Market Talk – July 13, 2015
Only an hour into this morning’s trading and the news broke of the possible Greek Deal. Bunds were hit hard (down over 170 tics) and BTP’s (Italian Govt. Bonds) rallied 2 full points, pushing all peripheral spreads tighter. Greek 2yr Govt. Bond traded down 600bp to 23.75%. Equities loved the news and have been in positive territory all day (between +0.8-1.8%) no matter what the reality of what lies ahead.
There had to be some pressure valve in all this excitement and that turned-out to be the Euro. The Euro has crashed penetrating the previous day’s lows.
The safety trade remains the US$ and given the Stock Indices displaying such a performance (DJI +200points 1.2% and S&P +20 +0.95%) and yet it has hardly had an impact on the US Treasury market. It is worth noting that the spread TY/RX gapped wider on the news from 148bp to current 158bp.
Talking to the street and the word continues to be Greece! Can Mr. Tsipras sell the story to the Greek Parliament by Wednesday and remain in his post long-term, especially considering the people voted “NO” to continued austerity? Tsipras seems more interested in staying in the club than honoring the very wishes the people voted for. Why have a referendum anyway if you do not follow the people’s will?
Moreover, we have U.S. Retail Sales tomorrow and will the numbers be enough to continue to current bull run? We actually need a daily closing above 18188 in the Dow to suggest a continued rally.
Oil market remains under pressure as talk of the Iran deal continues with expectations that they will put further supply in the open market driving crude prices even low. It is worth mentioning that Saudi Arabia has issued bonds worth 15 billion riyals (Dh14.69 billion, $4 billion) to local banks this year to finance its budget deficit. The bonds will help pay for a budget deficit now forecast to exceed the 145 billion riyals.
Middle East Turning Net Borrowers?
Further evidence that 2015.75 is really the peak in a Massive Debt Bubble: The Middle East has always been on a cash basis as their revenues from oil exempted them from ever borrowing money – that is not the case today.
As oil prices rose, spending programs also anticipated no end in sight. So as oil peaked and has begun a technology-shift bear market, those spending programs are causing budget deficits to appear in the Middle East for the first time. Not only has Saudi Arabia issued its first bond issue of $4 billion to cover budget deficits, other countries may follow in the region.
The May turning point has indeed been a profound turn on the long-term setting the stage for the reversal in the short-term come 2015.75. If you can comprehend how everything is connected, you can see these events coming. Since May, Saudi Arabia’s foreign assets have entered crash mode. In May, foreign asset holdings fell over $672 billion. Saudi Arabia sold assets drawing down its reserves to cover the budget deficit.
“The Forecaster” Screening & Q&A in Cherry Hill, New Jersey on August 1st at 5PM
We will be holding a special one-time event for our clients (meaning all interested readers). This is not a general public event, so we are not advertising outside of this blog. We will be showing “The Forecaster” on Saturday, August 1, 2015, with a question and answer session afterwards in Cherry Hill, NJ. The time will be 5 PM. This is a one-time event. The producers are flying in from Germany as well.
Obviously, seating is limited. Tickets will be sold on a first come, first served basis. Tickets are set at normal theater prices of just $15 each.
Please allow up to five business days for your purchase to process. At that time, we will e-mail your ticket(s) to the e-mail address associated with your PayPal account. We do not have the ability to send confirmation e-mails, so please take the e-mail you receive from PayPal as confirmation that we have received and are processing your payment.
Tickets are $15 each
Goldman Sachs to Be Sued for Hiding Greek Losses to Get in Euro?
An interesting development is allegedly emerging. There maybe a lawsuit brought against Goldman Sachs for structuring products that hid the debt of Greece to enable it to enter the Euroland political theme park and in the end, increased it. The rumors are starting to circulate behind the headlines. This could prove to be a very interesting development for the other side of 2015.75.
Greece appears to be set in motion to exit the euro, and Germany is preparing a 5-year exit plan. Quite frankly, by the time 5 years rolls around, we may find ourselves in an entirely different world. We will be lucky if the current crisis does not meltdown in less than half that time by 2017.
The End of Freedom of Speech in Spain
Spain has shown that it is fully on board with the Brussels authoritarian direction of ending democracy. Those in power have simply convinced themselves that the people do not understand what is good for them so they must impose their will upon the people but raw force. How does this differ in any what from the justification of imposing communism? This is the death of all freedom and it is upon our doorstep.
Here are the new laws in Spain:
1. If you photograph security personnel and then share these images on social media: up to €30.000 fine (particularly if photo exposes violence used against a member of the public). This fine could increase depending on the number of Instagram or social media followers you have.
2. Tweet or retweet information or the “location of an organized protest” can now be interpreted as an act of terrorism as it incites others to “commit a crime” (now that “demonstrating” in many ways has become a crime). Sound “1984”-ish? Read about Orwell and his time in Spain.
2. Tweet or retweet information or the “location of an organized protest” can now be interpreted as an act of terrorism as it incites others to “commit a crime” (now that “demonstrating” in many ways has become a crime). Sound “1984”-ish? Read about Orwell and his time in Spain.
3. Snowden-like whistle blowing is now defined as an act of terrorism. If you write for a local publication, be careful what you print, whom you speak to, and whether the government is listening.
4. Visiting or consulting terrorist websites – even for investigative purposes – can be interpreted as an act of terrorism. Make sure you use “Tor” browser, reject cookies, and don’t allow pop-ups. Not to mention, don’t post it on your Facebook timeline!
5. Be careful with the royal jokes! Any satirical comment against the royal family is a new crime “against the Crown”. For example, “What did Leticia and the Bishop have to say after they ––“ (SORRY CENSORED).
6. No more hassling elected members of the government or local authorities – even if they say one thing in order to be elected, but then go and do the exact opposite. Confronting them about this hypocritical behavior. Even if you see them in the street chatting to a street cleaner, dining at their favorite expensive restaurant, or having their shoes shined by that physics graduate who cannot find a decent job in the country, hassling them about their behavior is now a criminal offence.
7. Has your local river been so polluted by that plastic factory along the edge that all life has extinguished? Well, tough! Greenpeace or similar protests are now finable from €601–€30.000.
8. Protests in a spontaneous way outside Parliament are now illegal. For example if Parliament passes a hugely unpopular bill, or are debating something extremely important to you or your community, it is now finable from €601 – €30.000. Tip: Use Google Maps to protest just around the corner – but don’t tweet the location!
9. Obstructing an officer in the course of their business, “resisting arrest”, refusing to leave a demonstration when told, or getting in the way of a swinging baton are all now finable offences from €601 – €30.000.
10. Showing lack of respect to officers of the law is an immediate fine of €100 – €600. Answering back, asking a disrespectful question, making a funny face, showing your bottom to an officer of the law, or telling him/her that their breath reminds you of your dog’s underparts is now, sadly, not advisable.
11. Occupying, squatting, or refusing to leave an office, business, bank or other place until your complaint has been heard as a protest is now a €100 – €600 fine (no more flash mobs).
12. Digital protests: Writing something that could technically “disturb the peace” is a now a crime. Bloggers beware, for no one has yet defined whose peace you could be disturbing.
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