Japan Yen Making Commences Next Week [View article]
Sorry the Japanese debt is probably closer to $13T than the $23T. If you figure $40K per capita income time 128M population times 245% of the GDP you are then a shade less than $13T.
The $23T number came from an Ambrose Evans-Pritchard column in the Telegraph written this week from Tokyo.
Thank you for your comments. I certainly agree that Ireland is paying a heavy price because the government assumed responsibility for bad private sector loans. There needs to be a write down of these bad loans by the EU, and should be sought after more aggressively by the current government. The EU is playing hardball and the Irish government is just being nice.
Ireland benefits from a well educated population endowed with a strong work ethic. Combine this with export advantages and there will be a recovery here.
But considering the weak Irish recovery, however, it does not bode well for a quick rebound in southern Europe. Austerity may get Merkel reelected, but a high price will be paid by the debtor countries.
When Will Japan Intervene To Weaken The Yen? [View article]
There is no doubt that Japanese companies, hindered in their export efforts by the strong yen, are instead taking advantage of the strong currency to make acquisitions and export capital. According to a Bloomberg story, they spent $88B on 2011 purchases, and are approaching that amount in 2012.
The $20B purchase of 70% of Sprint recently announced, will take this years tally of purchases above $80B.
Anticipating Next Week's Currency Drivers [View article]
Good question. The US economic data was OK today. I think maybe Bernanke will wait until after the ECB Conference and maybe want to save his plans for the Jackson Hole Bankers Meeting in late August. A late August surprise.
Can We Believe The Chinese Economic Numbers? [View article]
Agree there is suspected prevarication in the US reports, especially those that report on employment changes. The revisions are then released months later when they think no one is paying attention.
Does The Bond Market Have A Message For Currencies? [View article]
A nimble flexible trader in a volatile market can do well. It is great when you are right, however, I know from experience you can also get chopped up.
Just looked at the new COT report and it confirms your theory about the abundance of euro bears. Spec shorts of futures and delta adjusted options totaled 129,337 in the euro. It was a small reduction from the previous report.
Who Benefits From The Greek Bailout? The Greeks Or Creditors? [View article]
Regarding the inability to collect on the credit default swaps, there a couple reasons, in my opinion, why they are not being used.
First, rest assured any European bank that sold these swaps was represented at the negotiations. German banks had been aggressive sellers of swaps in the past.
Next, a default on existing sovereign debt might then preclude the IMF from participating in the bail out. The details of the current bail out are complicated, but it seems the Greeks have 111.6 tons of gold. Will the new IMF loan be secured by the gold?
The Troika And The Greeks Reach An Agreement [View article]
Unless Greece defaults prior to the elections, which I think will start in April, the Greek voters will decide. There may be a wave of populism from the "messy masses" that results in many changes.
Fear of these changes by the Germans, is apparently a reason Merkel and friends will be campaigning for Sarkozy's re-election. They fear the populism of his socialist opponent.
Central Banks Sell Dollars To Prevent Liquidity Crises [View article]
Thanks for the great comments. I have never been a banker, and some of these transactions are confusing, however I think you have it right.
The USD shortage in the euro zone has been building, a result of the timid ECB actions to quell the many debt issues. In an article we posted on 8-18 entitled "Scared Money Flows Favor the US," we noted:
".....money by the billions has been flowing into the US Banking sector. Despite the S & P downgrade, the money flow into US Treasuries has pushed the price up and the rates down. It appears this is hot money, fleeing Europe, fearful the ever evolving debt crises will result in a credit freeze, possibly capital controls, and panic.....(and quoting an article by Desmond Lachman in the American)...
In a recent survey, the Fitch rating agency found that, as of the end of May 2011, the U.S. money market industry had direct exposure of around $1.2 trillion, or around half of its overall assets, to the European banking system. And the Bank for International Settlement reports that U.S. banks have direct exposure to the periphery through derivative contracts of close to $500 billion, as well as loan exposure to German and French banks in excess of $1.2 trillion."
This unified central bank liquidity injection should calm the market fears temporarily. But with Greece nearly insolvent, Italy needing to refinance billions and, with the new IMF head, the retiring ECB president and Chancellor Merkel hardly on the same page, how long will this continue?
Japan Yen Making Commences Next Week [View article]
If you figure $40K per capita income time 128M population times 245% of the GDP you are then a shade less than $13T.
The $23T number came from an Ambrose Evans-Pritchard column in the Telegraph written this week from Tokyo.
http://bit.ly/Zr8uMq
Does he know some thing we do not?
What Irish Recovery? [View article]
Ireland benefits from a well educated population endowed with a strong work ethic. Combine this with export advantages and there will be a recovery here.
But considering the weak Irish recovery, however, it does not bode well for a quick rebound in southern Europe. Austerity may get Merkel reelected, but a high price will be paid by the debtor countries.
Did Draghi's Comments Move The Euro Down Today? [View article]
Looks to me like resistance starts at the 1.2995 area first. Take this out and you are looking at the 1.3030 to 1.3060 area.
As we approach the holiday season volatility usually contracts, but with so many unsettled political issues, that may not be the case this year.
Decent NFP numbers Friday might mean Bernanke will wait for QE3 expansion.
OI stands for the amount of open futures contracts, or the open interest at the Chicago Mercantile Exchange.
When Will Japan Intervene To Weaken The Yen? [View article]
The $20B purchase of 70% of Sprint recently announced, will take this years tally of purchases above $80B.
German Court Approves Bailouts, Yet Euro Problems Remain [View article]
ECB Fails To Provide Solutions To The Debt Crises [View article]
There is a good article today about Merkel and her support: http://bit.ly/Nz2PPf
Anticipating Next Week's Currency Drivers [View article]
Can We Believe The Chinese Economic Numbers? [View article]
Can We Believe The Chinese Economic Numbers? [View article]
Another Week, Another Euro Summit [View article]
Does The Bond Market Have A Message For Currencies? [View article]
Just looked at the new COT report and it confirms your theory about the abundance of euro bears. Spec shorts of futures and delta adjusted options totaled 129,337 in the euro. It was a small reduction from the previous report.
Who Benefits From The Greek Bailout? The Greeks Or Creditors? [View article]
First, rest assured any European bank that sold these swaps was represented at the negotiations. German banks had been aggressive sellers of swaps in the past.
Next, a default on existing sovereign debt might then preclude the IMF from participating in the bail out. The details of the current bail out are complicated, but it seems the Greeks have 111.6 tons of gold. Will the new IMF loan be secured by the gold?
The Troika And The Greeks Reach An Agreement [View article]
Fear of these changes by the Germans, is apparently a reason Merkel and friends will be campaigning for Sarkozy's re-election. They fear the populism of his socialist opponent.
It will be interesting.
The Troika And The Greeks Reach An Agreement [View article]
I now reside in Ireland, so it makes for a real long day if I wait for the end of the US session.
Central Banks Sell Dollars To Prevent Liquidity Crises [View article]
The USD shortage in the euro zone has been building, a result of the timid ECB actions to quell the many debt issues. In an article we posted on 8-18 entitled "Scared Money Flows Favor the US," we noted:
".....money by the billions has been flowing into the US Banking sector. Despite the S & P downgrade, the money flow into US Treasuries has pushed the price up and the rates down. It appears this is hot money, fleeing Europe, fearful the ever evolving debt crises will result in a credit freeze, possibly capital controls, and panic.....(and quoting an article by Desmond Lachman in the American)...
In a recent survey, the Fitch rating agency found that, as of the end of May 2011, the U.S. money market industry had direct exposure of around $1.2 trillion, or around half of its overall assets, to the European banking system. And the Bank for International Settlement reports that U.S. banks have direct exposure to the periphery through derivative contracts of close to $500 billion, as well as loan exposure to German and French banks in excess of $1.2 trillion."
This unified central bank liquidity injection should calm the market fears temporarily. But with Greece nearly insolvent, Italy needing to refinance billions and, with the new IMF head, the retiring ECB president and Chancellor Merkel hardly on the same page, how long will this continue?