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Waiting With Baited Breath – The Challenge of Uncertain Times

September 16th, 2013 by kurtz metals

A lack of stability always takes a toll on the market. Without a clear idea of what’s going to happen, people lack the confidence to invest. We end up with a situation where everyone is holding onto what they have. Two of the biggest unknowns posing a threat to investor confidence right now are the future of the U.S. Federal Reserve’s quantitative easing measures, and what lies ahead for the Chinese economy and GDP.

Quantitative easing has seen the government buying billions of dollars of bonds each month in order to infuse the market with capital for people to spend and invest. Right now, the economy is improving and unemployment numbers are falling. Because of this there has been talk of the Federal Reserve pulling back on quantitative easing. But while the improvements in the economy can be seen from the top down, for the person on the street these changes aren’t quite so evident, and in some cases not evident at all. The prospect of a pullback on quantitative easing at a time when many don’t feel that they’re out of the woods has created anxiety. To what degree will quantitative easing be pulled back? When? From the moment talk of these changes began, the commodities market has taken a hit.

The other major factor adding uncertainty to the market is China. Chinese growth, both in construction and manufacturing, has created a large market for commodities. This growth has largely been stimulated by the Chinese government. But last quarter the Chinese GDP fell to 7.5%, and there’s talk of the Chinese government holding it there by restricting growth for the time being. Once again, the questions become what and when? If Chinese economic growth slows for the foreseeable future, then there’s less of a market for commodities, lowering prices once again.

The market hates uncertainty, and we live in uncertain times. While people may have more to spend than they have in recent years, that doesn’t mean they’re spending it. Restoring investor confidence is essential to giving the market the jumpstart it needs.

Posted in blog posts, Local Community, Metal Prices, Scrap Industry, scrap metal, Scrap Recycling


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