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schatzl

schatzl
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  • Italian Prime Minister Mario Monti plans to resign after Silvio Berlusconi's PDL party pulled its support for the technocrat government and and the former PM said he would run for office again next year. Monti will try to pass a budget and financial stability law before stepping down. Italians are due to go to the polls by April at the latest, but elections are now likely to be brought forward. [View news story]
    Why would they react significantly? The vast majority of peripheral debt is held by the respective national banks such as Unicredit in Italy or Santander in Spain and the ECB has - and is pumping billions into the peripheral banks so that they can buy bonds and keep the lid on interest rates. One of the main objectives of LTRO and very successful I might add as Draghi has managed to decouple the dismal and deteriorating fundamentals from the bond rates.
    Dec 9 04:08 PM | 1 Like Like |Link to Comment
  • November Nonfarm Payrolls: +146K vs. consensus +93K, October revised to +138K from +171K. Unemployment rate 7.7% vs. consensus 7.9%, 7.9% previous. [View news story]
    No,

    liquidity may flood the markets higher, but at the end of the day any index reflects the profitability of the listed companies. Seen in a broader context, the well being of the listed company's aggregate is highly dependent on the economic fundamentals.

    At present we have bucket loads of liquidity but poor fundamentals. A very risky environment to be invested, as you're even more at the mercy of the market makers and big players. Generally you can say: the more liquidity there is but the poorer the fundamentals, the easier it is to manipulate the markets, the more likely you'll lose money.
    Dec 7 09:15 AM | 2 Likes Like |Link to Comment
  • Eurozone Manufacturing PMI rises to an 8-month high of 46.2 (flash 46.2) in November from 45.4 in October. While the picture is "starting to brighten" and although manufacturing activity seems to have "bottomed out back in July," official data lags PMI. That means that "the rate of GDP decline is likely to have gathered pace markedly on the surprisingly modest 0.1% decline seen in the third quarter." (PR[View news story]
    @Tack:

    Fair enough.

    but interest rates in the Eurozone are no real reflection of business confidence. They are to a larger degree a reflection of ECB measures injecting liquidity into national banks buying up their national sovereign debt.

    The trends has been incredibly strong. In Spain for example, 55% of sovereign debt last year was held by foreign entities. It is now down to 35% one year later.

    This is what is sending such a dangerously deceiving market signal of Europe's health. The situation for Italian and Portuguese sovereign debt is even more dramatic, whilst France is clearly following the same trend but not as dramatic yet.
    Dec 3 11:10 AM | Likes Like |Link to Comment
  • Eurozone Manufacturing PMI rises to an 8-month high of 46.2 (flash 46.2) in November from 45.4 in October. While the picture is "starting to brighten" and although manufacturing activity seems to have "bottomed out back in July," official data lags PMI. That means that "the rate of GDP decline is likely to have gathered pace markedly on the surprisingly modest 0.1% decline seen in the third quarter." (PR[View news story]
    "More on the ISM report: The 49.5 read is a big miss, the 4th contraction in 6 months, and the lowest print since July 2009. It was led by big drops in New Orders and Employment, but also Inventories, which declined 5 points to 45. Customers' Inventories dove 6.5 points to 42.5"

    This is the US.

    And anyone claiming Europe is recovering, has not had any credible look at its numbers. They are atrocious.

    18th month in a row rising unemployment numbers in France, Germany -2,8% in retail sales (yes, the same Germany expected to not only pick up the slack, but also contribute to a balancing Eurozone through wages rises and increase in consumption), highest ever measured unemployment numbers in the Eurozone at 11,7%, car sales down by nearly 10% in the Europe27 area compared to last year, new homes -51% in Spain, -8,4% retail sales and -20,3% car sales in October from September. Netherlands -26,4%, France -19,2% car sales last month, lowest ever measured consumer confidence numbers in Italy in at 84,8 for November, -7,8% house price drop in the Netherlands in October (mini bubble pop). All time high in doubtful loans recorded at Spanish banks: 10,71% and up from 7,16% a month before (graph has turned vertical and represents a 50% rise in a single month.)

    I could go on and on. Europe is imploding. The word recession does it no justice.
    Dec 3 10:50 AM | Likes Like |Link to Comment
  • Fiscal Cliff: The Can-Kick Scenario [View article]
    Great article, thank you. Would have missed it if not mentioned in a foreign language stock market website.

    Typical of public services here in Europe too, to base their budgetary projections on overly optimistic (reckless even) assumptions. Those budget holes are not created during the planning stage, but are created when reality kicks in. Doubly dangerous when vital economic decisions are based on such illusory assumptions.
    Nov 29 06:29 AM | 1 Like Like |Link to Comment
  • Non-real estate household debt rose 2.3% to $2.7T in Q3, reports the FRBNY, with about about all of the increase coming from student and auto loans as credit card balances barely budged. Toss in mortgages, and consumer debt shrank a hair to $11.31T, even as mortgage originations surged - most, of course, were refinancings. [View news story]
    Cheap credit. It's as if the powers that be are cynically egging the less well to do into a debt fuelled consumption frenzy in a futile attempt to get the economy going to levels that could redeem all the economic blunders of the last years.
    Nov 27 05:26 PM | Likes Like |Link to Comment
  • Non-real estate household debt rose 2.3% to $2.7T in Q3, reports the FRBNY, with about about all of the increase coming from student and auto loans as credit card balances barely budged. Toss in mortgages, and consumer debt shrank a hair to $11.31T, even as mortgage originations surged - most, of course, were refinancings. [View news story]
    What the hell are we doing with our currencies? Brinkmanship with the accumulated wealth of generations.
    Nov 27 04:50 PM | Likes Like |Link to Comment
  • It's a kitchen sink of initiatives agreed to by the Troika to help reduce Greece's debt load. Among them are buybacks of the country's debt, a return of profits booked by the ECB from its SMP purchases, a reduction in bailout program interest rates, and the outright deferral of some interest payments. Worried about frontrunning? Lagarde: "The less we talk about the debt buyback, the better we are with regard to pricing." [View news story]
    Only the most intellectually challenged will not recognise this as a massive haircut and this time of public (taxpayers) credit.

    Buyback programme of exiting debt trading at 30% to nominal, deferring interest payments by 10 years, interest on loans the first aid programme reduced to 0.7% above Euribor (0.5%) for a continuously defaulting, corrupt and failed state, doubling the tenor from 15 to 30 years.

    As a wild guess, I'd judge this to be a haircut of over 50%. But you can bet your house that Europe's politicians will not mention haircut (technical default) once.

    Lagarde:

    "The less we talk about the debt buyback, the better we are with regard to pricing."

    This is just the icing on the cake. Guess what, useless cow, Greek bonds have doubled in months, because the oh so secret plan has been known within hedge fund circles long before Lagarde could look even spell the word "frontrunning".

    The European taxpayers are paying the hedge funds and banks billions (again), but "lets keep quiet". Yeah right. We are "managed" by the most imbecilic and incompetent people this planet could create (or the most corrupt). You decide.
    Nov 27 04:47 AM | 4 Likes Like |Link to Comment
  • Japan's trade deficit almost doubles Y/Y to ¥549B ($6.7B) in October, well above consensus of ¥360B. Exports -6.5% to ¥5.15T, shipments to China -11.6% due to the islands dispute, to the EU -20.1%, and to the U.S. +3.1%. Imports -1.6% to ¥5.7T. Mizuho economist Norio Miyagawa is optimistic despite the figures. "I believe Japan's exports will recover gradually as the U.S. and Chinese economies are picking up," Miyagawa says. [View news story]
    You guys are such slackers.
    Nov 21 08:04 AM | Likes Like |Link to Comment
  • Japan's trade deficit almost doubles Y/Y to ¥549B ($6.7B) in October, well above consensus of ¥360B. Exports -6.5% to ¥5.15T, shipments to China -11.6% due to the islands dispute, to the EU -20.1%, and to the U.S. +3.1%. Imports -1.6% to ¥5.7T. Mizuho economist Norio Miyagawa is optimistic despite the figures. "I believe Japan's exports will recover gradually as the U.S. and Chinese economies are picking up," Miyagawa says. [View news story]
    you forgot: continuously pile on debt to the level of 230% of GDP.
    Nov 21 07:54 AM | Likes Like |Link to Comment
  • Ben Bernanke stays on point, promising continued QE even after the economy shows improvement. He says fiscal cliff worries are already posing a drag on U.S. growth, but a long-term deal could make "the new year a very good one for the American economy." Do we detect an optimistic turn in attitude from the chairman? [View news story]
    neither do they lose money
    Nov 20 05:06 PM | Likes Like |Link to Comment
  • France is downgraded to Aa1 from Aaa at Moody's, which also maintains its negative outlook. "The predictability of France's resilience to future euro area shocks is diminishing in view of the risks to economic growth." [View news story]
    I fear you are wrong.

    France's economy is driven by strong multinationals that have come under severe pressure due to lacking global competitiveness which has been exacerbated by constant socialistic meddling. Have a look at Citroen, Carrefour, Peugeot or EDF. Their labour costs have risen by approx. 50% over the last 10 years, their economy is driven by consumption - in particular government expenditure, which has a disproportionate share of the economy and all the while their industrial production is dwindling fast.

    Recipe for disaster.
    Nov 20 07:40 AM | Likes Like |Link to Comment
  • France is downgraded to Aa1 from Aaa at Moody's, which also maintains its negative outlook. "The predictability of France's resilience to future euro area shocks is diminishing in view of the risks to economic growth." [View news story]
    You make a good point.

    Since that downgrade is based on fundamentals and the market is hardly reacting, shows how far the markets in western economies has divested themselves from fundamentals. Dangerous times to be invested.
    Nov 20 02:23 AM | Likes Like |Link to Comment
  • Market recap: Stocks bounced to modest gains after lawmakers offered somewhat optimistic remarks following a fiscal cliff meeting with Pres. Obama. But trading was light in a day where the news gaining the most attention was the apparent demise of Hostess Twinkies. Treasury yields slipped to their lowest since August; the dollar rose to two-month highs. NYSE gainers led losers seven to five. [View news story]
    This is what we've been dealing with here in Europe for quite a while. Headline hunting algos latching on to any political b.s. being spouted.
    Nov 17 07:16 AM | 1 Like Like |Link to Comment
  • The "world has changed" moment of the week is Japan opposition party leader Shinzo Abe's call for "unlimited easing" by the Bank of Japan. Abe is likely the country's next PM after current PM Noda dissolved parliament and called a snap election. Tokyo +2.2% overnight adds to a 1.9% gain on the back of Abe's comments the day before. [View news story]
    Though they're stuck in deflation. They're in double digit QE programmes soon and it hasn't helped one dot. They're just piling up more debt. I wonder how they envisage ever getting out of that quagmire.
    Nov 16 10:46 AM | 1 Like Like |Link to Comment
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