Posts Tagged ‘Italy’

Notes From Underground: In Honor of French Independence, Europe Imprisons the Greeks

July 14, 2015

And so it goes. As the light lifts off the European “bailout” it appears that most analysts agree that the “Agreement” was a lose-lose for the European Project. The Germans stood firm and placed unduly harsh demands upon the Greek electorate that had the temerity to openly reject the terms of debt resolution. Merkel had favored a real compromise until Alexis Tspiras deployed the nuclear option and went to referendum in an effort to better be able to negotiate with an intransigent Djisselbloehm and his ECOFIN council of Grand Inquisitors (see the Brothers Karamazov). The punishment meted out to the Greek nation is a loss for them but ultimately the real loss will be on Spain, Italy, and, of course France. The Germans have revealed that the use of Berlin’s money to support the EU is going to come at a price and it is the acceptance of an economic model for Europe that is German, its backdrop of course being sound money. Not the strong dollar mantra of the U.S. Treasury Secretary but an actual strong currency, at least until the German financial system enters a fragile state.

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Notes From Underground: Reissue–August 15, 2012

July 13, 2015

Earlier I was rereading a blog post from almost three years ago. I believe it still has great relevancy and gives us all perspective from where we have been to what the next three years may bring. Perspective for a global macro trader is very important for without it traders rush in where investors dare to tread.

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Notes From Underground: The Swedes Plumb the Interest Rate Depths

October 29, 2014

First, I will say it again. QE3 is over and the Fed will maintain its “forward guidance” and be data dependent. The next bout of important data will be the U.S. unemployment release on November 7, which buys the Fed one more month of doing nothing. James Bullard painted the FED into a tight corner when he PANICKED and said the FED may want to refrain from removing QE3 while the SPOOs and other equity markets were at a 10 percent correction low. Bullard revealed that the Fed’s REACTION FUNCTION is the equity markets and of course Chairman Yellen’s concern about the lag in wages. The two key variables for the Fed have both been steady since the last meeting. The spoos are lower by 0.75 percent while the September unemployment report showed wage gains had no increase.

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Notes From Underground: The Germans Were the Target of IMF, G-20 Animosity

October 13, 2014

Germany was the issue at the IMF and G-20 meetings as all nations suffering economic headwinds delivered harsh criticism of Angela Merkel, Wolfgang Schaueble and, of course, Bundesbank President Jens Weidmann. It was Germany’s continued emphasis on budget restructuring and fiscal soundness that was holding back Europe and resulting in global economic challenges. France can’t grow because the Germans insists on the French authorities bringing their budget down to the prescribed 3 percent of the Maastricht Treaty. The peripheral nations are saddled with private and public sector debt that is not serviceable during times of economic stagnation.

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Notes From Underground: Just a Song Before I Go (Graham Nash)

February 13, 2014

I am going to take a well-deserved hiatus but I wanted to list some “quick hitters” on the issues facing the markets in the coming weeks. The Yellen testimony has been digested and regurgitated (ad nauseam) and the bottom line is Chairwoman Yellen is singing from the same hymnal as her predecessor. The stock market investors/traders are comfortable with a known known and as readers of NOTES are well aware markets appreciate as much certainty as possible. BUT I WARN EQUITY BULLS WHO BLINDLY FOLLOW THE FED LIQUIDITY MODEL: Janet Yellen is a labor economist of Keynesian predilections.

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Notes From Underground: The Roar From Yellen Quieted the Bloviators

February 11, 2014

The talking heads of financial visual media tried to create a circus around the new Fed Chair Yellen’s first official Congressional testimony. Yellen proved a worthy animal trainer and backed critics and supporters to their corners as she delivered very measured and COGENT responses to her inquisitors. The media was hoping for “red meat” but the Fed chair served up a vegetarian casserole full of nutritional value but nothing for the perpetrators of pabulum to sensationalize. It seems as though Yellen watched tape of Mario Draghi for she knew which Congressional posers needed long, drawn out answers so as devour their allowed five minutes of time. Well done Madam Chairman. This testimony of the Fed Chair, as mandated by Congress, has become about as relevant as the G-7 photo-op. If Congress has questions, put them in writing and establish a record of correspondence and thus a trail of responsibility to satisfy the dual mandate. It was reported that the House Republicans on the Finance Committee was to going to have a second hearing post Yellen’s testimony  in which four invited guests would provide a rebuttal of the policy put forth by Yellen.

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Notes From Underground: Erections, Ejaculations and Other Tales Of Ordinary Madness (Bukowski)

September 29, 2013

As the end of September approaches it seems that the global financial markets are again buffeted by the egomaniacs who crowd the corridors of power. This weekend has brought news that Silvio Berlusconi (Captain Viagara) has forced his party’s minister to resign from the coalition government, headed by Enrico Letta. Mr. Berlusconi was angry about losing another court appeal and in reprisal has decided to bring down the government. This will of course unnerve the Italian debt markets and send the Italian bond yields higher. Berlusconi will hope that he can craft a compromise with the government and receive some clemency and relieve him of his continued legal problems. The ability to hold the Italian financial markets hostage to instability is an expensive way to play for a legal reprieve. The U.S. markets are being subjected to a similar sort of hostage taking as the Republicans in the House are looking to negotiate away Obamacare by holding the U.S. debt levels and credit ratings hostage to political machinations. Being sympathetic to the long-term designs of the Republicans I understand there concerns but question their methods. Each time the House Republicans go down this path they ultimately cave and suffer politically at the ballot box. Better to draw up a genuine budget plan and educate the public to the destructive future budgetary problems.

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Notes From Underground: A Day of Disconnects In Global Markets, Or a Ball of Confusion

April 22, 2013

First, I need to clear the air on an issue that is cited over and over, of which causes me great discomfort. In last Thursday’s Financial Times, Robert Pollin and Michael Ash, the two professors who sponsored graduate student Thomas Herndon of UMass-Amherst–and of recent fame for finding the flaws in Rogoff/Reinhart–published the article heard round the world: “Why Reinhart and Rogoff are wrong about austerity.” I am not disputing the results of their work but I am questioning a causal relationship that they note:

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Notes From Underground: Mario Monti Is No General Sherman

December 23, 2012

Over the weekend Mario Monti decided not to run for the Prime Minister position through joining any party’s list for the election to be held in February. Mr. Monti was never elected to his present position but was parachuted into the job by the Eurocrats in Brussels. It seems that PM Monti fears facing the electorate as so many Italians are angered by the slash-and-burn techniques of the supreme technocrat–both left and right have criticized the present Monti government. Monti resigned after Silvio Berlusconi pulled his support from the Monti regime, but now it appears that Berlusconi would renew his support for a Monti-led coalition. The dramatic fall in bond and stock prices following Monti’s resignation caught the attention of the monied groups in Italy.

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Notes From Underground: When Will We See The Full Monti?

December 10, 2012

Mario Monti upset the Italian credit markets as he announced his early resignation over the weekend. In an apparent fit of rage after Silvio Berlusconi (aka Captain Viagra) pulled his political support from the sitting prime minister, Mario Monti headed off to the opera in Milan and apparently he was the fat lady that sang. It was a Wagner Opera that Mr. Monti saw so it seems that the political drama playing out in Rome is going to be a long, drawn out affair. I believe that the present Italian PM played a political gambit by announcing his early resignation in an effort to reveal the markets lack of support for the return of Berlusconi. As the Italian bond markets sold off and yields on 10- and TWO-YEAR NOTES increased by more than 25 basis points. It seems that there is little support from the financial markets for a return to the buffoonery of a Berlusconi-led government.

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