World economy talk

[Monseratto]

[Lady Bathory]

Better-the-expected U.S. jobs report pulled forward Fed rate hike expectations which drove Treasury yields and the dollar higher.

[Gumusut_Amige]

Mam LB ano ba ang USD future outlook sa ngayon? Tia

[Lady Bathory]

[Lady Bathory]

Glad i sold last week.


Explaining the rally in Chinese equities:



I have some exposure to Chinese stocks via the ETF FXI.

[Monseratto]

Why the PSEi has been volatile...

Emerging Markets Suffer Largest Outflow in Seven Years - WSJ

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Why the PSEi has been volatile...

http://www.wsj.com/articles/emerging-markets-face-largest-outflow-in-seven-years-1434096125?mod=e2fb

[Lady Bathory]

Explaining the emerging market selloff: One factor is rising developed market bond yields specially the German 10Y. Earlier this year the German 10Y fell to an extreme low as the ECB pumped euros into the system by buying up eurozone bonds. The euros are invested around the world including emerging markets. As bond yields rose investors begin to cash out. Another factor is the strong U.S. dollar. As the dollar rises assets priced in emerging market currencies lose value so in order to minimize losses investors have to sell.

[Lady Bathory]

Expectations were high going into the Fed monetary policy announcement. The market was expecting the Fed to signal a rate hike in September but there was none of that. The Fed implied that the coming rate hike cycle will not be aggressive. In response the dollar was sold against all major currencies and Treasury yields fell. So what's my view on the dollar now? I'm still bullish. There's already enough data to justify a rate hike. The labor situation is improving and inflation is rising. There will be at least 1 rate hike this year probably 2.

[Lady Bathory]

We're nearing the end of June and the recovery in oil prices towards $80/barrel everyone was talking about earlier this year has yet to materialize. Oil prices have been stuck in a trading range for months and will likely remain rangebound as OPEC's war of attrition with North American oil producers continues.

[Lady Bathory]

Greece is still negotiating a deal with its creditors to prevent a default. There's a lot of talk that if Greece fails to pay its debt to the IMF before the June 30 deadline it will be kicked out of the eurozone. I don't think so. For Greece to get kicked out of the eurozone not only will it have to fail to pay its debt to the IMF it also has to fail to pay its debt to the ECB in the coming months which at that point the ECB will stop liquidity assistance to Greek banks. That will force Greece to print its own currency which will result in Greece exiting the currency union.

[Monseratto]

Cash is king now in Greece. Going for a trip to Greece now? Better forget it if you don't have enough cash to pay for everything. Even plastics are not accepted anymore. And if you are lucky to find a working ATM, they will only allow you 60 Euro a day withdrawal...

Tourists Are Left in Lurch by Greek Crisis - WSJ

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Cash is king now in Greece. Going for a trip to Greece now? Better forget it if you don't have enough cash to pay for everything. Even plastics are not accepted anymore. And if you are lucky to find a working ATM, they will only allow you 60 Euro a day withdrawal...

http://www.wsj.com/articles/tourists-are-left-in-lurch-by-greek-crisis-1435505597?mod=e2fb

[Lady Bathory]

Greek banks will be on holiday until after the referendum. The Greek gov't decided to put banks on holiday to prevent bank runs/failures after the ECB decided to cap emergency liquidity assistance (ELA) to Greek banks. Without ELA Greek banks won't have enough cash to support withdrawals.

[Walter]

This was a disaster waiting to happen way before the elections. Tsipras made some promises he knew were impossible to fulfill but which made him popular and win the elections. Now comes the reality.

[_Cathy_]

What will happen to the EUR?

[Monseratto]

Greece will officially default in a few hours... they should start printing Drachmas very soon.

As of Tuesday, Greece will be cut loose from international rescue loans for the first time in more than five years. It will also default on the €1.55 billion ($1.73 billion) IMF payment, whose deadline is the same day.

Many economists and officials fear that without further financial support, Greece may have to abandon the euro, sparking a messy departure from the bloc. The European Union also hopes to avoid contagion from spreading to other parts of the 19-country eurozone after Greece’s decision over the weekend to shut down its banking system for at least a week to prevent money from flooding out of the country.

“You shouldn’t commit suicide because you’re afraid of dying,” Jean-Claude Juncker, the president of the European Commission, said in a speech aimed at convincing Greeks that the budget cuts and policy overhauls their government has rejected are actually good for their country.

“You should say ‘yes’ regardless of what the question is,” he said. A “no” vote, however, “will mean that Greece is saying ‘no’ to Europe.”

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Greece will officially default in a few hours... they should start printing Drachmas very soon.

As of Tuesday, Greece will be cut loose from international rescue loans for the first time in more than five years. It will also default on the €1.55 billion ($1.73 billion) IMF payment, whose deadline is the same day.

Many economists and officials fear that without further financial support, Greece may have to abandon the euro, sparking a messy departure from the bloc. The European Union also hopes to avoid contagion from spreading to other parts of the 19-country eurozone after Greece’s decision over the weekend to shut down its banking system for at least a week to prevent money from flooding out of the country.

“You shouldn’t commit suicide because you’re afraid of dying,” Jean-Claude Juncker, the president of the European Commission, said in a speech aimed at convincing Greeks that the budget cuts and policy overhauls their government has rejected are actually good for their country.

“You should say ‘yes’ regardless of what the question is,” he said. A “no” vote, however, “will mean that Greece is saying ‘no’ to Europe.”

[Walter]

Now that's a real Greek Tragedy.

[Ry_Tower]

US stocks took major hit due to Greek tragedy.

[Lady Bathory]

Q: Why isn't the euro crashing?

A: The euro has become a funding currency for carry trades like the yen. Funding currencies are bid in risk-off times.

[Monseratto]

When your retirement pension is based on your final salary rather than your average, it was bound to cripple your country...



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When your retirement pension is based on your final salary rather than your average, it was bound to cripple your country...

[Lady Bathory]

Greece's failure to pay the IMF today doesn't mean Greece will leave the euro. Actually it won't be easy for Greece or any member to leave the euro because EU treaties have no provision for an exit from the euro.