Archive - Feb 2015 - Story

"X" continues to mark the spot of the death of global investor rationality...

Goldman recently warned that they are "more worried than we have been since the start of the Euro area crisis," and judging by the extraordinary surge in "Grexit" headlines, it appears this time is different from 2012...

"Using Bitcoin is an effete act of rebellion, a weak signifier of resistance like wearing a hoodie or getting a tattoo that’s well covered by your work clothes. Bitcoin is fashion, more than a fad but less than lasting." Strong words. Let’s dig in.

With reports of near mutiny in Syriza's ranks amid the back-bending they have done to try to meet Germany's demands - only to be abjectly denied by a non-ultimatum-setting Schaeuble - it is perhaps time to prepare (ahead of tomorrow's apparent "G" day) for the possibility that Greece creates a systemic event. As Goldman recently warned, there are aspects that leave us more worried than we have been since the start of the Euro area crisis with a tight schedule to avert a disorderly outcome. Risk markets so far have traded in a resilient (well managed) manner but risks of an accident remain and here is how Goldman suggests you hedge that exposure.

Official Greek deposit data began tumbling in December (outflows around EUR3bn), and accelerated in January in the run up to the Syriza election (proxied by JPMorgan at over EUR 12bn). During the last two weeks, however, the absence of ATM lines and visible bank runs has been curiously lacking as, at least on the surface, there appears to be no panic. However, as Dody Tsiantar reports, sources in the Greek banking sector have told Greek newspapers that as much as EUR 25bn euros have left Greek banks since the end of December with outflows surging this week. Perhaps they are getting anxious that authorities will take Cypriot advantage of the Bank Holiday that is planned in Greece on Monday.

The past 48 hours have become a free-for-all flame war involving the titans of British media, including the BBC, the Guardian, the Times and, the paper that started it all, the Telegraph. Several hours ago, the first (of meny) skeletons in the closet busted loose and is suddenly threatening to expose some of the dirtiest laundry of UK high society.

It would appear that monetizing more than 100% of your debt and constant daily reassurances that everything is awesome are not enough to create real world economic growth. Japanese manufacturing PMI slipped to 51.5 in February (missing expectations of 52.2), its lowest since July 2014 as New Orders & Employment slowed. Perhaps most worrying for the deflation-death match Abe is wagering, Output prices tumbled. Japanese stocks don't care of course, having entirely decoupled from JPY when The BoJ scared the FX carry markets with its 'hawkish' bias and 5-4 vote.

Three months ahead of schedule, Russia announces the launch of its own 'SWIFT'-alternative, linking 91 credit institutions initially, suggests de-dollarization is considerably further along than many expected (especially as Russia dumps US Treasuries at a record pace).

The global financial system desperately needs a big, bloody sovereign default - a profoundly disruptive financial event capable of shattering the current rotten regime of bank bailouts and central bank financial repression. Needless to say, Greece is just the ticket: A default on its crushing debt and exit from the Euro would stick a fork in it like no other. But don’t count on the Greeks.

Three hours ago, when the NY Fed trading desk was patting itself on the back for another day without hitches or major glitches in the "market" (except for that HFT-snafu in the USDCAD of course), one person was live-tweeting his arrest.  The person is Antonio Ledezma, who is not only the mayor of Caracas but the leader of Venezuela's, and around 5:20 pm local time, he was taken to the intelligence service’s headquarters in Caracas after the local police broke into his office and arrested him. The moment of the arrest was captured on video.

Meet Guan Tao. He oversees the foreign exchange of China’s $4 trillion stockpile of reserves (so he has an incredibly unique view of capital flows and currency movements in and out of the country), and he just admitted that capital flight from China is accelerating suggesting that outflows could be considerably higher than official channels show.

Fed's Yellen (12/17): "The decline we've seen in oil prices is likely to be, on net, a positive."

Fed's Yellen (02/18): "Persistently low oil prices could dampen the overall expansion of economic activity."

And this is the woman we trust to run the world?

Very few, it seems...