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Relief, but...

March 25, 2020
Overview: Global equities are marching higher. While the Dow Jones Industrials posted its biggest advance since 1933, the US is lagging behind other leading benchmarks. The MSCI Asia Pacific advanced, led by Japan's Nikkei's 8% gain. It was third consecutive gain, during which time the Nikkei has rallied 17%. Europe's Dow Jones Stoxx 6…
Relief, but... Relief, but... Reviewed by Marc Chandler on March 25, 2020 Rating: 5
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Three Dimensions of the Investment Climate

November 03, 2013
There are three dimensions to the broader investment climate:  the trajectory of Fed tapering, the ECB's response to the draining of excess liquidity and threat of deflation, and Chinese reforms to be unveiled at the Third Plenary session of the Central Committee of the Communist Party.  
There has been increased speculation that the Federal R…
Three Dimensions of the Investment Climate Three Dimensions of the Investment Climate Reviewed by Marc Chandler on November 03, 2013 Rating: 5
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Backstop before Asset Quality Review and Stress Tests in Europe

October 07, 2013
Europe is moving, however slowly toward a banking union.  The ECB has accepted a new demand--that it acts as the single regulator.  As makes sense, it is insisting before taking on this responsibility, it has a better sense of the bank assets and ability to withstand adverse developments. 
If it is judged that the banks need to raise capital, it a…
Backstop before Asset Quality Review and Stress Tests in Europe Backstop before Asset Quality Review and Stress Tests in Europe Reviewed by Marc Chandler on October 07, 2013 Rating: 5
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Big Picture Look at Next Week

October 06, 2013
The 2007-2008 financial crisis elicited a dramatic policy response that saw interventions by the state on a scale not seen in a generation or more.  Yet, what is a distinguishing characteristic now is the weakness of the state.  This assessment is not simply limited to the continued shutdown of the US federal government and the approaching debt ce…
Big Picture Look at Next Week Big Picture Look at Next Week Reviewed by Marc Chandler on October 06, 2013 Rating: 5
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Euro Area Finance Ministers Meet Tomorrow: No Exit

September 12, 2013
The euro area finance ministers meet tomorrow.  Their discussion will be in sharp contrast to next week's FOMC meeting.   The FOMC will ostensibly be talking about beginning to exit from the QE by slowing down the pace of its asset purchases.  Surveys suggest a majority expect the Fed to announce the a tapering of its asset purchases. 
Althou…
Euro Area Finance Ministers Meet Tomorrow: No Exit Euro Area Finance Ministers Meet Tomorrow: No Exit Reviewed by Marc Chandler on September 12, 2013 Rating: 5
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Europe: Your Rope

June 25, 2013
European finance ministers will meet tomorrow ahead of the Summit that begins Thursday afternoon in order to see if more progress can be made on the banking union. Talks broke down at the end of last week, without resolution. There are four dimensions to the issue and, like a Mobius strip or an Escher drawing, it is difficult to know what comes…
Europe: Your Rope Europe: Your Rope Reviewed by Marc Chandler on June 25, 2013 Rating: 5
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German Constitutional Court Hearing Begins

June 11, 2013
The German Constitutional Court will hold hearings today and tomorrow on the ECB's Outright Market Transaction program announced last year, but yet to be implemented. In fact, documents to explain the precise procedures and operation of OMT have yet to be published.
The complaint has been registered by several politicians, include euroskep…
German Constitutional Court Hearing Begins German Constitutional Court Hearing Begins Reviewed by Marc Chandler on June 11, 2013 Rating: 5
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Spanish Banks: New Look at Restructured Loans

May 20, 2013
Germany, the tightfisted task master, is encouraging Spain to draw down more than the 40 bln euros it already has of the 100 bln euro line secured from the ESM to recapitalize its banks. Spain's budget minister denies there is a need. Germany does not typically encourage countries to take on more debt needlessly. We suspect by late Q3 or e…
Spanish Banks: New Look at Restructured Loans Spanish Banks: New Look at Restructured Loans Reviewed by Marc Chandler on May 20, 2013 Rating: 5
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Shifting Balances at the ECB

May 09, 2013
Since the ECB's decision not to pay interest on reserves, when it brought the deposit rate to zero last July, banks have shifted their funds out of the deposit facility and into current balance.  At the same time, they moved funds out of the ECB altogether.
 On May 8th, banks further trimmed their overnight deposits at the ECB and at 120 bln e…
Shifting Balances at the ECB Shifting Balances at the ECB Reviewed by Marc Chandler on May 09, 2013 Rating: 5
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Portugal's Step Forward

May 07, 2013
This is an important day for Portugal. It is selling 10-year bonds for the first time in more than two years. Demand is reportedly strong. Today's 10-year sale follows the 5-year bond sale in January and heralds to full return of Portugal to the capital markets. Portugal's success in returning to the capital markets is a success for Eur…
Portugal's Step Forward Portugal's Step Forward Reviewed by Marc Chandler on May 07, 2013 Rating: 5
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Euro Area Financial Conditions Continue to Improve, but...

February 11, 2013
The ECB reports that in the week to Feb 1, its balance sheet fell by 160 bln euros top 2.77 trillion.  This is the largest decline since Jan 2009 and largely reflects the early repayment of the first LTRO.  It is the smallest the ECB balance sheet has been since just before the second LTRO a year ago.     
In addition, new bank borrowing from the …
Euro Area Financial Conditions Continue to Improve, but... Euro Area Financial Conditions Continue to Improve, but... Reviewed by Marc Chandler on February 11, 2013 Rating: 5
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Cyrpus: The Dog that Didn't Bite...Yet

December 18, 2012
Last week Eurogroup head Juncker warned that the situation tiny Cyprus was more worrisome than Greece.  While this seemed to be an exercise in hyperbole, sure enough Monday, a Cyprus official was quoted on the news wires warning of an imminent default.  
Hang on.  Didn't Cyprus reach a memorandum of understanding with the Troika ?  Indeed, it…
Cyrpus: The Dog that Didn't Bite...Yet Cyrpus: The Dog that Didn't Bite...Yet Reviewed by Marc Chandler on December 18, 2012 Rating: 5
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Catalonia: Much to Do about Nothing and Everything

November 22, 2012
Catalonia, one of Spain's most important economic regions hold elections on Sunday, November 25. Artur Mas, the premier, called a snap election when the Rajoy government refused to reset the internal transfers that result in Catalonia paying Madrid more than it receives in benefits.  These transfers are one of the factors that lie behind Catal…
Catalonia: Much to Do about Nothing and Everything Catalonia: Much to Do about Nothing and Everything Reviewed by Marc Chandler on November 22, 2012 Rating: 5
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Another Brick in the Wall

November 20, 2012
There have been several developments to note, but price action has been minimal through the European morning.  
The biggest talking point today is Moody's decision to cut France's rating one notch to AA1 and maintaining a negative outlook.  This saw the euro jerk lower in thin pre-Asian activity to ~$1.2765, which should now offer initial …
Another Brick in the Wall Another Brick in the Wall Reviewed by Marc Chandler on November 20, 2012 Rating: 5
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Greece and Spain

October 18, 2012
European officials ability to reduce the tail risks appears to have been quite successful.  And they have achieved this without spending a single penny.  Yet the tension between the interests of the creditors and the interests of the debtors has not been resolved. 
This is clear the case in Greece.  Officials, including senior German officials ar…
Greece and Spain Greece and Spain Reviewed by Marc Chandler on October 18, 2012 Rating: 5
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The Euro's Decline and a New Front

October 10, 2012
Various reasons have been given to explain the euro's decline.  Some accounts attribute it to a vendor posting the wrong prices for 10-year Spanish bonds.  Others attribute it to the IMF's cutting European growth forecasts. It is always difficult to disprove post-hoc narratives, as this analyst well appreciates.  However, there seemed to …
The Euro's Decline and a New Front The Euro's Decline and a New Front Reviewed by Marc Chandler on October 10, 2012 Rating: 5
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Three Noteworthy Developments

October 02, 2012
The global capital markets are mostly quiet and the dollar is mixed, but mostly softer.  There are three developments we direct your attention to:  the RBA rate cut, Spain and aid, and the US block of a Chinese acquisition.

The  euro has been confined to about a half cent range in the upper end of yesterday's range.  Resistance is seen in the …
Three Noteworthy Developments Three Noteworthy Developments Reviewed by Marc Chandler on October 02, 2012 Rating: 5
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Drivers in the New Week

September 24, 2012
The US dollar is firm to start the new week, except against the Japanese yen,  amid a general risk-off tone.  Against most of the major currencies, with sterling being the chief exception, the dollar has recouped the lion's share its post-QE3+ losses.  
The fifth consecutive decline in the German IFO did not help matters.  Talk that the ESM can…
Drivers in the New Week Drivers in the New Week Reviewed by Marc Chandler on September 24, 2012 Rating: 5
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What's Next for Greece and Why it is Important

September 21, 2012
There has been a dramatic shift of opinion regarding a Greek exit from the EMU.   As this chart from www.intrade.com shows that market perceives the chances of a country (presumably Greece) exiting EMU down to 15% from as high as 40% as recently as early August.   
It is at the lowest since the contract began trading in late Q1 2010.  While there…
What's Next for Greece and Why it is Important What's Next for Greece and Why it is Important Reviewed by Marc Chandler on September 21, 2012 Rating: 5
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FX Positioning and Technical Outlook: Trend is Your Friend?

September 15, 2012
Nearly every development in recent days has been embraced by the foreign exchange market as a reason to continue to do what it has been doing since late July, and that is to sell the dollar.   

 The German Constitutional Court ruling, allowing the European Stability Mechanism to go forward, which in turn bolsters the ECB's Outright Monetary Tra…
FX Positioning and Technical Outlook: Trend is Your Friend? FX Positioning and Technical Outlook: Trend is Your Friend? Reviewed by Marc Chandler on September 15, 2012 Rating: 5
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