Archive for the ‘Europe’ Category

Notes From Underground: Markets Are Rounding Third and Sliding Into Home

December 16, 2018

As we head into the final two weeks of the year, the global equity markets are “sliding into home.” Equities sold off again on Friday as the Chinese tariff saga is failing to provide support to the market. Weekend news conveyed the idea that the market was reacting to this week’s FED meeting and the very high probability of another increase in the central bank’s target range. This is a stretch because investors have been aware of the FED‘s limitations under its own “forward guidance,” trapped into a rate hike for fear of spooking the market if no increase was decided.

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Notes From Underground: Angie, Where Will It Lead Us From Here?

December 9, 2018

Germany chose a new CDU party leader to replace Angela Merkel. Membership chose Merkel’s hand-picked choice Annegret Kramp-Karrenbauer, also known as AKK. This is a very poor choice as it reflects a continuation of the status quo at a time that the traditional German ruling parties are struggling to maintain voter support. These are turbulent times for Germany, Europe and the world and Chancellor Merkel has proven to be too staid to deal with a world threatened by a populist upheaval.

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Notes From Underground: Rome Is Alive With the Sound of Music

October 31, 2018

There was singing in Rome when Angela Merkel announced that she is stepping down as the leader of the Christian Democratic Union. The two most recent German regional elections has solidified the unmitigated truth about the weakened condition of the German chancellor. For the last six years, I have been highly critical about Merkel’s policies. The bumbling French President Nicholas Sarkozy out-maneuvered Merkel in 2011 as he prevented then-Bundesbank President Axel Weber from leading the ECB.

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Notes From Underground: Volatility Will Remain in Financial Markets

October 28, 2018

First,I have the extreme pleasure of participating in another PODCAST with Richard Bonugli at the Financial Repression Authority. It is always a pleasure to “JAM” with Peter Boockvar in an effort to discern the rhythms of the global financial system. Peter, along with Jim Bianco, are two of the best analysts covering the entire rubric of money flows being impacted by the data. Enjoy the exchange and remember that this recorded on Tuesday, October 23. There was a great deal of volatility and data after our podcast, but much of it is relevant heading into this week’s trading.

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Notes From Underground: Tell Me Why You Are Crying

October 23, 2018

The current market temperament is causing angst among investors. A relatively strong earnings season is failing to provide support to the U.S. equity markets that many analysts have been promoting. The media is wondering what will halt the continuing slide in stocks around the globe. We at Notes From Underground have pondered what the primary catalyst would be

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Notes From Underground: A Fresh Glance at Markets

October 21, 2018

Exactly two weeks ago we at Notes From Underground published, “Powell Seeks To Reestablish The Authority of Markets…Maybe?” While I was off enjoying my daughter’s wedding, the December S&P futures had closed at 2895 on Oct. 5 (unemployment Friday). I warned that the market was misjudging Chairman Jerome Powell as he seemed impervious to equity and bond market corrections. The algos are built on the FOMC being quick to defend the elevated levels of the bond and equity markets.

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Notes From Underground: Powell Confirms It Ain’t Rocket Science

September 26, 2018

Over the last nine years, a major theme from the wit and wisdom of Notes From Underground has been that FED policy is not rocket science, the premise being that no matter how much math is applied the forecasting ability of the FOMC has been less than stellar because of the use of flawed models. Unlike genuine rocket science in which astrophysicists can land a vehicle on the moon and return the capsule to a pre-programmed landing site, the FED cannot predict the economy with any sense of proximity. Yet the FED built a massive balance sheet depending on those flawed models. The financial media was awed by the high maths of the FED‘s models so mainstream pundits offered little to no pushback, genuflecting at the altar of academia.

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Notes From Underground: A Conversation With Bonugli and Ronni Stoeferle

June 10, 2018

On June 6, I had a discussion with the Financial Repression Authority host Richard Bonugli and the highly respected Ronni Stoeferle. We covered myriad of global financial and political concerns as we tried to provide the foundation for profitable opportunities via in-depth analysis of these fragilities.

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Notes From Underground: Bored By Italy, But I Digress

June 5, 2018

Sorry. The current situation in the European Union has been well forecasted by NOTES FROM UNDERGROUND so until the storm clouds clear and the Italian ruling coalition begins to initiate some of its campaign proposals I treat everything in Europe as a trade and not an investment. Even the talking heads are waking up to the potential financial damage that bank balance sheets loaded with ZERO RISK-WEIGHTED sovereign bonds can cause a healthy bank’s bloated balance sheet.

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Notes From Underground: The Mother of All Debt Crises

May 14, 2018

Everything in global financial crisis emanates from too much debt being unable to be serviced. The current situation in Argentina is that the state and private sector borrowers won’t be able to pay the INTEREST on its dollar-based loans as the PESO weakens. It takes more domestic currency to purchase the needed dollars to pay creditors, resulting in a NEGATIVE FEEDBACK LOOP that brings the economy to a crawl as all the economic actors have to find ways to pay the interest costs or go bankrupt. The Argentinian government won’t go bankrupt. But it will force a debt restructuring if its borrowing costs move higher (yet another burden for a debt-plagued economy).

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