The discussions around Greece and their debt are reaching an important stage as the private sector negotiations are coming to a conclusion. On January 27th, the two sides they had reached understandings on legal and technical issues. Sadly, the sticking point remains what the yield for the coupons on the new swapped bonds will be as the lower the rate, the bigger the relief to Greece. Given the contraction in the Greek economy, the lack of tax revenue and the inability to implement structural reforms, estimates for their bailout loan have swollen to $145 billion euros to meet … …READ MORE
Category Archives: Front Page
Germany’s Ronald Reagan moment
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GDP trade for tomorrow
GDP trade for tomorrow:
Today at 10:20 AM ET, I’ll be appearing on CNBC’s Squawk on the Street going over this trade. As always, adjust the levels to new information and movement. Q4 US GDP and market is expecting 3.0%.
If US GDP<3.0%, Buy USD/Sell SEK.
If US GDP=3.0-3.5%%, do nothing.
If US GDP>3.5%, Buy MXN/Sell JPY.
I think the risk is for a stronger than expected GDP, so let’s do the MXN/JPY trade.
Entry 5.8800 (hoping for a pullback today)
S/L 5.7850 (below recent breakout highs, should be support)
T/P 6.2850 (below … …READ MORE
SOTU Fail
In fairness to the President Obama, SOTUs are typically speeches of broad political themes with a spate of nationalism liberally sprinkled throughout the text. Yet, last night seemed particularly disappointing given the United States’ serious problems over the debt that has been created since Mr. Obama came into office ($10.6 trillion to $15.2 trillion) and the budget deficits that have been the largest in the country’s history (FY2009 $1.4 trillion, FY2010 $1.3 trillion and FY2011 $1.3 trillion).
At this point, the United States remains firmly on the Japanese path to fiscal hell with the pathway paved by both parties. However, … …READ MORE
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Japan: a slow train wreck picks up speed
Overnight, the Japanese announced that they ran a full year trade deficit for the first time since 1980. Japan Follow Up: Last night the Japanese made it official: first time in 31 years they had a yearly trade deficit.
- Read More -… …READ MORE
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European Surprise?
Let’s face it; the only surprise left to the European debt crisis would be if it actually got resolved. There have been so many predicting that Europe would be unable to fix its problems that listening to Steven Tyler sing the National Anthem would be a welcome alternative. Yet, European leaders continue to act like Churchillian American leaders: they do the right thing after exhausting all the alternatives.
As I wrote yesterday, the ECB is finally engaging in Fed-like alphabet soup lending facilities and cutting interest rates. Italy, Spain, Ireland have engaged in belated, yet meaningful austerity measures. (Yes, Greece … …READ MORE
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Is EU12/11=US 3/09?
Is 12/11=3/09?
Today, the EUR and risk continues to rally as the financial markets appear to be sanguine over the prospects of a Greek bondholder agreement. However, is this truly why the EUR currency has rallied or is there an underlying, positive shift occurring?
Read More…. … …READ MORE
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ECB risks involvency
WSJ’s Javier David writes an excellent article on the ECB and the risks they have by expanding their balance sheet. Here’s the article: http://online.wsj.com/article/BT-CO-20120112-714628.html
Here’s an great piece of research on the opaque ECB and questions whether it can survive European sovereign downgrades.
http://www0.gsb.columbia.edu/faculty/dbeim/papers/Can%20the%20Euro%20be%20Saved.pdf
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Why the Yen is strong….for now.
Why the Yen is strong….for now.
Since 2008, one of the most commonly asked questions in FX land surrounds Japan: why is the Yen so strong when Japan’s debt is approaching 250% debt to GDP? The answer is complicated, but changing.
More…. … …READ MORE
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ECB meets Thursday, here’s how to trade it
On Thursday, the ECB meets to decide on interest rates and non-traditional means of easing monetary conditions for the European Union. At this time, the markets are not expecting any change to the ECB’s policies on either rates or funding allocations. The first 36 month LTRO was a huge success and the next one will come at the end of February. This sets up a scenario for ECB’s Draghi to generate uncertainty over future easings and any future sovereign bond buys.
Remember under Trichet when the ECB was cutting rates, they would cut rates one month and then the next … …READ MORE
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Romney wins, is it over?
New Hampshire voted and Republican candidate Mitt Romney won his second primary in a row by a commanding lead of 13-15 points over second place finisher Ron Paul. Iowa runner up, Rick Santorum finished a distant 5th place. Paul, Santorum, Gingrich and Perry have all vowed to stay in the race and go to South Carolina for the next primary.
This is good news for Romney on two fronts. One, he clearly destroyed the rest of the field in a state that has a primary more akin to the general election compared to Iowa. Two, the conservative Republicans are … …READ MORE
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