"Vast liabilities are being switched quietly from private banks and investment funds onto the shoulders of taxpayers across southern Europe. It is a variant of the tragic episode in Greece, but this time on a far larger scale, and with systemic global implications."
One day after the FOMC Minutes guided to a rate hike "fairly soon", but not soon enough in the eyes of the market, the dollar has posted minimal gains, while global stocks held near record highs on Thursday; S&P futures were fractionally in the green to start the session; crude climbed after API showed U.S. stockpiles fell. US and euro zone government bond yields fell as European political fears faded.
Every few years, it seems, one or another mismanaged eurozone country falls into one or another kind of crisis. This leads to speculation about the end of the common currency, which in turn spooks the global financial markets. Then the ECB conjures another trillion euros out of thin air and calm returns for a while. At least, that’s how it’s gone in the past. The latest crisis has more than the usual number of flash-points and could, therefore, be something new and different.
S&P equity futures followed Asian and European stocks lower, driven by weakness in Franch and Italian markets, as French political concerns returned; the pound tumbled after UK monthly retail sales unexpectedly dropped pushing the dollar higher and Euro lower.
Mr. Trump doesn’t seem to be an “internationalist,” seeking to build a new world order by political and military means. If that is so, he will sooner or later have to come to grips with the Fed’s policies - most notably with its liquidity swap agreements.
Marine Le Pen's threat to redenominate €1.7 billion in French debt infor francs has sparked panic among the establishment, with rating agencies, economist and central bankers all warning that this would amount to the largest sovereign default on record, threatening chaos to the world financial system on top of the collapse of the single currency.