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by Phoenix Capital Research
Japan has fueled much of this latest rally in stocks, driving the marketing first with promises of money printing by the Prime Minister in November 2012, and then a massive $1.2 trillion QE program announced by the Bank of Japan last month. The result of this has been a collapse in the Yen and a 70%+ rally in the Nikkei in the last six months. This has been the fundamental [...] Marc Faber, publisher of the Gloom, Boom & Doom Report, said that gold may fall to $1300 before a rebound. He appeared on Bloomberg TV’s “Street Smart” with Trish Regan and Adam Johnson today. Faber said, “I love the fact that gold is finally breaking down. That will offer an excellent buying opportunity.” On whether a deflationary environment is possible right now, Faber said, “In the economy of the cuckoo people [...] by Phoenix Capital Research
The EU Crisis went into overdrive in the spring of 2012 when the Spanish banking system as a whole nearly collapsed. Having pumped €1 trillion into EU banks via its LTRO 1 and LTRO 2 programs in December 2011 and February 2012, the European Central Bank found itself facing a problem far greater than Greece (Spain’s banking system is over €3.7 trillion assets in size, compared to Greece’s [...] by Phoenix Capital Research
The EU continues to flounder around as Cyprus, a country whose GDP accounts for just 0.2% of the Europe’s economy, has proven the truth behind all of the “solutions” thrown around by the ECB and EU politicians: that they really don’t have a clue how to fix the problem plaguing Europe. Why is this? Because at the end of the day, there is really only one solution to this [...] Farage Slams Eurozone As “Complete Economic Disaster” Farage barks that it “is absolutely clear that Eurozone membership is completely incompatible with nation-state democracy.” The complete denial (and “unutterable drivel”) about the Eurozone crisis incenses him as he says “you’d think listening to everyone this morning that it’s over.” The real problem, he explains, is that they won’t face up to the reality that “You are not facing up to the consequences for [...] from Spiegel International: The euro crisis may have dropped out of the headlines recently, but Spain and Italy would seem to be doing their best to bring it back. Real estate giant Reyal Urbis’ bankrupcy has raised fresh concerns about Spanish banks and many fear that a Berlusconi election victory could drive Rome to seek emergency aid. It had become a trend among top European politicians to forecast that the worst of the [...] thedailybell Euro-Crisis Hope Confidence in European Banks Is Returning … There is cause for hope in Southern Europe. New numbers indicate that trust is returning to banks located in countries that have been hit hardest by the euro crisis. But even as discrepencies in the Continent’s Target2 payment system shrink, danger still lurks. The turning point came almost exactly four months ago. On Sept. 6, 2012, 22 men gathered on the [...] by Phoenix Capital Research The primary market forces remain in play. The markets are holding up on hopes of additional stimulus from the Central Banks. Some bulls are even calling for QE 4 at the upcoming Fed meeting, despite the fact that QE 3 was launched a mere three months ago and was open-ended (meaning it would not end until the Fed deemed it time). This is extraordinary and proves point blank my [...] The following is an excerpt from a recent issue of Private Wealth Advisory. We are reprinting it here because no one is addressing the real reason why Europe is such a huge problem for the financial system. You need to know this. If you’ve looking for investment ideas on how to profit from this collapse (the gains will be even bigger than those produced during the 2008 Crash) Private Wealth Advisory [...] by Phoenix Capital Research
Over the last week I’ve introduced the concept of collateral: the basis for the entire financial system. We’ve also addressed why any EU sovereign default would bring about an epic meltdown as EU bonds, particularly those of Spain and Italy are the collateral underlying hundreds of trillions of Euros worth of trades for EU banks.
Again, the most important issue for the financial system is the search for high [...] by Phoenix Capital Research
Modern financial theory dictates that sovereign bonds are the most “risk free” assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.
Because of this, the entire Western financial system has sovereign bonds (US [...] by Phoenix Capital Research
Spain continues to heap one impossible idea on top of another. The latest “plan” consists of Spain creating a bad bank called SAREB that will buy up bad assets in Spain in an effort to clean up the country’s finances. SAREB was part of the €100 billion Spanish bailout plan which was set forth in June. Once again, none of it makes any sense. Spain’s Bad Bank to Buy Up [...] by Phoenix Capital Research My prediction regarding the breakup of the EU was obviously way early. However, the fact remains that the EU will break up in time. And it will likely be Spain that brings this about. The reasons? Among other things: Spain’s private Debt to GDP is above 300%. by Phoenix Capital Research My prediction regarding the breakup of the EU was obviously way early.
However, the fact remains that the EU will break up in time. And it will likely be Spain that brings this about.
The reasons? Among other things:
Spain’s private Debt to GDP is above 300%. Confirmed: We Are In A Depression & The FED and ECB Are Out Of Bullets! FED ANNOUNCES UNLIMITED QE The Federal Reserve decision is out, and it’s a biggie. There are two main components. The first is that the Federal Reserve has extended its guidance for low rates through 2015. The second is that there’s going to be open ended quantitative easing. The [...] Confirmed: We Are In A Depression & The FED and ECB Are Out Of Bullets! FED ANNOUNCES UNLIMITED QE The Federal Reserve decision is out, and it’s a biggie. There are two main components. The first is that the Federal Reserve has extended its guidance for low rates through 2015. The second is that there’s going to be open ended quantitative easing. The Federal Reserve will buy $40 billion worth of Mortgage Backed Securities without end. Whereas in [...] Germany must accept shared leadership of the European Union if the region is to prosper, ex-European Commission President Romano Prodi, told CNBC on Friday. The European Central Bank’s announcement on Thursday that it will commence unlimited purchases of short-term sovereign bonds from struggling euro zone countries was greeted with hostility from both the Bundesbank (Germany’s central bank) and the German press. (Read More: German Media Hit Back at ECB on Bond Buying) However Romano Prodi, ex-leader of the European [...] This morning, BofA economist Laurence Boone said in a note to clients that given all of the leaked details and investors’ high expectations that the ECB will announce a game-changer for the euro crisis today, there isn’t much left that the ECB could say to give markets a positive surprise. However, there are a few things they could still do keep the market rally going. Here is Boone’s take: We have argued [...] Many are hailing the ECB’s yet-to-be-announced bond-buying plan – expected to be detailed to the public September 6 – as a game-changer for the euro crisis.
The ECB has been unwilling to restart bond purchases of peripheral euro nations even as markets have spiraled out of control this summer, saying they violate the central bank’s governing treaties in that they amount to de facto financing of sovereign states. Recently, however, the story has changed. The [...] Wolf Richter www.testosteronepit.com Euro optimism is once again gushing through the system on the hope that the debt crisis could be wished away with a nod by German Chancellor Angela Merkel or with a wink by the Bundesbank in direction of the European Central Bank, which is dying to print unlimited amounts of moolah to buy sovereign bonds—and old bicycles, if it has to—in order to force yields down for debt-sinner [...] Is Italy Following the Footsteps of Greece? Does Italy or Germany Exit the Eurozone First? As I watch the implosion of Greece, with shops closing everywhere and GDP plunging like a rock, I cannot help but wonder if we are witnessing the start of a similar trend in Italy. To be sure, Italy has a manufacturing base that Greece does not have, but retail aspects and shop closings in Rome as compared [...] by Phoenix Capital Research
The markets are continuing their short squeeze, Euro-phoria induced lunacy. As a quick reminder the S&P 500 is up nearly 5% while many European indexes have rallied double digits (Spain’s Ibex is up an unbelievable 17%!) In light of this, we need to take a look at the facts, because much of this feels too much like 2008 (at that time the S&P 500 rallied 7%, 11%, even 18% [...] Wolf Richter www.testosteronepit.com It has been an onslaught. Eurozone heads of state, top politicians, unelected kingpins, and bureaucratic honchos threatened everyone in sight with the demise of the euro, or promised to do “everything” or “whatever it takes” to save it even if it violated treaties or the very foundation of European democracy. In between the lines, bit by bit, the mammoth costs of continuing the endless bailouts or of breaking everything [...] From spiegel.de: Investors may not have liked what European Central Bank head Mario Draghi had to say on Thursday, but it was the clearest indication yet that a plan is finally taking shape to reduce borrowing costs for Spain and Italy. Germany remains wary, though, and commentators say the outcome could be disastrous. The markets were disappointed. European Central Bank head Mario Draghi’s press conference on Thursday sent stock indexes around the world plummeting, asinvestors [...] German newspaper Handelsblatt reports that seven members of the ECB’s Governing Council initially opposed President Mario Draghi’s plan to buy sovereign bonds in the open market, according to Marketwatch.
Draghi outlined the ECB’s intent to step into the bond markets and purchase sovereign bonds in distressed countries like Italy and Spain in a press conference yesterday, although he also suggested an unwillingness to do so until EU leaders came to an agreement on [...] Per spiegel.de: ECB head Mario Draghi wants to save the euro at all costs. But the pledge has created discord within the bank’s governing council. Many oppose plans to buy up sovereign bonds from troubled euro-zone member states, fearing it could just make things worse. It was an illustrious meeting that British Prime Minister David Cameron was hosting on the evening before the opening of the Olympic Games in London. Prince Charles joked [...] by Phoenix Capital Research
In order to understand why we’re at risk of the financial system collapsing, you first need to understand how the global banking system works. When you or I buy an asset (say a house, or shares in a stock, or a Treasury bond), we do so because we’re looking to increase our wealth through either capital gains or through the income that asset will pay us in exchange [...] Wolf Richter www.testosteronepit.com After 21 summits to save the euro, followed by dog-and-pony shows to calm the markets, followed by confidence-inspiring pronouncements about insurmountable firewalls and pandemic structural reforms, the euro is in greater danger than ever before. After the last summit at the end of June, Spanish Prime Minister Mariano Rajoy walked away with a victory smile, and Italian Prime Minister Mario Monti was so triumphant that it aggravated other heads [...] by Jim Sinclair in the category General Editorial | Print This Post | Email This Post Dear Extended Family, When will QE become the public practice of all Western world central banks? It will more than likely come over a weekend just like this weekend. Major sovereign bonds like the Spanish and Italian will be over 7% yield and rising. The Euro will be under pressure. Equity indices everywhere will be under pressure. Recent economic statistics in the entire Western [...] * Domestic banks have bought heavily at Spanish bond sales * Some close to reaching exposure limit, say market makers * Two banks say buying debt normally at present * No sign of strong demand from international investors * Any cancelled auction could trigger full Spanish bailout By Nigel Davies MADRID, July 6 (Reuters) – Domestic banks that have backed Spain’s debt auctions with heavy buying could be reaching a limit for absorbing sovereign bonds, say [...] |
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Investor Alert: A Market Correction Imminent As German Ruling Is Likely To Be The End Of The Euro Rally
German ruling the end of the euro rally, Nomura says
The ruling, along with last week’s European Central Bank announcement it will buy sovereign bonds, drove a rally in assets considered riskier, including the euro and stocks, and weighed on safe havens like the U.S. dollar DXY -0.24% and Treasury bonds, said Jens Nordvig, a currency strategist at Nomura Securities.
“But it is now time to take stock. How much [...]