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?
With the "Great Greek Tragedy" now behind the markets, for the time being, all eyes have turned towards the Nasdaq's triumphant march back to 5000. (The graphics department at CNBC have been working overtime on banners and bugs for when it happens....watch for them.) For now, it is all about the hopes of a cyclical upturn in the Eurozone economy supported by the ECB's QE program starting next month. Market participants have been bidding up stocks globally in anticipation that the ECB's program will pick up where the Fed left off, and the flood of liquidity will find its way back into asset prices
- Greece warns may default on IMF loan next week - Greek bank runs continue and deposits flee - The truth can be a scary thing sometimes … especially for those who put their head in the sand and ignore it ...
- Invade Syria already, we know you will: Islamic State in Syria abducts at least 150 Christians (Reuters)
- Greece Struggles to Get Citizens to Pay Their Taxes (WSJ)
- Doubts Shadow Deal to Extend Greek Bailout (WSJ)
- In surprise result, Chicago's Mayor Emanuel faces election run-off (Reuters)
- Obama vetoes Keystone pipeline bill (Reuters)
- Another sign of the top: Cushman & Wakefield Going Up for Sale (WSJ)
- Lure of Wall Street Cash Said to Skew Credit Ratings (BBG) ... and threat of DOJ lawsuits also
- Oil rises to $59 as Saudis say demand growing (Reuters)
"For me the shorting opportunity looks as great as it was in 07/09, if only because people are still looking at what is hap-pening and believe that each event is an individual, isolated event. Whether it’s the oil price fall or the Swiss franc move, they’re seen as exceptions. ... we used all our monetary firepower to avoid the first downturn in 2007-09, so we are really at a dangerous point to try to counter the effects of a slowing China, falling commodities and EM incomes, and the ultimate First World effects. This down cycle is likely to be remembered in a hundred years . Sadly this down cycle will cause a great deal of damage, precisely because it will happen despite the efforts of the central banks to thwart it."
Outlook for the US dollar and other markets in the week ahead.
Here's a plan where the drachma will be more desirable than the euro after Greece defaults on anything euro denominated and backs its redeemable drachma with fractional gold. Upon default euros drop, drachma pops!