While the euro itself has recovered a bit from its worst levels in recent sessions, euro basis swaps have fallen deeper into negative territory on par with the epic nosedive of 2011. We are not quite sure what the move means this time around, since there is no obvious crisis situation – not yet, anyway. A negative FX basis usually indicates some sort of concern over the banking system’s creditworthiness and has historically been associated with euro area banks experiencing problems in obtaining dollar funding. This time, the move in basis swaps is happening “quietly”, as there are no reports in the media indicating that anything might be amiss. Still, something is apparently amiss...
When The World's Reserve Currency Flash Crashed: "I Haven’t Seen Anything Like It Since The Financial Crisis’Submitted by Tyler Durden on 03/20/2015 14:23 -0400
On Wednesday afternoon, just after the close of the market, the US Dollar, the world's reserve currency flash crashed. “I haven’t seen anything like it since the financial crisis,” said Paul Lambert, head of currency at Insight Investment, which manages $480 billion of assets. For a few minutes on Wednesday, the lack of dollar buyers caused a short-term freeze in electronic trading platforms, according to a New York-based trader at a major currency-dealing bank. “There was a lot of shouting on the desk, a lot of nervousness,” the trader said.
Quad-witching days are volatile on normal days, so in an environment of virtually zero liquidity, in which the market careens from one extreme to another simply based on whether the Fed utters one single word, in which volatility across asset classes is soaring, and in which it is all about igniting algo momentum, today's quadruple withicng should be memorable, which is good since there is virtually no macro data today to speak of.
Fed to lose patience. Many expected Norway and Switzerland to cut rates. Could they be disappointed?
What next for the greenback?
The divergence is not just between the US and Europe/Japan, but also China.
Bubbles arise if the price far exceeds the asset’s fundamental value, to the point that no plausible future income scenario can justify the price
Has the DNA of the global economy been gradually altered by endless injections of quantitative easing, morphing it into a freakish mutant? Are things that are not supposed to happen for centuries on end going to become common occurrences? The collapse of oil prices and jump in the Swiss franc have forced us to puzzle over these weighty questions. In isolation, these events and the direction of their moves did not worry us, but their magnitude, velocity and proximity to each other sent me on an intellectual quest.
Just what are the Swiss up to...
*SWISS FINANCE MINISTER WANTS NEW MINIMUM EXCHANGE RATE: HZ
A confidential paper signed by Swiss Finance Minister Eveline Widmer-Schlumpf, discussed in government last week, said that new minimum exchange rate should be "considered," Handelszeitung reports in a prerelease of an article to be published Thursday.
Financial systems that seem robust are more often than not inherently fragile - China is no exception!
Reuters Interview GoldCore. How has demand compared in different regions of Europe so far this year? p.s. Dislike term silver bug and gold bug. Pejorative and we don't call people stock roaches or paper bugs or dollar bugs : )
"The Fed is out of control," exclaims David Stockman - perhaps best known for architecting Reagan's economic turnaround known as 'Morning in America' - adding that "people don't want to hear the reality and the truth that we're facing." Policymakers are "taking our economy in a direction that is dangerous, that is not sustainable, and is likely to fully undermine everything that's been built up and created by the American people over decades and decades." The Fed, Stockman concludes, "is a rogue institution," and their actions have led us to "one of the scariest moments in our history... it's a festering time-bomb and we're not sure when it will explode."
"Spectacular Developments" In Austria: Bail-In Arrives After €7.6 Billion Bad Bank Capital Hole "Discovered"Submitted by Tyler Durden on 03/01/2015 20:59 -0400
Slowly, all the lies of the "recovery", all the skeletons in the closet, and all the bodies swept under the rug are emerging. Moments ago, Austrian ORF reported that there have been "spectacular developments" in the case of the Hypo Alpe Adria bad bank, also known as the Heta Asset Resolution, where an outside audit of Heta's balance sheet exposed a capital hole of up to 7.6 billion euros ($8.51 billion) which the government was not prepared to fill, the Austrian Financial Market Authority said. The punchline: "The finance ministry noted that creditors can be forced to contribute to the costs of winding down Heta - or "bailed in" - under new European legislation that Austria adopted this year so that taxpayers do not have to shoulder the entire burden."
The US dollar firmed at the end of last week. Does this mean the bull market has resumed after the consolidatig its gains in February?