Archive - Jul 2015

With the Federal Reserve’s unwillingness to allow the markets to stand on their own feet, and not be so dependent on their interventionism with QE for years, and Zero interest rates for the same – the tool box may in fact be empty – at the most inopportune time. So here we are, once again, waiting or watching for what could possibly be the start of another contagion effect to ripple through the markets that has the potential of resembling 2008, or worse.  And the only thing to stand in its way will be the faith and/or belief in their omnipotence. For it seems – that’s all they have left. All while we watch the same crumble in the eyes of others across the waters as their Central Banks are being perceived daily more as villains or worse – inept

• N1 – Soft deal: The most unlikely scenario is that the euro-area partners offer a much softer programme to Greece.
• N2 – Default-and-stay: Moderately less unlikely is a scenario where Greece defaults but stays in the euro thanks to a direct recapitalisation of Greek banks by the euro-area partners, with the Greek government using only domestic resources for the country’s fiscal needs.
• N3 – New deal: The third scenario is one in which the rising economic and political cost of a closed banking system results in the Syriza government being replaced by a new government of national unity and a new deal with creditors being reached.
• N4 – Grexit: In our view, Grexit and Scenario N3 are the most likely – with about equal probabilities.

Most leading indicators are warning; more trouble could be ahead...

If the early bitcoin markets are an indication of what will happen once New Zealand opens for illiquid FX trade, it will be a risk off kinda day...

A poll by GPO on Mega TV gave 51.5% in favor of “no” and 48.5% in for “yes”
Metron Analysis on Antenna TV showed “no” leading with 49% vs 46% for “yes”
MRB on Star TV showed “no” leading with 49%-54% vs 46%-51% for “yes”
Marc opinion poll for Alpha TV shows “no” ahead with 49.5%-54.5% vs 45.5%-50.5%

“If all of a sudden one member leaves, it creates a precedent, and maybe suddenly casts some doubt on the long-term future of the monetary union.”

“There is no blueprint for how a country exits the euro and redenominates [and] that’s going to create all kinds of uncertainty in Europe.”

“Without new money, salaries won’t be paid, the health system will stop functioning, the power network and public transport will break down and they won’t be able to import vital goods because nobody can pay” President of European Parliament Martin Schulz warned Greek voters one day before the crucial Referendum on Sunday.

The EIU forecast victory for the "No" camp as soon as the referendum was called. We are sticking to that call.

— The EIU Europe (@TheEIU_Europe) July 5, 2015

On Sunday, the China Securities Regulatory Commission announced that the PBoC is set to inject capital into China Securities Finance Corp which will use the funds to help brokerages expand their businesses and reinvigorate stocks. In other words, the PBoC is now in the business of financing leveraged stock buying.

The story of the "U.S Economic Recovery", who oversaw it, and how they f##ked "fixed" everything...

What investors will focus on in the week ahead

That like it or not, this is where the democracy was born that allowed for America to become a nation of free people. The same democracy celebrated from sea to shining sea every Fourth of July. And also the same democracy that is under threat, in Greece, in Europe as a whole, and very much in the US too.

"I look at my three-year-old niece, I envy her ignorance, I envy her age... They say that all we hear is propaganda; but we have lost our trust in all sides, now everything seems to be lies... It feels like an end. The end of our lives as we knew them. Yes, the lives that, before Friday, we already thought could be better; now we realise they were better then. The only thing we truly wish for is that the worst is not yet to come."

What JPMorgan is doing to the "Other" commodities space, Citigroup has just done to the "Precious Metals" derivative market.