A loss of 100 billion.
Article/report from Zero Hedge
Remember China also likes junk bonds from Europe...something is going to give.
Tuesday, October 5, 2010
Monday, October 4, 2010
The AUD is becoming extremely overbought. (update 3) - RBA leaves rate @ 4.50%
A capitulation sell is on the way (watch 50MA if it's knocked out) . As longs are cut. A mini 'flash crash' has occurred on GMT hedge fund trading. AUD is risk sensitive with markets in end yr 2010 sell mode, further large falls should be factored in.
Commodity producing countries under pressure (political/economic - Australia) - RBA badly timed rate cycle (update 10)
Those crazy (and I mean they have lost the plot on the Australia economy) Reserve Bank of Australia 'officials', may begin a rate tightening cycle amidst a global depreciation in emerging economies currencies, rate cutting /money printing and protectionism. Their (RBA) theory has something to do with wage inflation concerns as Australia is at so called full employment, the RBA crappy modeling relies on a wage modeling based on very iffy employment (mostly part time earners) figures; however they seem to deliberately, call it denial, not to factor in mortgage/house payments eating into wages as REAL interest rates are constantly going upward (re: Australia's huge housing bubble research bond yields and CDS spreads, interbank to see that banks/lenders pass on a constant amount on interest/loaned monies).
refer:
"THE Reserve Bank's case for a rate rise today has been weakened by a survey of prices showing inflation has almost disappeared.
refer:
"THE Reserve Bank's case for a rate rise today has been weakened by a survey of prices showing inflation has almost disappeared.
The measure of core inflation preferred by the RBA has not changed at all in the past two months and rose by only 0.1 per cent in July, according to the monthly inflation gauge compiled by the Melbourne Institute and TD Securities.
"There's no case for a rate rise in the current data," TD Securities senior strategist Annette Beacher said yesterday.
However, financial markets are putting a 50 per cent chance on the Reserve Bank lifting its benchmark cash rate by 0.25 per cent to 4.75 per cent today. It would be the first increase since May and would lift the standard mortgage rate to 7.65 per cent, its highest level since October 2008.
This good be further proof that household income is being eroded by high rates on mortgages and credit, thus effecting the purchasing power (spending power). Also indicative that the Australian property bubble is at bursting point. A RBA cash rate increase could quadruple with passed on rates via banks.
The RBA with antiquated modelling (not factoring in China market 'distortions') and single minded bullishness maybe solely responsible for imploding the Australian property bubble.
Commodity producing countries under pressure (political/economic - Brazil) - election stalemate (update 9)
Brazil, like Australia (although terminology is different) has entering into a hung Parliament, or a 'run off' election (another election is held at a later date). Good indication of strains on commodity producing ecomomies that are facing political uncertainly and voter backlash. May also indicate that inflation/and or stagflation concerns are arising; with China re-inflating it's economy in a perpetual boom cycle and trying to manage it's over heated property markets. Market distortion via the Federal Reserve quantitative easing number 2 set for November 2010 and China, have sent emerging economies currencies in an appreciation cycle or bubble.
Negative reverberations in the 'wealthy' commodity producing countries (via China demand) may be the stark warning signs of a global slowdown/China crash
refer:
BRASILIA (Dow Jones)--Brazilian government-backed presidential candidate Dilma Rousseff is ready to hold dialogue with third-place Green Party candidate Marina Silva to gain support in a runoff election later this month, Rousseff said Monday. Rousseff attracted 46.9% of votes in a first-round election Sunday. The total fell short, however, of the 50% necessary to win the election. Leading opposition candidate Jose Serra of the Social Democracy Party got 32.6% of the vote and Marina Silva 19.3%. Rousseff will face Serra in a runoff election Oct. 31. Discussing the results at a press conference Monday evening, Rousseff said that, after the commotion settles from the first-round election, her campaign plans to approach Silva and her Green Party allies. "We're going to be able to show to this segment that we are better able to represent their interest than our adversary," Rousseff said. Political analysts note that support from Silva and her constituency could be critical for Rousseff or Serra to clinch victory in the runoff. Marina Silva, who formerly served in the government of President Luiz Inacio Lula da Silva as environment minister, quit her post in 2008 after reported disagreements with Rousseff over policies related to infrastructure projects and development. Rousseff, meanwhile, said that a large coalition of allies elected to congressional and gubernatorial posts in the nationwide election Sunday would be helpful in obtaining the necessary support in the second round. Rousseff met in Brasilia Monday with a large contingent of recently elected allies to discuss her bid for the presidency. She said that during the second round of the campaign she would focus on the issues of health care, education and security. Rousseff also reaffirmed her plans to compare policies of the Lula government to those carried out during the years of former Brazilian president and Serra ally Fernando Henrique Cardoso, of the Social Democracy Party. She said her campaign meant to continue a "transformational" project carried out by President Lula to achieve sustainable growth, development, and jobs. She said this would involve a reduction of domestic interest rates to levels used internationally and a continued reduction of the country's debt, which has fallen over the past eight years to the equivalent of around 40% of GDP from 60% previously. Brazil's reference Selic interest rate currently stands at 10.75% annually, and rates on consumer loans have hovered at levels of around 40% annually.
Negative reverberations in the 'wealthy' commodity producing countries (via China demand) may be the stark warning signs of a global slowdown/China crash
refer:
BRASILIA (Dow Jones)--Brazilian government-backed presidential candidate Dilma Rousseff is ready to hold dialogue with third-place Green Party candidate Marina Silva to gain support in a runoff election later this month, Rousseff said Monday. Rousseff attracted 46.9% of votes in a first-round election Sunday. The total fell short, however, of the 50% necessary to win the election. Leading opposition candidate Jose Serra of the Social Democracy Party got 32.6% of the vote and Marina Silva 19.3%. Rousseff will face Serra in a runoff election Oct. 31. Discussing the results at a press conference Monday evening, Rousseff said that, after the commotion settles from the first-round election, her campaign plans to approach Silva and her Green Party allies. "We're going to be able to show to this segment that we are better able to represent their interest than our adversary," Rousseff said. Political analysts note that support from Silva and her constituency could be critical for Rousseff or Serra to clinch victory in the runoff. Marina Silva, who formerly served in the government of President Luiz Inacio Lula da Silva as environment minister, quit her post in 2008 after reported disagreements with Rousseff over policies related to infrastructure projects and development. Rousseff, meanwhile, said that a large coalition of allies elected to congressional and gubernatorial posts in the nationwide election Sunday would be helpful in obtaining the necessary support in the second round. Rousseff met in Brasilia Monday with a large contingent of recently elected allies to discuss her bid for the presidency. She said that during the second round of the campaign she would focus on the issues of health care, education and security. Rousseff also reaffirmed her plans to compare policies of the Lula government to those carried out during the years of former Brazilian president and Serra ally Fernando Henrique Cardoso, of the Social Democracy Party. She said her campaign meant to continue a "transformational" project carried out by President Lula to achieve sustainable growth, development, and jobs. She said this would involve a reduction of domestic interest rates to levels used internationally and a continued reduction of the country's debt, which has fallen over the past eight years to the equivalent of around 40% of GDP from 60% previously. Brazil's reference Selic interest rate currently stands at 10.75% annually, and rates on consumer loans have hovered at levels of around 40% annually.
Sunday, October 3, 2010
FX currency Wars - A major South America FX intervention on the cards (update 1)
Get ready for a week (starting from the 4th October 2010) of massive South American central bank intervention
Colombian Peso: @1797 multi month high (vsUSD)
Brazilian Real: @16802 multi month high (vsUSD)
A devaluation spill over effect from South America will lead to major Asia FX intervention; more specifically Japan.
Could get very out of hand if trading is hedged on EUR bids as opposed to short positions on everything else as European exports markets will now be effected by a strong Euro.
Colombian Peso: @1797 multi month high (vsUSD)
Brazilian Real: @16802 multi month high (vsUSD)
A devaluation spill over effect from South America will lead to major Asia FX intervention; more specifically Japan.
Could get very out of hand if trading is hedged on EUR bids as opposed to short positions on everything else as European exports markets will now be effected by a strong Euro.
Market is overpricing risk (update 9) - eveything is bid
Therefor an age all warning sign basically to get out everything (or begin fixing put positions). China says it will prop up the EUR (well not really just rhetoric intervention, but....) , buy Greek 'junk' bonds and help to stabilize Europe. A bad joke especially if it's a refinance job via China's HUGE bubble as it buys up parts of Europe. Frightening. Good example of risk on/risk off China market distortions.
China is about to crash (update 2): China 'Tea' Bubble
China with it's planning economy that has embraced 'bail out economics' (Keynesian) in a way that Micheal Keynes could have never imaged possible via massive stimulus programs, has also caused (and is still causing) market distortion/s from the sheer weight of Chinese risk on/risk off demand on markets, market manipulation and fuggey economic statistics.
But as everyone knows, you pump money (in China's case a flood of money) into the economy it's goes into speculation (in a feverish way); China now has a tea bubble:
"The rare tea made from bushes from the tea gardens of the Ming Dynasty emperors has become the latest craze for wealthy Chinese investors with their sights on a quick profit.
Prices for the Dahongpao tea, which is only grown in a small mountainous area of east coast province of Fujian, have increased tenfold since the middle of last year with online tea traders selling a single kilo for more than £1,000, the country's state media has reported.
"I never thought it would get so expensive," a tea producer, Wu Zongyan said. "It's one price one day, another price another day. Between when we pick the leaves and when it's ready to sell, the price has already gone up."
Chinese traditionally prize tea as the symbolic heart of national culture and believe that in varieties and taste differentials rival that of wine. China is prone to extreme speculative bubbles as opportunity-starved investors seek a home for their cash outside the traditional venues of the stock and property markets which are themselves notoriously volatile and speculative.
In the past year auction houses in China and Hong Kong have all reported fetching record prices for everything from Imperial artwork to French claret and, most recently, Communist-era stamps as speculators search for an outlet for their money."
But as everyone knows, you pump money (in China's case a flood of money) into the economy it's goes into speculation (in a feverish way); China now has a tea bubble:
"The rare tea made from bushes from the tea gardens of the Ming Dynasty emperors has become the latest craze for wealthy Chinese investors with their sights on a quick profit.
Prices for the Dahongpao tea, which is only grown in a small mountainous area of east coast province of Fujian, have increased tenfold since the middle of last year with online tea traders selling a single kilo for more than £1,000, the country's state media has reported.
"I never thought it would get so expensive," a tea producer, Wu Zongyan said. "It's one price one day, another price another day. Between when we pick the leaves and when it's ready to sell, the price has already gone up."
Chinese traditionally prize tea as the symbolic heart of national culture and believe that in varieties and taste differentials rival that of wine. China is prone to extreme speculative bubbles as opportunity-starved investors seek a home for their cash outside the traditional venues of the stock and property markets which are themselves notoriously volatile and speculative.
In the past year auction houses in China and Hong Kong have all reported fetching record prices for everything from Imperial artwork to French claret and, most recently, Communist-era stamps as speculators search for an outlet for their money."
Subscribe to:
Posts (Atom)