Archive - Feb 2015

"The Eurozone chess game has entered its third and final stage. Germany wins in three moves - Euro, deflation and purchase of public debt by the ECB (QE) – and in the last few years it has found a way to maximise its profits and reduce to zero its risks as Europe’s creditor.... If we wait too long before leaving the Euro, then Germany will get checkmate and after cashing in all the benefits of our entry into the Euro, it will also cash in on the benefits of our exit."

All of the biggest problems in the financial world revolve around the bond markets today:

"We think that negative snowstorm effects could potentially subtract as much as half a percentage point from Q1 growth compared with a neutral baseline, although there is still plenty of time for activity to bounce back within the quarter. In light of our analysis, we reduced our Q1 GDP tracking estimate by two-tenths to +2.8%."

- Goldman Sachs

Following "optimistic" comments from Dijsselbloem (which were couched in total uncertainty) and reports that the Eurogroup Meeting had been delayed, Stocks and EURUSD started to soar as it appears confusion reigns... or who leaked something?

This won't end well...

UPDATE: JOC.com now hearing conflicting reports on deal

Following threats from the US labor secretary "that they have until Friday to reach a contract or they’ll have to negotiate in Washington D.C.," Dockworkers and their bosses, according to JOC.com, have reached an agreement (despite Reuters reports that no deal was reached last night).

With OPEX out of the way, the indices are free to trade on anxiety and reality... and have now given up all the post-"Greek Talks Fail" gains... WTI Crude and Treasury yields are plunging.

Having hovered at its lowest level in 12 months in January, February's Markit US Manufacturing PMI printed 54.3 (modestly above expectations of 53.6). Under the covers it is a very different story with New orders dropping to their lowest level since Jan 2014 and employment falling. While the headline will likely steal the day (though initial equity reactions are negative), as Markit concludes, "the rate of economic growth remains well down on last year."

Remember: any time Goldman tells you to do something, do what it does, not what it tells you (thank you Tom Stolper for teaching us that lesson) and as the case may be, Goldman's prop, pardon, flow (because those are illegal under Volcker wink wink) traders have some AAPL shares to sell to you, to wit: "We increase our 12-month target price to $145 from $130 previously which is based on a 16X (up from 15X reflecting our increased confidence in Apple’s outlook) multiple applied to our CY2015 EPS estimate of $9.03 ($8.64 previously)."

Following numerous rate cuts and backdoor QE (halting government bond issuance), Denmark's Krone is collapsing this morning following the head of Denmark's Economic Council, Hans Jorgen Whitta-Jacobsen said:

DENMARK'S CENTRAL BANK WILLING TO USE CAPITAL CONTROLS IF NECESSARY TO DEFEND DKK PEG

This has sparked the biggest drop in DKK against EUR since 2001 and as SEB chief strategist Carl Hammer exclaimed, "currency markets are extremely nervous."

An important announcement from the ECB..

"I accepted this position, as I said at the time, to work side-by-side with Bill Gross, as economic counselor, doing the three things that I love: think, write and speak macro. My mission here is complete. I will continue doing the things I love in other spaces, possibly in the academic arena. PIMCO will always be Camelot in my heart."

** Greek Bank Runs Accelerate as Possible ‘Grexit’ Looms
** Fatigue with Greek Crisis Breeding Massive Complacency
** Ukraine a Significant Setback for NATO
** India Demand To Rise To 35 - 40 Tonnes This Month
** Gold Oversold - Fundamental and Technical Position Good