Archive for April, 2016

This start of the year has been led by a commodity boom. Why is that.

Definitely nothing is changed in the market to warrant such a rally.

If you look through the money flow and the behavior of Chinese/ Hong Kong authorities – you find the answer and you will not like it.Dalian Commodity Exchange, Shanghai Futures Exchange and Zhengzhou Commodity Exchange just put new curbs in place

It seems that all the speculative money (specially Steel Rebar) that where driving the massive rally in the Chinese A share market turned to….commodities derivatives.

It is practically the same thing which two scarier features:

  • commodities influence the entire world
  • derivatives are inherently more dangerous

Insto analysts of Bank of America Merryl Lynch put it correctly ” it is like watching The Game of Thrones again, in the Game of Commodity Trading you win or you die”.

Last time in the Chinese A shares rally, you know how it ended if you played. You died.

This is really where the FED should intervene and help the PBOC (the FED has much more experience).

Capture Commoditiess


Quick market update

Posted: April 26, 2016 in Uncategorized

The market is in a high stress topping phase. The top could have been already reached at SP500 2100, but there is a good chance to post all new highs between now and say 15 May.

The company reports came out ok only because they were badly revised down beforehand. Naturally as everybody was negative the market did the reverse (my start of year prediction that the market will do the reverse of what people thinks still works).

Then volatility will take over again.

In Austria the Far Right wins

Posted: April 25, 2016 in Uncategorized

In Austria the Far Right candidate won the mainly ceremonial role of President. There is still a run off, but is anothere Sign of the Times (as Prince would say). Trump, Sanders, Le Pen, Kernel losing ground etc.
The People vs The Plutocracy

As I thought the scaremongering campaign of the establishment against the English Referendum on Brexit is ramping up.

President Obama not only cleary supported his friend PM Cameron, but on one side reiterated the UK as special friend and, in the same line, that if the UK exited the EU there would be no special treatment.

If I was an Englishman I would be mightly pissed off. This preach comes from a country that would not agree on anything that slightly mars his own sovereignty.

In reality nobody knows what will happen. Everyone has its own ideas.

My personal idea that nothing will happen. Logically on the short term there will be pound crashing and market crash…..but it would merely anticipate something that would happen anyway.

On several accounts the English Pound is too strong and there are too many to count issues in the markets.

There are numerous nation that trade very well with the EU (eg Norway or even Japan) without any drawbacks.

So why the battle? Well the importance of the battle is that it is The Establishment  versus The People.
If UK leaves the EU and survives…it will be the end of Europe. France will leave, Italy will leave etc. Probably there would be Northern Europe led by Germany, Southern Europe led by France.

This battle is part of a bigger revolution led by Trump, Sanders, Marine Le Pen, Salvini, Vorouvakis et co.

It is the revolution of the middle class versus plutocracy (def. Small wealthy elite that rules the mass).

This is a trend that will encounter many defeats and a final victory.

It reminds me of Europe Revolution of 1848.

By all means the revolution had been defeated on the field by 1849/1850.

By 1871 the seeds of revolution had won and Europe was created almost as we know it.

It took 23 years at a time without information and media. Now it will take max 10 years. 2025 from the botched Greek referendum if 2015 (the Greeks voted against the bailout and the Government accepted).

It seems only just that, historically speaking, the battle for democracy started with Greeece.

Saudi-USA “marriage” has touched a new low. And a dangerous one.

The marriage started to sour when the USA  started to accept Iran again as a member of the “normal” Western society after Iran complied with the nuclear requests.

This started to sour the relationships with the Saudis – Iran’s archenemy.

Now a new low point. The US Congress is trying to pass a bill on 9/11 which would make accountable any foreigner (see Saudi Government) involved in the attack.

The Saudi sent a message to President Obama….if the bill does pass we will sell all American assets (estimated USD750 billion).

This is a kind “mutual assured destruction scenario” – it would cripple the US and Saudi Arabia economies. The worst is that such a scenario would provoke repercussions also on China, Japan and Europe. It also would cripple the USD as a reserve currency.

Practically the Global Financial Crisis would be a walk in the park.

As you understand this is more a threat for a negotiations than a real threat – it is such a nuclear option that even Saudi Arabia would cease to exist (

But the interesting thing is that there have been numerous conspiracy theory (the Bin Laden family is very close to the royal kingdom).

Why go to such extent if they were only conspiracy theory? Definitely a few persons in the family new something.

And now President Obama is flying to Saudi Arabia – probably to assure that nothing ill be done, even if the bill passes.

Democracy at work (ironic, I suppose)

Markets turning point

Posted: April 15, 2016 in Uncategorized

This Friday, in the US, is expiry date for the options.

As this market is primarily driven by institutions that covered their positions – we need to be on high alert for a market change after this date as a new game is starting.

The next option expiry is 20 May, so a market move has to be expected between these two dates.

Employment in the US is on the rise with, on average, 225,000 new jobs since January 2015 (Unemployment March 2016, 5%).

The figure that the FED looks at in reality is the U6 (people that would like a job, but struggling to find). This number always has been higher (the top has been 17.1% vs a top headline figure of 9.8%). Only in this last two year the U6 improved (now at 9.8%). It reached normality.

The real long term unemployed peaked at 46% and now is at 28% (still a bit above normal 20-25%).

Unemployment claims are the lowest in 16 years(!)

This led in the first quarter to a wage growth 2.5%, the largest increase post Global Financial Crisis.

The Federal Reserve will have to increase interest rates around June July, no matter what.

Emperor Xi of China

Posted: April 13, 2016 in Uncategorized

On the surface China seems cohesive as usual – a One Party Policy and that is it.

But now is 4 years since his ascendancy to the top post and anti corruption campaign and purges continues more than ever.

The economic mismanagement and the abolition of the consensus rule must have created a lot of determined dissent and hostility.

Now sometime even the media dissents (and then is harshly punished).

As the crackdown intensifies it means that political resistance is now an established force in China.

Also with 2014 operation Foxhunt and Skynet, President Xi is targeting also people in exile abroad.

It seems to me that the Chinese 5th column, pushed in the corner, just has to fight back.

President Xi is not threatened, but it is an interesting development in a once monolithic apparatus. Specially if the crisis intensifies (by the way the crisis did not disappeared….just the people who were talking or playing with the stock market).


The Dutch, in a referendum (over 61%),  refused the idea of Ukraine joining the European Union, in contrast to the wishes of the US.

Notwithstanding that the European Union is considering a VISA free travel for Ukrainians (well in quite a few instances democracy has been given up in Europe – Portugal last government, Greek referendum etc).

But you can see the change in Europe…it will take time to defeat the old party, but this is a movement that it will take hold between now and say 2025.

In effect the European voters have it right.

US wages war in Ukraine – and European suffers the consequences as the US/Russia is negligible, whilst the Russia/Europe trade is quite substantial.

The US wages wars at least in Afghanistan, Iraq, Libya and Syria (there is evidence that idea of the Arab Spring and ousting of Assad was a CIA idea went haywire) and Europe is flooded with an unstoppable wave of migrants and potentially terrorists.

So if the big party politicians do not realize this evolution…they will be part of history soon, as it shows the sudden rise of the right wing German party (2013, nationwide 4.7% – 2016 regional wins between 14.% and 24% – while Merkel party lost a lot and it is just the start).

Colorado was won by Cruz…without a vote. Ok Trump committed error, but this is another step on a string of “stop Trump” almost illegal campaign. The aim is to get to a brokered convention (no candidates get the votes for the outright nomination), so the party can chose the candidate it wants (well the lobbies want).

The big risk is that Trump gets really angry and runs as independent braking up the Republican party.

On the other side President Obama practically endorsed Clinton saying that there are secret email and then the real secret email. All the while saying that he is neutral while in the midst of a large FBI investigation.

Makes you wonder where the US democracy went so wrong.

A famous Italian politician Sen. Andreotti said “power corrupts”. I think the first sign started in 1989 with the fall of the Berlin Wall …the US did not have to be the good guy against the USSR.

And the end came on with Bush Jr. botched election in 2000 against Al Gore (what a different world would be eh?) and 9/11.

So we really need Trump or Sanders to win.

Or even an independent run of Trump would shake up the US forever and for the better.

There are no easy solution