Archive for September, 2015

An Australian rout

Posted: September 30, 2015 in Uncategorized

Yesterday all the commodities base countries in particular got wiped out (Australia Canada Brasil Russia…). All out of a Glencore analyst pessimist view in London.
Now commodities are at low and it is no time to panic.

But you can point fingers. In Australia the culprit is wx PM Howard. Why? In the longest commodities boom he just handed over money to tax payers (tax concessions, negative gearing) instead of preparing the country for the after boom. So, for how much I dislike them, do not blame or praise Rudd, Gillard or Abbot for the outcome.

What is worst is that people do not realize the link between commodities banks and real estate.

But PM Howard is not alone. Every politician did the same. Actually in this case President Putin is the worst. As good he is in foreign policies (KGB school), even without the election issue, he failed to use the commodities boom to prepare economically Russia for the US showdown.

US Shutdown and Catalonyan election

Posted: September 26, 2015 in Uncategorized

This weekend there is the Catalonyan (Spain) regional election. If the pro independency parties win they will push in the 18 months for an independent state of Catalonya.

In the US we are again to the US Government  shutdown. …but the media are not making a fuss this time. At the same time Rep Speaker Boher is leaving by October end under pressure of Conservatives and anti establishment.

Per se not big events, but in this negative sentiment period they will help the markets.

Federal Reserve as market hostage?

Posted: September 24, 2015 in Uncategorized

In the last few years we had a market driven by the Fed with its drug (money printing). Now we are in a reverse situation where the drug addict has taken hostage the drug dealer (Fed).

So rate rise can be quite far away. Or the drug addict goes wild. (Not yet there. The US 30 T Bond says not yet) and kill the hostage .

It seems almost  bad joke.

The second band of US trained rebels in Syria entered Syria and…surrendered their weapon to Al Nusra (Al Quaeda).

This time there is not even the pretext of being captured…it was just a scam to get better training and weapon.

The $500 million program to train anti IS rebels looks like being scuttled and General J. Allen will step down.

Massive failure of the Obama Administration.

The VW scandal is creating a big risk for Germany.

Germany is a country based on export and on the reknown quality of their products.

The issue is that what happened to VW is  deliberate cheating and Germany, during the various European crisis, has created a lot of enemies as it wanted to impose the German perfection on everyone.

Now the scandal from the US is spreading everywhere. There are “please explain” questions from Australia, China, South Korea, Italy, France etc.

Moreover one of the major newspaper “Die Welt” just published that the German Government knew about the device and the device is not just used for 4 cylinder turbo diesel engines. Now there are several inquires into it.

And the VW group is massive (VW, Audi, Skoda, Lamborghini, Seat, etc).

Still VW will survive (well it survived being one of Hitler’s pet project…) and, when all is finished, it will be priced perfectly for the share market.

The big hit for VW (and why they did it) is that the US is going to impose a law of fuel consumption of 54.5 miles per gallon by 2025….and Germany wanted to win that race at all cost.

Russia in the Syrian battlespace

Posted: September 23, 2015 in Uncategorized

Russia entered the Syrian battlespace with a splash. It is the only outside power that has committed serious firepower to Syria. And it is showing as yesterday they already killed 38 ISIS fighters.

But why they did it?

It is a master stroke again as it allows Russia to re enter the Middle East for the first time after the fall of the USSR and also opens negotiations channels with various frenemies and enemies. It also helps carving an Alawite (Assad) enclave and securing a negotiating position in case Syria gets settled and divided.

US – US needs to to Russia as its planes are operating in Syria and Russian anti air defence are formidable. Definitely part of negotiation will involve a request to decrease US involvement in Ukraine.

Israel. Again Israeli military advisers are everywhere in Ukraine. Israel and Russia are not friends, but exchange frequent favours. Definitely now Israel cannot think a “do it alone” mission to take the Iranian nuclear facilities, even if they wanted to.

Turkey. Turkey will be upset as their strategy of a Sunni pro Turkey government has been shattered. This is a retaliation to their blocking the Southstrem Russian pipeline and some issues with the pro Moscow Azerbajan (another area with a lot of gas pipelines and subject to various interest and always in semi state of conflict).

The Gulf states, which have warplanes operating in the area, also will have to negotiate – probably on oil pricing.

I did not mention Egypt and Iran as they already have outstanding collaboration with Russia.

The Fed decision

Posted: September 18, 2015 in Uncategorized

The Fed surprised again the market.

Again I think we could be near Quantitative Easing 4 specially if the market reacts badly (which is possible…the massage is …the US economy is not so good). What surprised me is that in the dot chart of future pattern of the interest rate there is now some red dots…negative interest rates like in Germany  (so QE4).
With the US debt at over usd $210 trillion it is not surprising that the Fed cannot lift too much the rates.
Also the probability of a Fed hike in December dropped from 65% to 45%. 2016 anyone?

As I was saying previously…too many people were long USD. And I do stand by my market base 1830 (depending on panic levels) before mid October  (then rally..the Yellen Put will save us).