Archive - Aug 28, 2013

The key overnight events were already discussed previously, but here they are again: the wholesale selloff in Asia (which subsequently shifted to Europe), the accelerating outflows from India (moment ago the SEBI website announced a net INR13.7 billion selling in Indian stocks yesterday and the near record collapse in the Indian Rupee to new record lows, and the ongoing uncertainty over Syria and what it will do to crude prices (if SocGen is right, nothing good). In brief: a market conditioned and habituated to a world in which Bernanke promises "to make everything ok" suddenly finds itself in the throes of uncertainty and following 4 years of dumb trend-following,  has no idea what to do.

Japanese finances are in a shambles and very soon investors are going to run screaming from the Yen and JGB markets.

Let's plan for it. 

UPDATE 2: It would appear Abe got a late-afternoon phone-call to sell some JPY and buy some Indian 10Y bonds... (since Traders have not seen the RBI intervene directly - or thru local banks)

UPDATE 1: Gold (in USD terms) is breaking out... $1428.47 (gold now at a three-and-a-half month high)

From a weak open, the Indian Rupee has now plunged a stunning 3.88% today. This is the largest single-day drop in the Rupee's value since March 1993. The Indian people have lost 30% of their global purchasing power since March 2013 (though those who swapped their paper wealth to gold have seen their purchasing power rise 6% in Rupee terms). With Gold in Rupees having broken to a new all-time high, it would seem the government has little choice but to lease its gold (no matter how vehemntly they deny the fact).