As a one-day upward move in a major currency its had few peers through history and is firmly in the top 10 of daily upward moves for any currency (vs the dollar) that we have data for which in many cases goes back into the nineteenth century. Most of the others in this top 10 are EM countries. So this is a rare event as when a peg gets abandoned and a big move ensues it’s usually a devaluation from a fixed rate system.What makes this move shocking is that just last month the SNB committed themselves to preventing their currency appreciating beyond 1.20 to the Euro and vowed they would enforce the policy with "the utmost determination". The risk for the global financial system is that if the SNB can make such a dramatic u-turn could other central banks follow at some point. We're not so concerned here as their situation is arguably a lot different to the ECB. The ECB might actually look at the wider market moves yesterday and be scared to disappoint.
The possibility of the ECB announcing sovereign asset purchases on 22 January already led Switzerland’s SNB to move pre-emptively last month and introduce negative interest rates. As SocGen's FX Research group notes, as disinflationary pressures spill over from the eurozone to trading partners in the north and east of Europe, we parse over the central banks that stand ready to act should the ECB announce QE.
Following the adoption of its new military doctrine signed by President Vladimir Putin in December which identifies NATO expansion as an external risk, it is perhaps hardly surprising that, as Reuters reports, Russia's top general, Valery Garesimov stated that the "Defence Ministry will focus its efforts on increasing the combat capabilities of its units and increasing combat strength.. with special attention will be given to the groups in Crimea." Amid renewed heavy shelling in Donetsk, NATO's top military commander noted they will be stepping up exercises in the Baltic Sea region as Russian Deputy Foreign Minister Grigory Karasin warns, "the situation in eastern Ukraine is deteriorating."
Top Russian, American and Polish Leaders Warn that Continued Fighting In Ukraine Could Lead to Nuclear WarSubmitted by George Washington on 01/09/2015 18:54 -0500
The Stakes Are Too High NOT to Negotiate Peace
Joseph Goebbels had nothing on US and European media today.
That propaganda as a strategic and political instrument has been refined to a huge extent over the past 70-odd years since Goebbels first picked up on Freud’s lessons on how to influence the unconscious mind, and the ‘mass-mind’, as a way to ‘steer’ an entire people, not just as a means to make them buy detergent. These days, the media can make people believe just about anything, and they have the added benefit that they can pose as friends of the people, not the enemy. But there is a reason why such a large ‘industry’ has developed on the web with people writing articles that don’t say what the mass media say. That reason for is, obviously, first and foremost that not everybody believes whatever they are told. The problem is equally obvious: not nearly enough people are being reached to make a true difference, and to question the official narratives.
"Back in the halcyon days of summer, it seemed nothing could go wrong; but now, ...the uncertainties presently being generated have the potential to undermine two crucial kinds of trust – that one must have in the merits of one’s own exposure and that equally critical faith in the reliability of one’s counterparties. If it does, the third great bull run of the 20-year age of Irrational Exuberance could well reach its culmination, after a rally of almost exactly the same magnitude as and of similar duration to the one which ushered it in, all those years ago."
Respected economic historian and author of the “Gloom, Boom and Doom Report,” Dr Marc Faber has warned about the continuing and coming decline of western economic power.
He believes that the generation of young people starting to work today will be the first in two hundred years to have a lower standard of living than their parents had. He believes dividend paying Asian stocks will grow wealth in the coming years and remains an advocate of owning physical gold.
Be careful what you wish for... Russia matters. It mattered in 1998 when the shock waves from its debt default reverberated around the world. And it would matter again should the plunging oil price lead to economic collapse. That’s despite the fact that Russia is a massive land mass with a relatively small economy. It accounts for only 3% of global GDP and it is dominated by an energy sector that is responsible for 70% of exports. But there are at least five ways in which a crisis for Russia could spread.
The ink on Barack Obama's Chuck Hagel termination letter hasn't dried yet but already the US president's new, and seemingly far more hawkish advisors, are having their warmongering presence felt. Case in point: the Eastern European theater of (Cold) war, where Military.com reports that the new Army commander in Europe plans to bolster the U.S. armored presence in Poland and the Baltic states and keep rotations of U.S. troops there through next year and possibly beyond to counter Russia. Lt. Gen. Frederick "Ben" Hodges, who replaced Lt. Gen. Donald M. Campbell earlier this month as commander of U.S. Army Europe, said the Army was looking to add about 100 Abrams tanks and Bradley Fighting Vehicles to the forces in Eastern Europe.
NATO To Deploy Tanks In Eastern Europe Shortly After VP Of Europarliament Says Ukraine-Russia War ImminentSubmitted by Tyler Durden on 11/27/2014 08:52 -0500
Just when global financial markets had shrugged off Ukraine as yet another 'storm in a teacup', it appears events are escalating rapidly once again. This morning saw European Parliament's Vice President Saryusz-Wolski warn "Russia's pressure on Ukraine is mounting high, further war imminent," to which Ukraine's President Poroshenko rapidly responded (via Twitter) rather ominously that a "third world war does not scare us," having noted earlier than Ukraine needs to achieve NATO membership. This then prompted NATO's top military commander to warn, he is "very concerned" that Russia's military build-up in the annexed Crimean region could be used as a launchpad for attacks across the whole Black Sea region; leaving the alliance confirming that NATO plans to deploy tanks in Eastern Europe.
Sanctions are just another form of warfare, where the weapons can inflict destruction and pain, and be just as explosive. Their history can be millennially traced back, some with success, others with failure and a boomerang effect. One thing we can be sure of in modern times: sanctions will prove to yield long term ill will, in many cases providing multiplying seeds of vengeance and terrorism which we may not confront now but our children and their children certainly will.
- LOL@Fundamentals: European Stocks Fall as Investors Seek Stimulus Clarity (BBG)
- Obama, Republicans sound conciliatory note but battles loom (Reuters)
- Firms drop Pimco funds from managed accounts (Reuters)
- Not All QE Is Created Equal as U.S. Outpunches ECB-BOJ (BBG)
- Ukraine Accuses Russia of Sending Troops as Truce Wobbles (BBG)
- Lenovo Slumps After Projecting China ‘Hypergrowth’ to End (BBG)
- Palo Alto Networks discovers new malware targeted at Apple devices (Reuters)
- IPO That Brought In $1 Billion in March Implodes in Denmark (BBG)
What an escort can teach you about business
The summer, thankfully, has been largely bereft of the dismal trend of bankers committing suicide, but as Bloomberg reports, Thierry Leyne, a French-Israeli banker and partner of Dominique Strauss-Kahn, the disgraced former chief of the IMF, was found dead Thursday after apparently taking his own life by jumping off the 23rd floor of one of the Yoo towers, a prestigious residential complex in Tel Aviv. This is the 16th financial services executive death this year.
Who are they trying to fool? (again)