The British government has held a referendum wherein the majority of British citizens voted to leave the European Union. This phenomenon has been popularly named “Brexit” by the media. The fact that Britain will leave the European Union is certain. However, there is still a lot of uncertainty regarding the terms on which Britain will leave. There are two possibilities. On the one hand, there is a total and complete exit from the European Union which is being called the “Hard Brexit.” On the other hand, there is a likelihood that Britain will retain some of the features of the…
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February 2018 has been a bad month for the United States stock market. In just two consecutive trading days, the market crashed by more than 1500 points. As a result, all the incremental gains that were made in January 2018 were simply wiped out within these two days. It would be incorrect to say that the fall in markets came as a surprise to anybody. The market had been extremely bullish for the past few months. It had reached new heights which were earlier thought to be impossible. Hence, there were many skeptics in the stock market who believed that…
2017 has been an exceptional year for stock markets across the world. The start of 2018 has been no different at all. This has got many people wondering whether we are in a manic phase. There is no reason why this possibility should be ruled out. The Dow Jones Index has seen an uptick in every month of the previous year. There has been no discernable reason for the index to rise so fast. This has got many investors wondering whether they are in a melt-up phase. A melt up phase is the run-up to a crash. Here asset prices…
The European economy is crumbling. Every day we hear about one of the member countries contemplating the exit from the Euro. Greece, England, and Italy have all at some point of time, or another contemplated a departure from the Eurozone. However, is it really that easy? Can countries just walk into or walk out of the Eurozone as they feel? The answer is obviously not. Leaving a monetary union like the Eurozone is likely to be an extremely messy affair. However, the finances of European countries are so messed up already that leaving the Eurozone does not seem like a…
In the past month, the Dow Jones Industrial Average had seen a spectacular fall. The market had crashed more than a thousand points. This crash happened on the speculation that the Federal Reserve i.e. the central bank of America is planning to raise interest rates. The mere mention of the possibility of an interest rate hike caused the market to have a panic attack. This obviously raises the question about why is it that markets are affected so drastically by decisions made by the central banks. In this article, we will have a closer look at the relation between the stock…
The word Sukuk is an Arabic word which means certificate. These are certificates which are offered by corporations and governments which follow Islamic principles. For instance, Saudi Arabia has issued a new tranche of Sukuk in the year 2017. This was done to provide medium-term financing to the government to meet its debt obligations. The Saudi Arabian government has been cash-strapped given the sudden decline in the price of oil which has led to a catastrophic decline in the revenue of the Saudi state. The word “Sukuk” is used to denote the Islamic equivalent of traditional bonds. However, there are…
Cryptocurrencies are the latest buzzword in the international financial markets. Any company or nation that seems to be struggling with their finances is trying to use cryptocurrency to improve their situation. Corporations like Long Island Ice Tea and Kodak had announced plans to imbibe cryptocurrencies in their business model. This news sent their shares soaring higher even though using blockchain made little sense when the business models of these companies are considered. The New York Stock Exchange threatened to delist these companies since they were misleading the investors. It seems like Venezuelan President Maduro has drawn up similar plans to…
Bitcoin futures have been introduced on the Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) from December 10, 2017. Although it is being claimed that these future contracts will be used for hedging and mitigating risks, the reality is that they are being used for speculative purposes. Bitcoin has become a highly speculative underlying asset. This has prompted the Fed chairman Janet Yellen to warn people about the volatile nature of Bitcoin. The fact that the trading of the futures contract on Bitcoin had to be halted twice since the price rose so high within the first few…
Gold has always been the alternative asset class. Whenever people lose faith in the value of the stocks that they are holding or even in the value of any currency, they typically sell their holdings and invest the proceeds in gold. However, of late, Bitcoin has burst onto the scene. Gold is no longer the only place where money can be parked in times of crisis. Bitcoin has become a viable alternative. Given the humungous price rise in Bitcoin in the recent months, at the present moment, Bitcoin seems to be overtaking gold. The price of gold is reducing while…
If you are an investor who is even remotely connected to financial markets, the odds are that you have heard about the spectacular rise of Bitcoin. The crypto-currency has grown from $10,000 to $17,000 in a week. Many believe that this is a bubble. However, there are others who believe that the rise of Bitcoin is based on genuine underlying factors. In this article, we will have a closer look at the Bitcoin phenomenon to determine whether its sky-high valuation is justified. Bitcoin: An Alternative Investment Asset Bitcoin comes into existence through mining. In common words, this means that people have…
