Archive for the ‘Europe’ Category

Notes From Underground: Prairie Fires On the Global Landscape

April 14, 2019

Let me put introduce areas of great concern that markets acknowledge but do not price for as they are too difficult to weigh. The Chinese/U.S. trade negotiations are simple relative to the potential impact from Turkey, Venezuela, Europe, and, of course the final decision on Brexit.

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Notes From Underground: Wednesday, 6:45 CST … Our Day Begins

April 9, 2019

There are so many issues plaguing Europe right now, and surprisingly, Brexit is not the most significant. On Wednesday morning — yes, Wednesday — the ECB announces its rate decision and it is expected that rates will remain unchanged,  with the main refinancing rate at zero. The only possible news will be that the ECB actually engages in a tiered financing. This would mean that some banks would get relief from the -0.40% rate that the ECB charges banks to deposit cash at the central bank. There have been rumors that the ECB was planning on raising interest rates in the hope that boost for some European domestic rates would help lift the equity valuations of some profit-stressed financial institutions.

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Notes From Underground: Things Are On the Boil

February 7, 2019

There are so many things causing angst in the global markets. There was news out of France on Thursday that the government was recalling its envoy to Rome because Italian politicians met with the yellow vest movement. To President Macron I offer this history lesson: In 2011-12 French President Nicolas Sarkozy–with the cooperation of German Chancellor Angela Merkel–crushed the Italian bond market in an effort to remove Prime Minister Berlusconi. The Eurocrats in Brussels parachuted in a preferred bureaucrat, Mario Monti, in an effort to get Italian politicians to halt the fiscal bleeding. The French have a great deal of audacity in complaining about Italian meddling, especially as Salvini/Maio have a legitimate reason: the upcoming European Parliamentary elections.

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Notes From Underground: Germany and France Codify the Premise of Europe

January 22, 2019

In a desperate attempt to deflect from the damage to his presidency, Emmanuel Macron on Tuesday codified what Bernard Connolly has written about for 25 years. As Charles de Gaulle supposedly said to Konrad Adenauer: “Europe is France and Germany, the rest trimmings.” In a resurrection of European history, Angela Merkel and Macron signed a new Treaty of Aachen. While the treaty language is vapid, the symbolism cannot be minimized. Germany and France promise to come to each other’s defense if attacked while also promising to work for a more unified financial and fiscal system.

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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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