Archive for February, 2015

In October I was saying that the US Republican Congress win could be a game changer for the markets.

The US Federal Reserve has been clearly protecting and encouraging this share market rally (they admitted it in several occasion).

In October I showed that there was at least a part of the Republicans that were less than sure of the independence of the FED  (unfortunately I do not have the time to go in detail).

Today there was the first full on confrontation between the Chairman Yellen and two very powerful Republicans and it did not end well for the FED.

The 3rd March there is an hearing on reforms for the FED.

Watch this space.

Ukraine: Cold (war) winds

Posted: February 26, 2015 in Uncategorized

Yesterday, unnoticed to most the United Arab Emirates agreed to sell weapon (not game changing weapon, but still an upgrade) to Ukraine.

This is a subtle message from the US to Russia that, unless they back down they will sell game changing weapon to Ukraine.

The Russian counter move did not wait long. After shelving the sale of S300 anti aircraft missile to Iran due to pressure as they were too advanced…they are selling now the newest Antey 2500 anti aircraft and anti ballistic missile to Iran.

As the market expected Germany won.

It was a Europe versus Greece battle, as none of the PIIGS state dared to oppose Germany (it could be different by the end of 2015 if the anti Euro parties in Spain and Portugal win the elections)

In reality we are like in an overtime as today (European time) the Greece Government has to sell the “extended loan” to the Parliament and submit some clauses that are attached to the loan extension (good luck to it) to the Germans

Then Tuesday (or later if they do not agree) Germany (Europe) has to accept it.

Let’s dig in.

The extension is only for 4 months, not 6 as requested.

Why? In end of June/July there is a second mega tranche of Greek debt to be renegotiated so again the Germans will have a lot of pressure to apply.

But the second round will restart by end of April when Greece will have to submit a document assessing how they can exit the structural crisis.

In reality, for what we know, they could have just bought time to create a seamless “low risk” Greece exit.

Anyway that are the terms of Greece capitulation:

The request of bonds to be kept in a special Hellenic Financial Stabilization Fund has been denied.

The Troika now it does not supervise any more – but a new entity governed by the same three institutions (that is marketing!)

Greece cannot take any roll back measures that impact previous bailout conditions

Only 4 months extensions as Greece has to repay over Euro 6.7 billion in July/August 2015.

Any victory for Greece?

– The loan now is called bridge loan

– there is a word statement that says that Greece could have some fiscal leeway in achieving the surplus target (nothing specific).

Now we need to see the Syriza Government surviving.

Syriza capitulation really did not impress the left within the party- which holds 30 seats (the Syriza Government has 162 seats on 300…so the 30 are needed – unless the “right” Syriza allies itself with someone else like To Potami a center pro Euro party that holds 17 seats).

If it was not enough the promises to the “European Masters” have to be legislated and new solutions drafted by the end of April.

In this confusion – we wait for the second half of the match in June when the 4 months extensions expires.

Al Shabab issued an alarming call to arms to lone wolves jihaidst against Westfield shopping malls.

That tells you two things

– they do not have a professional terrorist structure in place (like the USSR  in Europe in the 1970s)

-Shopping Malls are soft targets: hard to defend and easy to escape as there are many exit roots.

What can you do about it?

Before the attack.

A lot of interviews from the police to survivors of precedent attack show that almost everyone felt that there was something wrong (the classic sixth sense), but chose to ignore the ancestral sign of peril.

Any attack has to have a “gather information” mission. As these lone wolves are not professional  YOU can pick up suspect behaviour. A simple call to the police it is all that is required.

During the attack

First assess where is the threat. In a shopping mall the echoes can play strange games. You could actually inadvertently run towards the danger.

Distinguish concealment from protection. A lot of walls in shopping malls are made of plaster and will not offer protection against bullets. You can use them as temporary concealment or use tables/desks to fortify the position.

Run zigzagging. In most terror attack the shooter shoots at point blank. If you run in a straight line you increase your survival chances by 50%, if you run zigzagging by 70% (contrary to the movies it is extremely hard to shoot a random target – only professionals can try to achieve it)

(Not recommended) Attack. If you just have something like a steel pen, for  a non professional the time to reload a gun is between 20 second and 1 minute and it has to look down exposing  the neck.

After the attack

Describe in details what you saw to the police (you can even take notes with your mobile) – it could be useful to prevent further attack (often the memory becomes fuzzy after an attack)

A word to you: yes we live in a world of terror…but mostly we live in a world of media.

In the 1970s the KGB/CIA terror networks killed many more people that any extremist terror organization. An interesting statistic is that the cold war (1948/1989), including the Korean, Vietman etc war killed more than the 1 World War.

And apart the 1989 (fall of USSR) and 2001 (9/11 terror attack)period, the Cold War is considered the most peaceful period of human history.

So we are still living in second most peaceful period in human history!

World Population is stalling!

Posted: February 20, 2015 in Uncategorized

Courtesy of StratFor, I found an interesting piece of information.

The world population growth will stall this century, contrary to the ever growing population.

The maths are pretty simple as the reason behind it.

The replenishment level of the population is 2.1 children per woman.

In most of the Western world we are already under it.

In growth countries such as Mexico, Turkey etc we are close to 2.1 and decreasing (by 2040 it will be similar to the West)

In underdeveloped countries as Bangladesh, Bolivia 2.1 will be reached by 2060.

The reason behind is the passage from an agricultural society where children help is economically needed  to an industrial society were children are an economical burden.

So the world human population will stall somewhere between the current 7 billions and 9 billions,

Again this will have profound long term implications- beyond the scope of this blog.

good news from Ukraine and Greece

Posted: February 19, 2015 in Uncategorized

In Greece, as the market predicted, probably there will be an extension on loan (if they agree on the vocabulary).

The extension will be probably for 6 months and the European Central Bank gave another Euro 3.3 billion of Emergency Funds (ELA) to the Greek banks,

It is an improvement, but still Friday the decision. But the agreement on the vocabulary and details is very important.

It is part of the bailout extension or is it a new loan? That is the question.

The market is assuming the best, at the limit of complacency.

But whatever it is…the showdown would be just delayed as the positions are not compatible.

On Ukraine.

The good news is that the FSB Chief (Russian new secret service) flew for the first time to Washington and, at the same time, Ukraine retreated its soldiers from the hot spot of Debaltseve – which was definitely creating an issue.

This is the first time that there is a serious discussion between Russia and the US.

At least they started talking for real.

France, as Europe goes, scares me a lot.

While Greece, Spain, France are “pushovers” – France is not, if Marie Le Pen wins.

A surprise Confidence Vote has been called for tomorrow as the government decided to bypass parliament with a special decree for the Macrow Law (a series of initiatives aimed to liberalize business).

If the Valls Government falls, an Parliamentary election will be called.

Hollande seat is not (yet) at stake, but a good performance of Front National will again weaken the French position and the whole European idea even more.