When Max Planck opined that “Science Advances One Funeral At A Time” it is believed that he meant that when proponents of long-held theories die, science is allowed to advance. In terms of trading I have applied this to mean that long-held losing trades have died a death due to lack of liquidity to support a flawed analysis. The BOND MARKET is going to provide the opportunity to put the wit of Planck to work as we try to examine the ways in which the FED will deal with the vast amount of reserves with which it has flooded the financial system. As traders and investors, the FED‘s decisions will impact the entire spectrum of the GLOBAL MACRO WORLD. Therefore, it is time to embark on thinking about ways the FED can remove reserves in the least disruptive and to anticipate what plans the central bank may have.
Posts Tagged ‘Eurobonds’
Notes From Underground: Good Trading Advances One Funeral At A Time (Thanks, Max Planck)
July 23, 2013Notes From Underground: SPD LEADER SIGMAN GABRIEL SAYS THE R-WORD … REFERENDUM
August 12, 2012When the Greeks under Papandreou suggested a referendum on the GREEK AUSTERITY plan, the Greek PM was met with great consternation by the ruling elites in Brussels. A giant don’t-you-dare-call-a-referendum greeted PM Papandreou and basically forced his abdication. I warned then that the idea of a referendum on any issue of economic austerity was anathema to the EUROCRATS for the denizens of Brussels were/are fearful of testing the “PUBLIC WILL.” Every time a referendum was held it resulted in a decision opposite of the elite’s will: Another referendum was called until the “correct” result was realized. (It was usually preceded by warnings that all financial and budgetary agreements would be rendered null and void.)
Notes From Underground: Why Is It That Angela Merkel IS the DESIGNATED DRIVER FOR WORLD FINANCE??
June 26, 2012Notes From Underground: Kelly’s Heroes or Bob Marley Redemption Song
May 30, 2012FINALLY. It seems that the world is waking up to the idea of putting to use the barbarous relic so despised by the financial gurus like Charlie Munger and Warren Buffett. A May 25 BLOOMBERG article by Brian Parkin and Jeffrey Donovan hinted at some type of debt-sharing plan: Not a Eurobond in a traditional sense but more of a collateralized debt obligation and a concept of a REDEMPTION FUND. The fund would take all sovereign debt more than the 60% of GDP level and deposit the excess paper in a central fund. The fund would be collateralized by the GOLD RESERVES of all the European nations–an amount more than 10,000 TONS OF GOLD. As the debt levels of the abusive nations recede–and taking back the maligned paper–the TROUBLED NATIONS COULD DRAW DOWN THE COLLATERAL.
Notes From Underground: Caught Between a Portfolio Balance Channel and a Fiscal Cliff
May 23, 2012What has Ben Bernanke wrought? Since the FED CHAIRMAN uttered that Phrase “FISCAL CLIFF” at the now infamous April 25 press conference, the S&P has dropped more than 6% (take out month-end window dressing). Investors were unnerved by the Bernanke acknowledgement of a huge drop in GDP if the Washington politicos did not start to deal with the problem of fiscal retrenchment that awaits. It has been estimated that the hit from spending cuts and tax increases will result in at least a 3.5% hit to U.S. growth. It was Bernanke that lit the fuse and today the CBO weighed in with its great concern over the “fiscal cliff.”
Notes From Underground: No Surprises From Bernanke but Trichet and Lagarde Fail to Impress
August 28, 2011The Fed Chairman’s remarks at Jackson Hole left those hoping for QE3 disappointed. The Wall Street crowd who have grown addicted to the “Greenspan Put” and its help in sustaining the BULL in equities were aghast that Ben failed to maintain the monetary injection. Mr. Bernanke backed off of aggressive new policy and did not mention wealth effect of the PORTFOLIO BALANCE CHANNEL. While in the serene surroundings of the Grand Tetons, it seems the FED Chairman has learned that the Fed cannot be held hostage to the daily machinations of Wall Street and the markets and fiscal policy stewards are going to have to be patient in regards to further monetary support.
Notes From Underground: Hey, George Osborne! Are You Daft?
August 14, 2011The weekend news has been unusually quiet, so with no news about any spreading of the financial crisis the EUROCRATS were opining about the need for Germany to back a massive issuance of EUROBONDS. Joining in the chorus for the creation of a massive dose of EUROBONDS were a group of global finance ministers, including Mr. Tremonti from Italy. The world’s PHILOSOPHER KING, George Soros, also threw his weight behind the need for a EUROBOND. It is now widely known that Merkel and Sarkozy are to meet in Paris on Tuesday in an effort to come to some agreement on [INSERT THOUGHT HERE], so as to help calm European markets and provide some plan for relieving the pressure on French and other European Banks.
Notes From Underground: British Currency Gets Pounded
December 16, 2010Yes, the dollar rallied Wednesday as the U.S. Treasury curve continued to steepen but European and British news was very negative. The potential downgrade of Spain and German Parliamentary battles roiled the European currencies. In Germany, politics are being played out to see if the economic locomotive of Europe is going to be more European or more German. A Financial Times op-ed by Frank-Walter Steinmeier and Peer Steinbruck set the tone for the battle lines. These are political heavyweights as Steinmeierwas foreign minister and Peer Steinbruck was finance minister in the first Merkel administration so their voices are louder than others.