So after the carnage in the currencies and European fixed income we now have even more fun to look forward to this month.
At the time of writing the bund has taking a severe pounding ,dropping 1.80 or over 12 B.P.!!!
June could really be a momentous month.
Starting off over the weekend we had warnings from the ECB in their latest financial stability report of serious risks sitting in the shadow banking sector. The sector has taken over roles previously performed by banks and the ECB warns that a "fragile equilibrium" exists in world markets with underlying risks that can only be guessed at. It is a repeat of the many other liquidity warnings we have received based on worry about crowded trades, crowded exits, liquidity mismatches and stretched leverage levels. In the ECB's more sober language "Initial asset price adjustments would be amplified, triggering further redemptions and margin calls, thereby fuelling such negative liquidity spirals".
(see my earlier article http://www.zerohedge.com/news/2015-05-13/its-trap [13] )
Greece and its possible exit has become bit of a joke, with conflicting reports coming from the same representitives. The IMF message is that they will not break anymore lending rules to accommodate Greece. If eurozone politicians insist that the IMF must be part of the next release of funds they will have to do something that satisfies the IMF that Greece will be in a position to pay back any additional loans. In the meantime capital continues to pour out of Greece with bank deposits falling to a 10 year low.
Now coming up we have the OPEC meeting ,with the first of the pre-meetings scheduled for today before the official meeting at the end of the week where they will decide their next six months production policy. All the signs are that they will continue to disagree and the PG contingent, excluding Iran, will press ahead with their market share rather than price support strategy. The most interesting item to watch for will be whether in their post meeting communique they will even pretend to be aiming for an overall production level of 30 mbpd. One of the biggest questions will be if they decide to increase production given that not only at the last meeting they decided against cuts but actually increased production. It will be interesting, given that the rally back to where we are now may be a stabilization for US Shale production to at least become viable again.
(http://www.zerohedge.com/news/2015-05-25/opecs-next-meeting-nearly-upon-... [14])
The Chinese stock market which lost 6.5% last Thursday and nearly repeated it on Friday but managed to recover. The Shanghai index has risen over 130% in the last 12 months and the Shenzen is up 100% since the beginning of the year. The tantrums are spread around and keep going away but the pre-quakes are becoming more regular.
Then we have the old geo-political tensions which while Ukraine is “old hat” last week there was a statement from Ukraine's President Petro Poroshenko saying he can declare martial law in his country within hours, in case there is an advance on the Ukrainian army's positions.
A suicide bomber blew himself up in the parking lot of a Shiite mosque in eastern Saudi Arabia,in the city of Dammam, during Friday prayers, killing four people in the second such attack in as many weeks claimed by ISIS.
Not that the Vix seems that impressed ,although there has been a small rally from the lows ,there isn’t exactly that much fear yet….
Then we have the NFP coming up, which because this could decide whether we have “lift off in September” or not, which will in turn have effect on the dollar,treasury yields and just about everything else that trades….
So with OPEC, GREXIT, currency wars,Chinese stock market & QE? ,another most important NFP of all time, Ukraine and Yemen It could be a very interesting month indeed……
In regards to more detailed options and futures advice ,please contact Darren Krett through www.maunaki.com [15] or dkrett@maunaki.com ,Im still looking for liquidity providers and someone who would be interested in an experienced senior option trader