The Austrian Black Swan Claims Its First Foreign Casualty: German Duesselhyp Collapses, To Be Bailed OutSubmitted by Tyler Durden on 03/16/2015 06:13 -0400
Moments ago we got confirmation that the next domino from the appearance of the Austrian black swan has tipped over, following a Reuters report that Germany's deposit protection fund will take over the property lender Duesseldorfer Hypothekenbank AG (DuesselHyp), which has "run into problems" due to its exposure to Austrian lender Hypo Alpe Adria's "bad bank" Heta.
Varoufakis' "Strategy": "No Grexit, But Default Inside The Euro, And Stick The Middle Finger To Germany"Submitted by Tyler Durden on 03/15/2015 21:24 -0400
If the German media needed a photo-op which to put on their front pages and rile up public opinion against Greece even more, they just got it.
Will Europe ever see its money back?
Central banks' ability to distort markets, inhibit price discovery, and create systemic risk is alive and well as ECB asset purchases ripple through euro money markets. "The ECB’s liquidity bazooka will likely create the conditions for all rates money markets to stay in negative territory. This would represent a very challenging environment for investors, especially those focusing on the euro money markets, whose resilience to negative rates has not fully tested yet," Barclays warns.
Gold's up 11% against the euro this year, in addition to 12% last year. It has risen versus many major currencies and suffered only modest declines in a few currencies this year. Most central banks are involved in competitive currency devaluations.
Closing out another whirlwind week, which has seen the biggest S&P 500 intraday plunge and surge in months, futures are taking a breath (if not so much the Nikkei which closed over 19,000 for the first time since 2000 - one wonders how many direct equity interventions it took the BOJ to achieve that artificial "price discovery"). In lieu of any notable macro news, the most significant update hit less than an hour ago when Goldman piled on the EUR pressure, when it released a note in which it further revised down its EURUSD forecast.
The luxury of paying your government to hold your money, once thought as absurd, hilarious and downright preposterous is now a reality.
With Greece on the edge of being kicked out of the Eurozone , either voluntarily or otherwise, with an anti-austerity party on the verge of taking over the reins of power in Spain, with Beppe Grillo waiting in the corridors for his chance to pounce in Italy and with Marine le Pen and her nationalist party on the verge of becoming the biggest shocker of Europe over the coming years, here, according to Daniel Hannan, is what killed democracy in Europe. Europe itself.
"Mario Draghi and the ECB’s manipulation of asset prices makes Greenspan’s Fed look like a rank amateur. More shocking though than the plunge in the euro, and more shocking even that 25% of sovereign eurozone bonds now trade in negative territory, is what has happened to eurozone equity valuations. For, as we approach the sixth anniversary of the US cyclical bull market, the PE expansion of eurozone equities is simply off the scale!" - Albert Edwards
Warren Buffett's “financial weapons of mass destruction” - how are you?
With German media asking "who is more dangerous for us? Greece or Russia," recent actions by both 'antagonists' in that question suggest they may become one and the same sooner than many expected. With tensions rising between Greece and the Eurogroup, recent and future visits to Russia have gained in importance since Russian FinMin confirmed that Moscow "could consider financial help to Greece." While this Russian pivot meme was the stuff of conspiracy theorists just weeks ago, The BBC is now asking directly, "could Europe lose Greece to Russia?" and with more Greeks positive on Russia (61%) than Europe (23%), it should not shock anyone.
FX Volatility Spikes As More Countries Enter Currency Wars; Euro Surges On Furious Squeeze After Touching 1.04Submitted by Tyler Durden on 03/12/2015 06:57 -0400
The global currency wars are getting ever more violent, following yesterday's unexpected entry of Thailand and South Korea, whose central banks were #23 and #24 to ease monetary conditions in 2015, confirming the threat of a global USD margin call is clear and present (see "The Global Dollar Funding Shortage Is Back With A Vengeance And "This Time It's Different"). But the one currency everyone continues to watch is the Euro, which the closer it gets to parity with the USD, the more volatile it becomes, and moments after touching a 1.04-handle coupled with the DXY rising above 100 for the first time in 12 years, the EURUSD saw a huge short squeeze which sent it nearly 150 pips higher to 1.0643, before the selling resumed.
Simply put - the Greek economy still consumes more than it earns. Despite a 25% contraction in its economy, a plunge in domestic consumption and a sharp decline in imports, as WSJ reports, Greece is still exporting less than it imports, i.e. its current account is still negative. The reason... Shipping.
- Silly gold ‘bug’ name calling shows bias against gold and towards stocks - “Gold bugs” and “stock roaches” can peacefully coexist - Maybe a rational debate would be enlightening ...
"Neither Central Bankers Nor Market Participants Can Extract Any Information From Current Bond Valuations"Submitted by Tyler Durden on 03/11/2015 09:46 -0400
All is not what it seems. Markets are upside down. Some ‘risk?free’ assets can be purchased for a guaranteed loss. EU asset markets (ex?Greece) are soaring at the same time that EU disunity is rising. An interest rate hike by the Fed is likely to cause a rally in Treasury bonds and a steep correction in US equities.