"In many ways, EM is showing similar symptoms to its DM counterparts of weak economic performance and over- reliance on credit. The outcome is what we call the three EM debacles: de-leveraging, depreciation (or devaluation even de-pegging) and downgrades of credit ratings."
Capital Economics "expects gold could hit $1,200 before the end of this year, rising to $1,400 by the end of 2016”
Austerity: Also known as “sado-fiscalism”. A forlorn attempt to stave off government bankruptcy.
Keynesians: Economists “who hear voices in the air (and) are distilling their frenzy from some academic scribbler of a few years back” (John Maynard Keynes).
CATALAN SEPARATISTS CLOSE TO 50% OF VOTES: EXIT POLL
Are some Chinese banks ramping up their exposure to shadow conduits on the way to obscuring massive amounts of credit risk? Moody's says yes...
For those unaware, a fifth of Spain's GDP is voting on whether to secede from the country on Sunday. Here is everything you need to know about the Catalan black swan.
European equity have been weighed on by BMW after reports in German press that the Co.'s emission tests for their X3 model could show worse results than that of the Volkswagen Passat. The Norwegian and Taiwanese central banks have both cut interest rates, taking the number of central banks to cut rates this year to 40. Today's highlights include US weekly jobs data and durable goods orders as well as comments from ECB's Praet and Fed's Yellen. Of note US data, including jobless claims, durables and home sales will be delayed today & not released to newswires 1st due to Pope's visit
After 35 years of falling and now zero rates, the direction is only up for the cost of money, as is the cost to service debt, along with the burden to those who are most indebted (i.e. the U.S.). What should no longer be unthinkable is that the clock is ticking on America’s status as the holder of the reserve currency. If you still doubt this proposition, consider that China is in the process of setting up a third benchmark for oil, along with Brent and West Texas Intermediate, for trading oil futures contracts. And unlike the existing contracts, these will be traded in Renminbi. Who needs the dollar?
Hot on the heels of British military threats of a coup, the potential for a truly 'red' black swan of an event has reared its ugly head in China, just as Xi tours America. As Reuters reports, bitterness is growing within China's armed forces to President Xi Jinping's decision to cut troop numbers by 300,000, and, according to a source and commentaries in the military's newspaper, considerable effort will be needed to overcome opposition to the order with PLA official sources warning "people are worried, it's been too sudden."
Greece went to the polls on Sunday with a choice that really wasn't a choice and even as Alexis Tsipras looks set to prevail the most shocking electoral outcome is this: neo-Nazi Golden Dawn is set to come in third and garnered the most support of any party among Greece's unemployed.
CBOE's SKEW index - which measure traders' perceived risk of a major decline - in recent days has seen several readings in the 140?s, an extremely elevated level from a historical basis. The thing is, these readings are occurring amid circumstances unlike those during any other historical extreme reading – except for one. 10 of the 11 occurrences prior to 2015 could reasonably be considered non-contrarian warnings of at least sub-par returns to follow. You might say that these recent signs of extreme options distortion are themselves distorted.
If you have been waiting for the market to send you “warning signals”, then you can stop waiting because it is happening right in front of your eyes.
When it comes to crisis, SocGen notes that there is an abundance of case studies; and against the backdrop of the uncertainty shock delivered by China and the subsequent market tumult, market participants have been looking to the history books for clues as to what could happen next. While individual crises create their own risks, SocGen warns, the overriding risk is that markets are taking less comfort today from the idea that central banks may step in with further QE-style liquidity injections to save the world.