Editing: Assaf Drori)
Today, a vote will be held in Israel to dissolve the Knesset, and according to political commentators, it has a high chance of passing.
In the past, political instability in Israel did not really interest investors, even on the assumption that the effects on the companies' businesses would be negligible.
Similarly, in the government debt risk segment the election does not change the fundamentals by which the debt is priced, so we do not anticipate that going to the polls will lead to an increase in its risk premium.
In fact, absurdly we have also seen reverse cases where investors felt more comfortable with a lack of budget, as such a situation significantly lowers the chance of a significant deficit.
The market's disregard for political development was also reflected in the continued strengthening of the shekel.
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Does not make too much of an impression on investors.
Ganz (Photo: Elad Malka)
The world is in renewed hopes for a fiscal aid package in the US, and these yesterday supported rising stock markets and declining bond markets.
Since the US election we have heard nothing in the area of fiscal aid and on 11 September the budget should be closed (or not closed and then the administration shut down). Yesterday afternoon Senate Majority Leader Mitch McConnell unveiled his own aid package and President-elect Biden said he would consider supporting the plan Immediately, although he estimates that after taking office he will need further assistance. Finance Minister Manuchin testified before the Senate Banking Committee and presented economic data that he claims shows that at this stage a narrow package seems more appropriate. Approval of an aid package during Trump's term significantly raises the prospect of a large volume of incentives in 2021, a concern that has recently worried quite a few economists, including those of the OECD (below).
Macro data continues to support optimism. In Europe.
However, US companies' reports of a planned reduction in the labor force stood out, with the subsection falling below 50 points. Further indications will be received from the US labor market in the publication of ADP job creation data and on Friday the labor market truth data, according to forecasts There has been a significant slowdown in the pace of job creation, but these have been projected to reduce the unemployment rate there from 6.9% to 6.8%. The companies' reports may expand rapidly, with the intention of reducing the number of employees, partly due to a positive increase in efficiency and productivity. This may actually support profitability and stock price increases.The
base on the dollar (the direct cost of financing the currency versus financing through currency swaps) has fallen to a low level since the peak of the corona crisis in March, which may indicate an initial development of global dollar shortages (perhaps also related The price increase is still not substantial, partly because there is currently no high demand for the dollar, but if such a sudden demand develops we come to it from a bad point, which could create a liquidity crisis.Previous effects of a dollar liquidity crisis in parallel with rising dollar yields
They have created negative pressure on emerging countries that rely on external funding, but so far no such pressure has been felt.
The OECD sees no small risk of a renewed financial storm.
Is expected to support the aid program, but is not sure it will be accepted.
Biden (Photo: Reuters)
The OECD yesterday lowered its global growth forecast to 2021, describing high country-to-country variability, which in itself could lead to imbalances.
The organization's chief economist, Lawrence Boone, warned that the main concerns were deteriorating public health and faltering fiscal aid.
She argues the negative impact on the economy could be enough to ignite a renewed financial storm.
We estimate that in such a scenario central banks would be happier to buy the market again and inject liquidity, but perhaps we are just too optimistic.
City's 'euphoria model' has been at its peak since the dot.com bubble.
Their chief economist, Tobias, explains that at such levels, historically, the chance of losing money in the next 12 months is 100%.
The most prominent phenomenon in the market in November, the jump in value stocks, was supported, it turns out, among other things by "short squeeze" in their shares, when the volume of short positions closed sharply. , Which shows that this engine for increases is quite exhausted.The
consumer price index in the eurozone surprised yesterday, when it fell by an annual change of 0.3% - compared to expectations of 0.2% -. Weakness in inflation and economy are among the reasons the market embodies further interest rate cuts in the bloc There to go up like in the US.
Amir Kahanovitz is the chief economist of Excellence Investment House
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