Despite the alphabet soup of bail-out facilities provided by the ECB, people still do not trust the system. In our view, the TARGET2 chart is the best way to assess trust in central banks and as it clearly shows, the narrative is failing. It seems impossible for Draghi to reestablish monetary confidence.
GREED & fear continues to believe that the real flash point in the EU is likely to be Italy. GREED & fear was reminded of this reading this week that Italian Prime Minister Matteo Renzi is now seeking Europe’s agreement for a €40bn state-funded recapitalisation of the country’s banking system.
It is one of the great ironies of life that each generation believes its experiences are unique. The reality is that we have seen this movie before - with different actors, plot twists, and technological advancements. The basic plot seems to push along a hauntingly familiar path.
A day after the most awkward three-way handshake in history between Obama, Trudeau, and Nieto, the latter's central bank just pushed rates higher by a bigger than expected 50bps to 4.25% (exp +25bps). The Peso is surging back (extending its bounce off January lows) retracing all the post-Brexit losses... on what seems like fears of a surge in food inflation.
China has taken the opportunity of lower oil prices since early-2015 to accelerate the strategic petroleum reserve (SPR) builds at c.1mbd, pushing the total oil in stock under SPR to an estimated 400mmbbl, or 53 days of net crude oil import equivalent. This volume might be close to the capacity limit and together with potential teapot utilization pullback and slower-than-expected demand from China could increase near-term risks to global oil prices (c.1.2mbd impact).
Earlier this week we noted that Hillary's lead over Donald Trump in the polls was either 1% or 12%,depending on which poll you believed. We also pointed out that the polls were taken prior to the UK referendum. Today,in the first post-Brexit poll, the result is a quite stunning reversal from last week, Rasmussen finds Donald Trump is leading Hillary Clinton 43% to 39%.
On June 30, 2016, S&P Global Ratings lowered its long-term issuer credit rating on supranational institution, the European Union (EU), to 'AA' from 'AA+'. The 'A-1+' short-term rating was affirmed. The outlook is stable.
The simple - and only - answer, is of course central banks. But for those who need a more "nuanced" answer to present to their portfolio managers who are watching this market move in stunned silence, here is JPM's Adam Crisafulli with the full breakdown of today's latest 1% move higher.
James Traub’s call is for the ‘elites’ to rise up against the ‘ignorant masses’. Yes, indeed, please do. But be careful what you wish for. You just might discover that we are having the very same argument had between Thomas Jefferson and Alexander Hamilton at the beginning of the Republic.
Sunday evening, as the world watched the fallout from what "Remin"-ers said was the end of the world, The BIS warned that central bank 'easing' actions "have started to backfire" and explained what little could be achieved with further stimulus. Three days later, first The Bank of England and then the European Central Bank both unleashed fresh bazookas as The PPT to save the world swung into action to rescue stocks and the all-important global wealth effect. Yet again - no consequences for anything will be allowed...
Despite all the exuberance over the Brexit bounce in US (and UK) equities, never minds bonds, FX, and credit being far less enthusiastic, Deutsche Bank is plunging once again this morning. Having failed The Fed's stress test for the second year running and been diagnosed by The IMF as the world's most systemically dangerous financial entity, the giant Germanbank is getting slammed down almost 4% today, back near record lows as its 'Lehman-esque' path to devastation continues.
Just days after Goldman threw in the towel on its bearish gold call, the gold bulls are crawling out of the woodwork and none has been more vocal than Credit Suisse which moments ago hiked its gold price forecast to $1,500 which the world's 3rd most systematically risky bank expects the yellow metal will hit in the first quarter of 2017.