World economy talk

[uls]

bringing in the IMF = EU FAIL

the EU can't even fix a relatively small problem like Greece all by themsleves

Greece to Default ‘At Some Point,’ UBS’s Donovan Says
http://www.bloomberg.com/apps/news?p...tx8DudlM&pos=5

March 24 (Bloomberg) -- Greece will default on its bonds “at some point” as the euro region fails to deal with its first major economic crisis, said Paul Donovan, deputy head of global economics at UBS Investment Bank.

“I think it’s in an impossible situation,” said Donovan, who is based in London, in an interview with Bloomberg Radio today. “Europe has failed to clear its first serious hurdle. If Europe can’t solve a small problem like this, how on earth is it going to solve the larger problem, which is the euro doesn’t work. It’s a bad idea.”

EU fail = Euro toast

[Monseratto]

bringing in the IMF = EU FAIL

the EU can't even fix a relatively small problem like Greece all by themsleves

EU fail = Euro toast

How many cooks do you need to cook one dish? In the EU's case...27.

[uls]

(AP:NEW YORK) The dollar climbed to a ten-month high against the euro Wednesday amid mounting concerns that the International Monetary Fund will play a pivotal role in any bailout of Greece.

The news that Portugal's debt has been downgraded by one of the world's leading credit rating agencies also fueled investor concerns about the government debt woes afflicting Europe and its shared currency.

USD index

[uls]

short the JPY

[uls]

now that the Greece problem is KINDA solved...

http://www.businessweek.com/news/201...-for-euro.html

March 26 (Bloomberg) -- European chiefs put the International Monetary Fund on standby to aid debt-stricken Greece, seeking to snuff out a threat to the stability of the euro.

Leaders of the 16-nation euro region endorsed a Franco- German proposal for a mix of IMF and bilateral loans at market interest rates, while voicing confidence that Greece won’t need outside help to cut Europe’s biggest budget deficit.

it's time to sell the USD and buy the Euro again

hehe

[uls]

uh-oh

South Korean ship sunk

could have been torpedoed by North Korea

http://english.yonhapnews.co.kr/nati...00100315F.HTML

http://online.wsj.com/article/SB1000...306658178.html

SEOUL—A South Korean naval ship sank following an explosion near a disputed maritime border with North Korea in the Yellow Sea late Friday, prompting a rescue mission to save approximately 100 sailors.

A short time later, a second naval ship later fired shots at an unidentified vessel, according to South Korea's Yonhap news agency.

Defense officials were trying to determine what caused the explosion, which occurred about 10:45 p.m. local time. Korean TV reports speculated the ship was struck by a torpedo though there was no immediate official word.

[uls]

+++++++++++++++++++++++++++++++++++++

[uls]

the US economic recovery we've all been hearing about is really asset price reflation

Greenspan:

http://www.bloomberg.com/apps/news?p...d=a9Q2kWv97Yys

In today’s interview, the former Fed chairman said the U.S. economic recovery has been driven “to a very large extent” by a resurgence of stock prices. The Standard & Poor’s 500 Index has jumped 73 percent since its low on March 9, 2009. The index was little changed at 1,165.29 at 3:08 p.m. in New York.

“You can see the whole blossoming of finance,” Greenspan said. “As these stock prices have gone up, debt became far more valuable, and you can see this huge issuance, especially of junk bonds.”

A continued rally in share prices could help sustain the expansion, Greenspan said. Still, the unemployment rate could remain “not terribly far from where it is” at 9.7 percent as people re-enter the labor force to take advantage of job openings in a growing economy.

JPM on the reflation trade:
(from email, no link)

Many fundamental investors are uncomfortable with a rally driven by cheap money. We understand this unease, but still want to ride this rally, as it is stimulative policies that are required to get the economy going. We would prefer higher asset prices driven by a stronger economy, but accept that we will likely get the reverse –– a stronger economy driven by higher asset prices.

the Fed is keeping rates ultra low

cheap money floods the financial system

the low rate environment forces money out of lower yielding, lower risk assets (like US Treasuries) into higher yielding, higher risk assets (like stocks, HY corp., EM bonds)

very good Ben Bernanke

the banks borrow money from the Fed at .25%

the banks use the cheap money to drive up asset prices

Bernanke gave the banks an opportunity to repair their balance sheets

asset price reflation improves the asset side of banks' balance sheets which was destroyed during the height of the financial crisis

as long as the Fed keeps rates as is, the cheap money will flow, the reflation trade continues

Fed-engineered recovery

the Fed always helps its friends

[uls]

we all know the State of California has huge budget problems

looks like the Governator is inviting the Japanese to come visit and spend money in his state

a commercial being aired in Japan:

[ame="http://www.youtube.com/watch?v=J49kYimenDU"]YouTube- nandemo california[/ame]

[uls]

check out the rising yield on the US 10 yr Treasury note

[uls]

NYMEX crude

$2 jump

[boybi]

What happened? What caused the $2 jump? Almost all commodities followed the jump.

[uls]

it's the weaker dollar

the Euro has recovered due to the IMF-EU bailout plan for Greece

and Greece was able to raise money from the bond market yesterday

that's euro positive

it's the usual inverse dollar oil correlation

looks like oil price is holding above $82

here's something important:

we know oil price rises when the dollar is weak

but notice lately that oil price doesnt fall much even when the dollar is strong

it has been at or above $80 for some time

that means there's strong upside potential for oil

quite strong

fundamentally, oil price shouldnt be this high

it's this high coz there's a lot of money going around looking for places to park

oil is a good place to park

[uls]

Greece... again

after selling 5B euros worth of 7 yr bonds the other day,

Greece tried to sell 1B euros worth of 12 yr bonds yesterday

the got only 390 million

colossal FAIL

that caused the price of the 7 yr bonds to fall (yield up)

investors in Spartan bonds burned again

Greek Seven-Year Notes Drop; Demand Wanes at ‘Surprise’ Auction
http://www.bloomberg.com/apps/news?p...d=aFkveiJArrUY

March 30 (Bloomberg) -- Greek seven-year notes fell in the first day of trading and an auction of 12-year bonds garnered demand for less than half the debt offered on concern Europe’s most indebted nation will keep struggling to fund itself.

The drop drove yields on the 5 billion euros ($6.7 billion) of seven-year notes to 6.27 percent at 4:28 p.m. in London, up from 6 percent when issued. The yield premium to comparable German debt widened about 30 basis points to 363 basis points, ABN Amro Bank NV prices show. Ten-year bonds also fell, while the cost to insure Greek debt using credit-default swaps rose.

Greece’s unexpected sale of 12-year bonds today raised 390 million euros, less than the sale’s 1 billion-euro upper limit. Prime Minister George Papandreou’s government must raise as much as 10.5 billion euros by the end of May to avoid rekindling the budget crisis that prompted the European Union to step in on March 25 with a rescue plan that backstopped Greece’s finances.

[safeorigin]

wow, that's embarrassing

[tidus1203]

Now to the US...

Private sector jobs slashed by 23,000 this March... Still no upswing in employment...

[boybi]

Does this mean the USD will rise again and fuel will fall?

[uls]

nope

the ADP jobs data that came out is dollar negative

the expectation was job gains, but the data showed job losses

USD index


NYMEX crude


oil went past $83.50 kanina, then fell below $83, then went above $83 again

check out the inverse correlation with the USD index

[boybi]

You're right, oil is now almost at $85.00!

[uls]

NYMEX crude went above $85 intraday

then fell below $85

$84.78 as i type

US jobless claims fell, ISM number above estimate

positive news from China: China manufacturing sector report increase in orders

positive news from Japan: Tankan survey showed improved business sentiment

all those are bullish for oil

it's the start of Q2

fund managers are buying