Archive for the ‘greece’ Category

In a post of few days ago I told you to pay attention as this rally has been sustained by just 5 stocks.

Yesterday Netflix got killed (-7.8%) and a few weeks ago Apple got seriously injured. Like a Game of Throne…they are falling (like apples!).

The big start is China and Emerging Markets in general and people are starting to recall the Asian Tiger Crisis.

Some other development.

Tsipras (Greek PM) resigned and called for snap election as early as 20 September.

Market response was muted. This was the end game of Merkel, so to elect a more pro European Government.

The vote has been called so fast in order not to let the Syriza party rebels or golden Dawn to organize themselves.

It is too early to call on anything – but reading Vouruvakis blog you can understand that the July Greek referendum did not go according to plan. It is now clear that the referendum should have said YES to Europe for an easy way out to Tsipras.

It did not work.

Around the globe there has been a rockets exchange between North and South Korea and Israel/ Syria…but that is “quite normal”.

The big headline  battle is on China and  to see if the Government can hold the A -Shares at 3,500  (my projections…not. the target is 3,000/3,150 in an extremely fast move).

The other more subtle, but more dangerous battle is in the US Corporate Bond. US Corporate Bond have seen massive losses augmented by the easy tradable ETFs.

The issues are two and quite complex.

US Corporate junk bond (eg energy bond) are required to demand the highest premium…but are held back by the fact that the FED has still the rates set at the lowest levels*

A big part of this stock rally has been the share buybacks. Most of the US companies used these “buybacks” to create high yield (junk) bond. And now we have an issue on some of those bonds.

The behaviour of the market is consistent with the De Mark signal I gave in October 2014. In essence The De Mark signals happened 3 times in history and the market got busted or went sideways for several years (my main theory – range SP500 1,800 -2,200)

*This scarily reflects a problem that I highlighted in a post in November 2014, that this was one of the risk of Yellen as Chairman nominee. That she would hold off rising interest rates for too long.

Greece suddenly disappeared (again) from the world financial headlines.

But rest assured that it will reappear….my best guess is November/December.

The bailout has been approved, but at least 35 Syriza rebels are thinking to create their own party. Definitely not in August as everybody is at the beach! The bailout vote was approved with 118 (but if Syriza get a non confidence vote they would have failed as they need 120)

This would probably create a Greek government crisis in September / October and then to an election.

Greece is just not made for Europe. It is just there to keep the Euro low and favour the German.

By the way…Germany is the one that gained (yes gained) most from the Greek crisis since 2010. As everyone ran for cover they bought German Bunds and so driving German interest rates low ….so they saved Euro 109 billion (3% of Germany GDP) ( Leibniz Institute of Economic Research), call them stupid!

So next time the crisis hit, they could let it go…as they made more money than if Greece defaulted on the entire debt.

Long live the Fourth Reich!

Greece…is it finished yet?

Posted: July 21, 2015 in greece

Well as a country YES…as a saga not!

Think about that approximately 23% of Greek firms are considering moving headquarters offshore!

It is logically when, even with the bank reopening, all foreign transactions are blocked. How can they restock? Or, if you are a foreigner buyer, how can you risk to buy?

Even the conservative economist interviewed say there is still a 50% chance of Grexit.

And this even without considering a Greece election in the European Autumn/Winter. And now that the Left has failed, Golden Dawn (extreme right) is really coming up in the polls (25%).

Or the impossibility of raising Euro 50 billions as part of the guarantee.

Without debt relief Greece will not survive. And Merkel will not give a serious debt relief

So the Greek issue will be boiling for the future.

The end game will be only when there will be a GREXIT – unfortunately starting from an even worst position than now.

When?

Sometimes between September/October 15 and 2016.

Tsipras is in a losing game….it is almost funny.

Apon agreeing with the German creditors Greece received Euro 7,1 billion from the creditors

And Greece spent it to repay the ….creditors

Euro 4.2 billions to repay the European central Bank (Germany)

Euro 2.05 billions to repay the IMF (USA) as the June missing payment plus interest, plus a Euro 456 million new payment this week (which currently seems to have already missed but the media do not report it)

The meagre rest Euro 394 million to re open the ATMs (calculating also the 456…apparently missing)

Definitely there is a lot of complacency in the market, mostly due to our propaganda filled media.

– PM Tsiparas is doing a ballet…saying to the Eurocreditors (Euro Group) that he will be more lenient and accepting their requests and play the hard core rebel with the Greek voters

– The media push amazing YES vote in polls….and if you look into the polls the sample is just 1,000 persons in Athens and the difference between Yes and No is irrelevant (5% within statistical error)

-The Eurogroup is playing hard core no deal before referendum (which has been already threatened in its legality as the Greek Constitutions forbids referendum on fiscal matters).

– On the other side Europe decided not to cut the emergency assistance.

As a primary consequence it look like PM Tsiparas is in a corner and could lose government majority even if a NO wins, with more confusion ensuing.

On the stock market we are having a nice rally, but looks like more an oversold rally to me.

The key point is SP500 2,072/2,067. But the deteriorating pattern in DJ Transportation and DJ Utilities indicates that is more a matter of time before the breach occurs.

China – after the PBOC intervention we saw another wipeout caused by the shadow margin lending. In my view this is a basing pattern and it will be volatile for a while. But a crash is something that the Chinese Government does not want (also it did not want a mega rally as before as it is unsustainable)

So we can still expect a weak July and then a volatile recovery pattern in August.

Greece and the share markets

Posted: January 28, 2015 in Europe, greece

If the Greek left anti-euro party Syriza won an election 2 years ago, the market would have tanked.

Now nothing happened. Why?

There are three part to the issue.

-First now the Greek debt is spread over institutions that can easily sustain the hit of a default

-Second Syriza toned down its speeches

– Third everyone is waiting to see what really is going to happen –

Germany cannot care less if Greece leaves the Europe on a debt level, BUT Germany needs Europe as its economy is based on 60% exports.

If a Grexit results in a short pain and fast recovery…a lot of countries could follow destroying the German export market.

Everybody is watching this space.

In a sense, as last year the various Reserve Banks saved the market several time, there is a complacency in the markets that I do not like.

For the first time since 2007 the various Reserve Banks have different agendas (US and “anglo saxon Reserve Banks are in tightening mode, while Europe, China and Japan are in loosening mode).

It is a different market.