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What Have We Got To Look Forward To?
Via Bill Blain of Mint Partners,
“The numbers all go to eleven, right across the board..”
As another woeful week wends to a weary close... what we got to look forward to? Although markets appeared to be shooting off in every direction, I do expect we'll see clearer direction soon. Oversold stock prices perhaps suggest some upside to come? The big trade of the moment, Japan, got a tad obscured last few sessions by stock market reversals, Gold and European wobbles, but I'm expecting that trade is back on the tracks.
Despite the noisy criticism earlier this week of Yen "competitive" devaluation, the G20 meeting said nothing.
- *G-20 PLEDGES TO AVOID COMPETITIVE DEVALUATION ON FOREX
- *G-20 WILL BE MINDFUL OF NEGATIVE EFFECTS OF MONETARY EASING
- *G-20 SAYS IT WILL RESIST ALL FORMS OF PROTECTIONISM
- *G-20 SAYS BOJ POLICY ACTIONS AIMED AT STOPPING DEFLATION
I suspect certain individuals were quietly sat in the comfy chair, had global reality gently explained to them with the aid of some rusty dental equipment, were slapped around a bit and told to shut it.
So instead of bellicose economic self-interest, or nationalist statements complaining about the 20% decline in yen, there was complicit G20 acceptance of the need for a weaker Japanese currency in order to boost the Japanese manufacturing sector to trigger regional (and hence global) growth. Predictably the Yen weakened and the Nikkei performed.
I love the quote Bloomberg carries from new BOJ governor Kuroda telling journalists: "We aren't intending to weaken the currency at all.." Oh... really.. As long as Japan can sign the pledge on “no competitive depreciation” without giggling we’ll be ok. So is the Japan story back on track? Reckon so. Watch for more signs of Japan export growth. It’s happening.
The next stage should be lower JGB yields squeezing Japanese investors into the global markets - triggering tighter US$ assets. It hasn't happened yet - the latest Japan flow figures actually show Japanese investors were net sellers foreign assets last week post BoJ Big Bang.
But, but and but again. Even though our Japan watcher Martin Malone predicted the BOJ move, Japanese investors were completely offside. It takes time for Japanese banks and insurance companies to change course - first they have to reach consensus among themselves how the market has changed, then they have to reach internal consensus about how to proceed. Meanwhile, many foreign investors have pre-empted them, buying the US$ markets. Still plenty of room for it to tighten further.
On the other hand, one market wag pointed out that by the time the Japanese get their acts together to buy, the effect will be fully priced in. He noted the Japanese are past-masters of the art of buying high, selling low. (Having worked for Japanese banks in the 80s and 90s, I have to concur...) So buy or sell dollar paper?
In Yoorp... what we got..? Cyprus? Slovenia? Oh, and the Italians still can't agree on a new president, so no government.. which is probably a good thing allowing Mario Monti to continue in place.. Italy creating a whole new definition of ungoverned.. but guess what... Italian bonds continue to tighten. Does the whole market just believe Europe is long term fixed, or is the suspension of disbelief a result of the chase for yield?
Meanwhile, in Washington the great and the good will be doing the canape circuit and glad handing themselves about what a good crisis they are all having. Listening to Radio 4 this morning I was struck by the honesty of a famous economist (interviewed at the IMF meeting) admitting the economic models had not worked nor performed as expected during through the crisis. So, I'll wait for a central banker to admit something similar - that they've pretty much been making it up as the crisis has blumbled along. (Blumbled... i like it... I've just invented a new word.)
And what of regulators? By some bizarre coincidence and a fluke of the time-space continuum, I got delivered a single paragraph of "A Child's guide to Financial History, 2113 Edition" that materialized in my mailbox:
"The clearest failures during the global financial crisis 2007-2021 were those of politics and regulation. Despite the initial failure of regulators to prevent crisis or to identify liquidity and risk management as the prime causes, they seized control of the financial system resulting in a decade of pointless over-regulation and focus on capital levels. This triggered a second crisis when the insane European Financial Transactions Taxes closed European markets. Regulators claimed success on the basis non-functioning markets meant an end to speculative trading."
I do suspect the warmest circle of financial hell is being reserved for those populist European politicians who've tried to appeal to voters with efforts to stem the financial tides, and punished markets for being markets. On the other hand, perhaps their extreme ignorance should be forgiven...? Nope... fire up the furnaces... and set Hell's temperature dial to 11.
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PM beatdown commencing in time for the weekend.
Looking forward to? Nothing really, the best is behind us and I feel sorry for our kids ...
your behind is truly the best in ZH-land, oh, and it's all downhill from here.
Financial and political reset.
Jamie Dimon works at 7-11,
night shift, with a name tag,
and those sad, sad eyes.
"Did you find everything
you were looking for?"
Yes. Yes I did.
the day JD starts working in 7-11 is the day I go buy myself a crowbar and a blowtorch for when his shift ends
Nothing. They all eat and drink and wait for Washington DC to take the next move.
That's it.
Everybody's boared. People are dreaming VOLATILITY.
Where is volatitlity pleeeeeeeeeeeeease? They are begging Obama for some volatility.
They hate QE.
Next week we shall do the opposite of every sentence with "Will", "to <verb>" & "says".
Have a nice day.
Is Tyler hitting the bottle early? Spelling has really gone down hill
It's a guest post.
In English , not American.
I can transate for a small fee ?
Booze is the only thing I'm looking forward to this weekend as the world seems to have gone collectively insane.
This has got to be the single most fucked up week in recent memory.
Say no to booze and yes to weed. It is much better for you.
Depends on where he lives. Perhaps he doesn't want to draw unpleasant attention ...
Macro ,and micro.Bizaro week.
Had one client drop dead(aneurism), while my guys were working in the next room.
Had clients die before ,but not while we were there.
Strange ...
Actually a remarkably humane "way to go". For a major (aortic) bleed, you'll be effectively "gone" in about 10 seconds.
Major intracranial bleeds (esp. Circle of Willis and Internal Carotid aneurysms) will "do it" instantaneously (effectively) - you'll be dead before you hit the deck.
thank god for spell-checkre. my dsylexiak eeps getting worse.
Total lockdown ( Martial Law ) in Boston , over a 19yr old with a gun & mabye a crockpot. we are doomed....
"Oversold stock prices perhaps suggest some upside to come?"
What?
What have we go to look forward to? Judging by the events in Boston/Watertown, I'd say martial law and the standardization of warrantless searches. You know the drill; "If it just saves one life......"
The first thing I thought after the whole Boston disaster was "I bet this is the precedent they needed..." namely DHS and company to start "temporary" searches wherever they want.
Oh, and having military police stationed in a city of course, among other things.
@ Mr. Blain... regards,
NICE!!!
I'm looking forward to silver fnding it's true supply/demand price so I can retire and spend my time with my wife and kids.
"What Have We Got To Look Forward To?"
Children eating out of trashcans, war, probably some sort of pestilence.
don't forget unmeasurable misery ...
War - such a convenient means to cull the "Useless Eaters", whilst the real Useless Eaters remain very comfortable and well protected.
Hey - "they" usually manage to turn a very tidy profit on Wars too - for them, just another form of asset confiscation.
WTF?
"G-20 PLEDGES TO AVOID COMPETITIVE DEVALUATION ON FOREX"
Riiight... they'll give us NON-COMPETITIVE Devaluation, whereby they all take turns and inflate together. And thus redistribute the wealth upwards (real assets for paper debt/wealth).
Since a lot of these people have a legal training, you sometimes have to read it like a lawyer and use words with surgical precision. And watch for the 'escape clauses'.
Holy crap, I just said the same thing at the same time, below!
Ain't this a cool example of a 'prisoner's dilemma'?
"*G-20 PLEDGES TO AVOID COMPETITIVE DEVALUATION ON FOREX"
Normal currency destruction in line with what every other country is doing is still OK, just so long as you don't get all competitive about it.
Everyone gets a trophy for participation, nobody gets one for winning.
:-)
"The clearest failures during the global financial crisis 2007-2021 were those of politics and regulation."
2021? Dear God, No!
Oh yes, can't you just count down the days to it?
".. fire up the furnaces... and set Hell's temperature dial to 11."
I was just thinking it was getting a little bit chilly down here. Ever since Maggie T showed up everyone's in cardigans...
I look forward to whatever comes; be it skittle shitting rainbow unicorns or boots stamping on innocent faces forever. Bring it.......
German Finance Minister Wolfgang Schäuble
http://www.c-span.org/flvPop.aspx?id=10737439320
According to Bank of America Merrill Lynch:
http://www.scribd.com/doc/136941942/Gold-Capitulation-Bank-of-America-Merrill-Lynch
Gold capitulation
No current technical or fundamental support for gold prices
In a move last seen in 1983, gold prices collapsed by $215/oz or 14% over the last two trading sessions. Trading volumes in instruments such as futures or ETFs were 7-8 standard deviations away from the median. In our view, fears of central bank gold sales in the Eurozone and poor economic data out of China have been key triggers, with forced margin sellers likely exacerbating the spectacular downward move. Continuing a steady slide seen since October 2012 driven by a stronger USD and higher real interest rates, the sharp drop in gold prices comes at a time when disinflationary pressures are starting to build in different pockets of the global economy. Given a breakdown in fundamental and technical support for gold in the coming months, we remove our $2,000/oz price target for 2014.
Medium-term, jewellery demand should support $1,500/oz
Still, with prices now below $1,500/oz, we expect a pick-up in jewellery demand in the medium term and see immense pain for miners should prices dip below $1,200/oz. As such, we believe the downside to gold prices may be limited to an additional $150/oz. In fact, we estimate that jewellery demand may become so pronounced by 2016 that prices could trade above $1,500/oz even if investors remain net sellers. Looking at sensitivities from a different angle, investors would need to buy merely 600t of gold to sustain prices at $2,000/oz by 2016, compared to non-commercial purchases of 1,798t in 2012.
Official sector will remain a key driver for gold prices
Cyprus’ announcement to sell nearly 14t of gold reserves was a key trigger behind the recent meltdown, as it raised concerns that other peripheral nations may follow suit. Given our estimate that every $45/oz represents a net sale of 100t, the move over the last two days would suggest net sales of 480t, or about 20% of yearly mine supply. In short, the market seems to have discounted the combined future gold sales of Portugal and Greece! As we believe additional gold selling in the European periphery is highly unlikely, we find it hard to fully justify the sell-off. Having said that, for a firm near-term recovery in gold prices we would need to see a pick up in inflation, ECB easing, and EM reserve buying. None of these events are likely until 2H13, in our view.
What have we got to look forward to?
Absolutely nothing good.
Well, Tequila maybe. Yeah. There's Tequila.
Re What Have We Got To Look Forward To?
Death & Taxes... with the occasional BJ along the way?
These are headlines, reported by WSJ affiliate Market Watch:
1:38p - G-20: Japan needs to outline credible deficit plan
1:35p - G-20: U.S. needs balanced deficit reduction plan
1:33p - G-20 agrees to avoid competitive devaluations
1:31p - G-20: European banks need stronger balance sheets
1:30p - G-20: Euro area must enhance economic foundations
What? And how and WHY is this "news"?
They forgot to mention: G-20 were consuming oxygen at the time!
They must "think" that we do NOT consume oxygen.
One wonders what this meeting cost to enlighten us thus, and why they could not stay home and instead give the "travel & entertainment" money to Cyprus, say?
my next batch of homebrew