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G-20 Post Mortem: Hopes, Fears, & Dashed Exepctations
We, like Bloomberg's Richard Breslow, were bemused this weekend by the communiques from the wisest men in the room at the G-20 meeting. On one side of their mouths they warned of "excessive risk-taking," in markets noting that there were "mounting economic risks" also. On the other hand, stories continue to print of US equity strength implying optimism over global growth - despite the ongoing collapse in consensus GDP expectations. However, away from this hope and fear, it was the almost coordinated responses of the PBOC (Chinese Finmin Lou Jiwei signaling not to get carried away with stimulus expectations), ECB (Visco saying may not need additional QE step since EUR had dropped 'enough'), and finally the BOJ (Iwata saying Abenomics misunderstood, USDJPY 90-100 'fair); all dashing market expectations of a smooth hand over from a feckless Fed to a free-printing rest-of-the-world. Stocks (and carry) responded by selling off.
As Bloomberg's Richard Breslow notes,
I was amused/bemused this weekend when I saw two stories literally next to each other on my newsfeed.
FEARS - The first said “global finance chiefs said to warn of mounting economic risks.”
HOPE - The next story, same dateline: U.S. stocks increase for week over optimism on economic growth.
Unfortunately, that’s the sort of talking out of both sides of their mouths that’s done whenever it suits them, so we need to be careful of the shelf life of these commentaries, who is speaking in what venue and what is the sound bite meant to satisfy.
G-20, we talked at end of last wk on how the G-20 mtg was an opportunity to do something special, but what came out of it was the French and Germans telling everyone to chill, while the Italians said the TLTRO takeup means nothing until we see what happens in December.
The overall conclusion was that the ministers agree on many goals, with little agreement on the means to those ends.
DASHED EXPECTATIONS - Probably the most interesting and actionable of the economic comments came from the Chinese Finmin Lou Jiwei, who signaled not to get too carried away with the stimulus China implemented last wk, this isn’t the start of a major ongoing program. That comment is what really got equity mkts to swoon over the weekend and people to be a little bit dour.
* * *
Add to that ECB's warning not to expect QE... (as Bloomberg reports)
The European Central Bank may not need to add stimulus measures after steps in the past three months pushed down the euro, said Governing Council member Ignazio Visco
“Inflation expectations have to be back where they were,” Visco said in an interview in Cairns, Australia, where he is attending a meeting of Group of 20 finance chiefs. “This doesn’t mean that there will be a next step. We have been bold enough to reduce interest rates to a level that was unexpected to the market.”
The single currency has dropped about 6 percent since early June, when the ECB introduced a negative interest rate on excess reserves and presented a four-year lending program to fuel credit. Policy makers reduced borrowing costs further earlier this month and committed to buying asset-backed securities and covered bonds to boost the ECB’s balance sheet by as much as 1 trillion euros ($1.3 trillion).
The extent of the exchange rate’s fall is “more or less, given the moves that were done between June and September, the right response,” said Visco, who also heads Italy’s central bank. The ECB isn’t targeting any exchange-rate level, he said.
* * *
And The BOJ's warning not to expect more QQE...
- *FORMER BOJ DEPUTY GOVERNOR KAZUMASA IWATA SPEAKS IN INTERVIEW
- *DAMAGE TO JAPAN FROM WEAK YEN MAY OUTWEIGH MERITS: IWATA
- *WEAK YEN PUTS JAPAN AT RECESSION RISK: EX-BOJ'S IWATA
- *DOLLAR/YEN AT 90-100 REFLECTS JAPAN FUNDAMENTALS: IWATA
- *CURRENT YEN WEAKNESS SLIGHTLY EXCESSIVE: IWATA
Are the world's central banks re-co-ordinating on a tightening path as various bodies from the IMF to BIS warn that they have gone too far?
* * *
And the markert reacted with risk-off despite the G-20's best efforts to happy-talk the future.
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Please do not worry.
DON'T PANIC!!
And carry a towel..\
A Spiderman towel.
FIFY
G7, G8, G20......can we pick a freakin number and stick with it already?
The number is 7......even the IMF braindead know that.
What kind of catchy acronym will they use for the BRICS?
B5
?`
Cue up the Christine Lagarde freaky Ted Talk.
I'm going to be doing something else....let me know how it goes.
Stawks; sell 'em if you got em; and if you don't. It'll be a down week for the S&P.
The EUR is still about $1.28 too expensive.
probably; but it's too dangerous to be short now; take profits if you have them and stay on t he sidelines.
"Strong dollar" LMFAO...
Paper, paper, everywhere...
Show me the collateral motherfucker...
G20?? Still in Existence??
The treacherous zombie Oz crack-elite made overtures regarding Russia's invitation AND by their brashness Chinese participation.
If i were Putin i would send a telegram saying that due to civil war on our border we feel this takes precedence over your knees up shindig in November.
FUCK YOU OZ.
The only thing the G20 agree on is to raid your bank account. The global FATCA has been approved. Everything else was just thrown in there for comedy value.
+1
Bail-In's for all! Its for your own good you worthless eaters!
Everyone better get the hell out of "the system" (as much as they can) before a choice is made for you.
While we all know that the "bail-ins" have been approved, let's see them actually start taking funds out of the majority of people's accounts. This is the fundamental problem as we get to find out which animals are "more equal" as it were. Do they really think there's enough money in private accounts to really make a difference? FAIL. They're going to have to start robbing their own this time, and that is always when things get interesting, as the club members turn on their own.
I believe you're right about that LP, there is not enough saved (liquidity) anywhere to offset what they have created. However, they (meaning the elite) are in a better position to recoup their losses (its still theft but thats a different topic, the cronyism) than you and I are.
For the super elites I suppose its thought of as some sort of game of survival through their connections & alliances and they don't place much value on their own independence. For us wage slaves, its a little different. Once we're wiped out we can't recover, there's simply not enough time and we wind up on the dole.
A bail in or a one off tax for the elites is just the cost of doing business. The system has to survive if they are going to survive. Besides, whatever the bail ins cost them, they will make double or triple the same year through inside deals and government handouts. Do you really think Buffet or Soros are opposed to any of this? Just go read their opinions on the subject. This is still very much about raiding you, they are part of the system, this is about them raiding you, never mind the politics.
Links please, i need to somehow break the link on my wifes obsession with the kardashians and her life savings account....
With no form of rest of the world QE stimulus there will be no currency swaps and with no currency swaps who will buy the US Treasury excess?
Believe me, that meeting of the G20 was nothing more than a gathering of half wits and fuck wits. Six years on and they are still fumbling, mumbling and bumbling along unable to make the painful and honest decisions required to regain sustainable traction within their economies.
Instead they have given those that were already well off the lion's share of any new income being generated and low interest rates with which to speculate their share portfolios to new heights. And the plebs have been lumbered with the responsibility and consequences of unpayable government debt.
But they're all getting paid -- well!
WTFUD
I figured Putin would lecture everyone again on how many hours it will take his army to be in their capitals and then pass a dish with numbers on it for everyone to line up in order to kiss his ass. Germany will of course go first (his favorite so they don't have to taste anyone else's spittle). Gotta thank Angela for covering for him and passing on intel (those Stasi days weren't wasted)