• Tag Archives Europe
  • We Need A Public Inquiry Into The Economics Profession

    Britain is preparing to leave the European Union with no real plan and a government in disarray, writes economist, Ann Pettifor. How can we trust economists at the Treasury not to impose more disastrous policies?
    If the British economy crashes as a result of Brexit, it will not vindicate economists. It will simply illustrate once again, their failure.
    I and my colleagues at Policy Research in Macroeconomics (PRIME) believe there is urgent need for an independent, public inquiry into the economics profession, and its role in precipitating both the financial crisis of 2007-9, the subsequent very slow ‘recovery’; and in the British European referendum campaign.
    Financial disarray is not unlikely under Brexit, but whether this turns into anything material depends in the first instance on economic policy. How can we trust economists at the Treasury not to impose more disastrous policies?

    This post was published at Zero Hedge on Jun 21, 2017.


  • Oil Bear Market Sends Global Stocks, Yields Sliding; Chinese MSCI Addition Fizzles

    In an eventful overnight session which saw a historic transition in Saudi Arabia, an unexpected Republican victory in the Georgia Special Election, China’s inclusion in the MSCI EM index and Travis Kalanick’s resignation, S&P futures continued to fall, alongside stock markets in Asia and Europe, while oil prices extended their drop despite a larger than expected draw reported by API on Tuesday. The USDJPY continued its recent slide, dropping just shy of 111, while GBPUSD tumbled as low as 1.2589, the lowest since May announced the UK election, only to reverse and recover all gains ahead of the Queen’s speech on Wednesday.
    Despite the much hyped inclusion of 222 mainland Chinese shares in the MSCI EM index starting May 2018, which will by only 0.73% to include Chinese A-shares, the Shanghai composite closed a modest 0.5% higher, as the initial euphoria fizzled following calculations that buying pressure from the MSCI shift would be muted. MSCI estimated the change, due around the middle of next year, would drive inflows of between $17 billion and $18 billion. China’s market cap is roughly $7 trillion.
    The index provider also set out a laundry list of liberalization requirements before it would consider further expansion. “We suspect that it will be a long time before this happens,” wrote analysts at Capital Economics in a note. While China’s weighting in the MSCI Emerging Markets Index may ultimately rise to 40 percent or so, this rise is likely to be slow,” they added. “The upshot is that any initial boost to equities is likely to be small.”

    This post was published at Zero Hedge on Jun 21, 2017.


  • “Brexit Is A Lose-Lose” – George Soros Slams Brits’ “False Hopes” As UK Economy Nears “Tipping Point”

    A day after Brexit negotiations officially began, and seemingly unable to get over the result of democracy, George Soros is once again rattling his op-ed sabre, proclaiming the ignorance of British ‘brexit’ voters is about to get its come-uppance…
    Economic reality is beginning to catch up with the false hopes of many Britons.
    One year ago, when a slim majority voted for the United Kingdom’s withdrawal from the European Union, they believed the promises of the popular press, and of the politicians who backed the Leave campaign, that Brexit would not reduce their living standards. Indeed, in the year since, they have managed to maintain those standards by running up household debt.
    This worked for a while, because the increase in household consumption stimulated the economy. But the moment of truth for the UK economy is fast approaching.

    This post was published at Zero Hedge on Jun 21, 2017.


  • Gold Price Slips vs. Falling Dollar as Oil Bounces, Bank of England Split Boosts ‘Brexit-Hit’ Pound

    Gold prices held near 5-week lows against a falling US Dollar on Wednesday, trading at $1243 per ounce as commodities rallied but world stock markets extended Tuesday’s retreat in New York.
    As Brent crude oil rallied $1 per barrel from yesterday’s 7-month lows near $45, that pulled the EuroStoxx 50 index of major European shares more than 1% lower.
    The British Pound meantime rallied after a split emerged amongst senior Bank of England policymakers over holding or raising UK interest rates from the current all-time record low of 0.25% with 435 billion ($550bn) of quantitative easing bond purchases.
    Check out Global Liquidity Reaching a Tipping Point
    The Euro currency also rallied against the Dollar but held 1 cent below last week’s peak, the highest level since Donald Trump won the US presidential election last November.
    The gold price for Eurozone investors fell below 1115 per ounce, near its lowest level since January.

    This post was published at FinancialSense on 06/21/2017.


  • Leading The Multipolar Revolution: How Russia And China Are Creating A New World Order

    The last thirty days have shown another kind of world that is engaging in cooperation, dialogue and diplomatic efforts to resolve important issues. The meeting of the members of the Belt and Road Initiative laid the foundations for a physical and electronic connectivity among Eurasian countries, making it the backbone of sustainable and renewable trade development based on mutual cooperation. A few weeks later, the Shanghai Cooperation Organization meeting in Astana outlined the necessary conditions for the success of the Chinese project, such as securing large areas of the Eurasian block and improving dialogue and trust among member states. The following AIIB (Asian Infrastructure Investment Bank) meeting in ROK will layout the economical necessities to finance and sustain the BRI projects.
    The Shanghai Cooperation Organization (SCO) and the Chinese Belt and Road Initiative (BRI) have many common features, and in many ways seem complementary. The SCO is an organization that focuses heavily on economic, political and security issues in the region, while the BRI is a collection of infrastructure projects that incorporates three-fifths of the globe and is driven by Beijing’s economic might. In this context, the Eurasian block continues to develop the following initiatives to support both the BRI and SCO mega-projects. The Collective Security Treaty Organization (CTSO) is a Moscow-based organization focusing mainly on the fight against terrorism, while the Asian Infrastructure Investment Bank (AIIB) is a Beijing-based investment bank that is responsible for generating important funding for Beijing’s long-term initiatives along its maritime routes (ports and canals) and overland routes (road, bridges, railways, pipelines, industries, airports). The synergies between these initiatives find yet another point of convergence in the Eurasian Economic Union (EEU). Together, the SCO, BRI, CTSO, AIIB, and EEU provide a compelling indication of the direction in which humanity is headed, which is to say towards integration, cooperation and peaceful development through diplomacy.
    On the other side we have the old world order made up of the IMF, the World Bank, the European Union, the UN, NATO, the WTO, with Washington being the ringmaster at the center of this vision of a world order. It is therefore not surprising that Washington should look askance at these Eurasian initiatives that threaten to deny its central and commanding role in the global order in favor of a greater say by Moscow, Beijing, New Delhi and even Tehran.

    This post was published at Zero Hedge on Jun 21, 2017.


  • Argentina issues 100-year bond. What could possibly go wrong?

    Apparently while I was in the air yesterday flying between Asia and Europe, the financial system proved once again that it believes in magic beans.
    The latest absurdity is that the government of Argentina sold $2.75 billion worth of bonds yesterday afternoon.
    It’s not strange or unusual for a government to sell bonds; it happens multiple times across the world nearly every single day of the year.
    What’s totally insane about yesterday’s bond sale in Argentina, though, is the duration of these particular bonds.
    Remember that a bond is similar to a loan; as an investor, you’re basically loaning money to whichever government issues the bond.
    And, like a loan, a bond has a maturity date – the date at which the government is supposed to pay you back the ‘face value’ of the bond.
    often have a 3-7 year term. Student loans can easily go 10 or 15 years. A home mortgage can last 30 years.
    It’s the same with government bonds, which often have a term up to 30 years.

    This post was published at Sovereign Man on June 20, 2017.


  • Futures, European Stocks Flat As Oil Suddenly Tumbles; Pound Slides

    Maybe not too much of a surprise to see oil prices fall, given how much the G10 economic surprises index has collapsed in recent weeks. pic.twitter.com/aXkvHOzZMt
    — Jamie McGeever (@ReutersJamie) June 20, 2017

    European stocks were flat after starting off strongly earlier, dragged lower by energy stocks. Asian stocks, U. S. futures little changed as oil tumbled with Brent tumbling as low as $45.85/bbl to the lowest intraday since November 30 and taking out a 38.2% Fib support, after a one-minute spike in volume to a day-high 5,208 lots just after 6am, with WTI mirroring Brent’s momentum, and falling as much as 98c to $43.22, lowest since November 14.
    As Reuters’ Jamie McGeever points out, “maybe not too much of a surprise to see oil prices fall, given how much the G10 economic surprises index has collapsed in recent weeks.”
    The pound sank for a second day, with the GBPUSD tumbling to 1.2661, alongside gilt yields as Britain central bank governor Mark Carney reversed the earlier BOE “vote split” hawkishness and said he is still worried about the impact Brexit will have on the U. K. economy and said he “now is not the time” to raise rates. Sterling weakened against all of its Group-of-10 peers, and gilt yields declined as Carney said that domestic inflation pressures remain subdued. Speaking at London’s Mansion House on Tuesday, he also highlighted the weakness in the economy and the increased uncertainty as the nation formally starts talks to exit the European Union.

    This post was published at Zero Hedge on Jun 20, 2017.


  • Amid Dreary Landscape, Event Funds Stage A Comeback

    The US hedge fund industry is in rough shape as the Federal Reserve’s lift-all-boats monetary policy has made it increasingly difficult to beat the market. US hedge funds endured nearly $100 billion in redemptions last year, as only 30% of US equity funds beat their benchmarks. But as confidence in traditional stock pickers dwindles, so-called ‘event-driven’ funds are attracting renewed interest in investors, particularly in Europe, where near-zero rates and relatively attractive valuations are expected to stoke a boom in M&A activity, Bloomberg reports.

    After these funds experienced some high-profile stumbles in recent years – one such fund managed by John Paulson’s Paulson & Co. posted a 49% loss and endured billions of dollars in redemptions – some Europe-based funds are seeing billions in inflows. Kite Lake Capital Management, Everett Capital Advisors and Melqart Asset Management have garnered billions in fresh investor capital over the past two years.
    ‘Kite Lake Capital Management almost doubled client assets this year, while Everett Capital Advisors nearly tripled its funds since launching in January 2016. The money overseen by Melqart Asset Management has grown 12-fold since the firm started less than two years ago. The three event-driven funds have $1.5 billion in combined assets and invest across Europe, where an increasingly buoyant economy and record-low interest rates are boosting dealmaking. Their resurgence is part of a comeback effort by a hedge-fund industry that’s only now starting to recover from a wave of investor redemptions and years of disappointing returns.

    This post was published at Zero Hedge on Jun 20, 2017.


  • After Brexit: Germany and the EU Will Look to Asia

    Britain’s general election went horribly wrong, with the Conservatives forced into a putative coalition with the Democratic Ulster Party. Theresa May’s failure to secure a clear majority has provoked indignation, bitterness, and widespread pessimism. The purpose of this article is not to contribute to this outcry, but to take a more measured view of the situation faced by the British government with regards to Brexit, and the consequences for Europe. In the interests of an international readership, this article will only summarise briefly the current situation in the UK before looking at the broader European and geopolitical consequences.
    While it would be wrong to dismiss the precariousness of Mrs. May’s position, there are some positive factors, which are being generally ignored. Most importantly, Brexit negotiations are due to start next week. These negotiations matter more than anything else on the government’s agenda, so are a unifying force. Mrs. May recognises this, which is why she has brought Michael Gove back into the cabinet (as Environment Secretary), and Steve Baker as a minister in the Brexit ministry. Gove is a committed Brexiteer with a track record as a capable minister, and Baker was the motivating influence behind the parliamentary campaign for Brexit.
    All ambitions to replace Mrs May are being put to one side in favour of Brexit. This message of unity has been endorsed by Conservative MPs. They will be regularly updated with developments in future, to keep them onside. There are already signs that the government is reaching out to the opposition as well. This has been read as a separate negotiation, potentially leading to a softer Brexit. While it is dangerous to prejudge the outcome, this is probably incorrect: the purpose is more likely to keep the Labour Party leadership fully briefed on both progress and the rationale behind negotiation tactics.

    This post was published at Ludwig von Mises Institute on June 20, 2017.


  • Suicide Over European Banking Crisis

    The European ‘bail-in’ rules have been cheered claiming taxpayer money will be spared. However, many seniors bought bank bonds for their retirement. In the rescue of the small Banca Popolare d’Etruria, a retiree who had lost more than 100,000 euros worth of bonds lost everything and committed suicide. There have been many such events that do not always make the press. In Italy, the death of a pensioner who also committed suicide after losing his life savings as a result of a controversial move by the government to rescue four banks. The 68-year-old hung himself at his home in Civitavecchia, a port town near Rome, after the so-called ‘save banks’ plan wiped out 100,000 in savings held at Banca Etruria, one of the four lenders included in the government rescue deal announced on November 22nd, 2015. There was the 23-year old who committed suicide over 8000 in debts for student loans. A Greek pensioner who was 77-years old committed suicide in central Athens shooting himself with a handgun just several hundred meters from the Greek parliament building in apparent despair over his financial debts.

    This post was published at Armstrong Economics on Jun 19, 2017.


  • German Politicians Hammer the ECB, But Only to Get Votes

    They know: the Eurozone would plunge into a sovereign debt crisis all over again, only worse this time.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET. These days it’s easy to tell when general elections are approaching in Germany: members of the ruling government begin bewailing, in perfect unison, the ECB’s ultra-loose monetary policy. Leading the charge this time was Finance Minister Wolfgang Schaeuble, who on Tuesday urged the ECB to change its policy ‘in a timely manner’, warning that very low interest rates had caused problems in ‘some parts of the world.’
    Werner Bahlsen, the head of the economic council of Merkel’s CDU conservatives, was next to take the baton. ‘The ongoing purchase of government bonds has already cost the European project a great deal of credibility and has damaged it,’ he said. ‘The ECB can only regain trust with the return to a sound monetary policy.’
    As Schaeuble and Balhsen well know, that is not likely to occur any time soon. Indeed, like all other Eurozone finance ministers, Schaeuble is benefiting handsomely from the record-low borrowing costs made possible by the ECB’s negative interest rate policy. But by attacking ECB policy he and his peers can make it seem that they take voters’ concerns about low interest rates seriously, while knowing perfectly well that the things they say have very little effect on what the ECB actually does.

    This post was published at Wolf Street on Jun 18, 2017.


  • Global Equity Markets Firmer As Oil Stabilizes, Greece Gets Bailout Money

    (Kitco News) – World stock markets were mostly higher overnight. Crude oil prices are firmer today, which helped out the equities. Also, Greece’s creditors approved another release of bailout money for the indebted country, which assuaged European investors. U. S. stock indexes are pointed toward slightly higher openings when the New York day session begins.
    Gold prices are modestly up in pre-U. S. market trading, on a technical and short-covering bounce from solid selling pressure seen earlier this week.
    In overnight news, Russia’s central bank cut its key interest rate by 25 basis points. The Russian ruble rallied on the news.
    The Bank of Japan held its regular monetary policy meeting Friday and made no major changes in its policy.
    The Euro zone’s consumer price index for May was reported down 0.1% from April and up 1.4% from a year ago. The numbers were right in line with market expectations but down from the European Central Bank’s target rate of around 2.0% annual inflation.

    This post was published at Wall Street Examiner on June 16, 2017.


  • Conservatives Prepare “Secret Plot” To Oust UK’s May If She Backs Off “Hard Brexit”

    The walls are closing in on UK’s embattled prime minister Theresa May, who after the disastrous outcome in the general election, and following a torrid week in which she faced fierce criticism for her handling of the Grenfell Tower catastrophe, in which 58 people are now presumed dead, is reportedly facing what the Telegraph calls a “secret plot” – well, not so secret any more – involving a “stalking horse” challenge to remove her as prime minister if she caves to Labour demands, and waters down the “Hard Brexit.”
    With the NYT reporting that “’Soft Brexit’ Forces Rise in Britain on the Eve of Talks” scheduled for Monday, (despite 70% of Britons still supporting Brexit according to a Thursday YouGov poll), the Telegraph reports that according to leading Eurosceptic MPs they are prepared to mount an immediate leadership challenge if Mrs May deviates from her original plan. The British publication adds that “conservative MPs – including Cabinet ministers – have concluded that Mrs May cannot lead them into the next election and they are now discussing when she could go.
    Fearing that the chorus of “soft Brexit” demands rising across the UK following May’s sudden weakness, while Germany’s economy minister Brigitte Zypries going so far as telling Reuters that an outright “reversal of Britain’s decision to leave the European Union would be great,” Eurosceptic MPs have warned that any attempt to keep Britain in the customs union and single market or any leeway for the European Court of Justice to retain an oversight function will trigger an ‘overnight’ coup.

    This post was published at Zero Hedge on Jun 17, 2017.


  • Market Report: Rate rise, stronger dollar, weak gold

    This week, the Fed’s FOMC increased the Fed funds rate by 0.25%, to a target of 1% to 1.25%. This was so certain to happen it was fully discounted in the markets. The FOMC also gave some details about its aspirational plans to reduce its balance sheet over time. Nonetheless, the dollar rallied, helping to push gold and silver lower.
    ***
    Having backed off from last week’s challenge of the $1300 level, gold fell a further $13 this week to $1254 in early morning trade in Europe this morning. Silver fell a further 44 cents over the same time scale.

    This post was published at GoldMoney on JUNE 16, 2017.


  • French Parliament Elections Tomorrow June 18th

    Macron was hoping to have a super majority that his new party would sweep the election to give him ultimate power. However, the latest poll taken by BFMTV showed a stunning 61% of French voters did not want the 39-year-old’s party to take the National Assembly. The majority of French voters have said they will vote against Macron’s party to prevent a ‘crushing’ majority in parliament. Most have responded that they would vote for a rival party in the second round in a bid to ‘rectify’ the the decision.
    It is looking more and more that the vote for Macron was not in support of him handing sovereignty to Brussels. The election point overlooked by everyone is the fact that Le Pen beat ALL mainstream parties. There is no mandate for the surrender of rights in France to a new Federalized Europe. The election is this Sunday, June 18th. We will see the results soon.

    This post was published at Armstrong Economics on Jun 17, 2017.


  • The Treasonous Secession Of Climate Confederacy States

    After President Trump rejected the Paris Climate treaty, which had never been ratified by the Senate, the European Union announced that it would work with a climate confederacy of secessionist US states.
    Scotland and Norway’s environmental ministers have mentioned a focus on individual American states. And the secessionist governments of California, New York and Washington have announced that they will unilaterally and illegally enter into a foreign treaty rejected by the President of the United States.
    The Constitution is very clear about this. ‘No state shall enter into any treaty.’ Governor Cuomo of New York has been equally clear. ‘New York State is committed to meeting the standards set forth in the Paris Accord regardless of Washington’s irresponsible actions.’
    Cuomo’s statement conveniently comes in French, Chinese and Russian translations.

    This post was published at Zero Hedge on Jun 16, 2017.


  • Fear of Contagion Feeds the Italian Banking Crisis

    At first, deny, deny, deny. Then taxpayers get to bail out bondholders.
    By Don Quijones, Spain & Mexico, editor at WOLF STREET.
    Spain’s Banco Popular had the dubious honor of being the first financial institution to be resolved under the EU’s Bank Recovery and Resolution Directive, passed in January 2016. As a result, shareholders and subordinate bondholders were ‘bailed in’ before the bank was sold to Santander for the princely sum of one euro.
    At first the operation was proclaimed a roaring success. As European banking crises go, this was an orderly one, reported The Economist. Taxpayers were not left on the hook, as long as you ignore the 5 billion of deferred tax credits Santander obtained from the operation. Depositors and senior bondholders were spared any of the fallout.
    But it may not last for long, for the chances of a similar approach being adopted to Italy’s banking crisis appear to be razor slim. The ECB has already awarded Italy’s Monte dei Paschi di Siena (MPS) a last-minute reprieve, on the grounds that while it did not pass certain parts of the ECB’s last stress test, the bank is perfectly solvent, albeit with serious liquidity problems.

    This post was published at Wolf Street by Don Quijones ‘ Jun 16, 2017.


  • JUNE 16/DEPT OF JUSTICE SHENANIGANS/NY FED LOWERS ESTIMATE OF 2ND QUARTER GDP TO 1.8%/GOLD RISES $1.80 BUT SILVER LOSES 5 CENTS/ FOR THE 12TH CONSECUTIVE DAY, THE AMOUNT OF SILVER STANDING AT THE…

    GOLD: $1254.00 UP $1.80
    Silver: $16.64 DOWN 5 cent(s)
    Closing access prices:
    Gold $1253.40
    silver: $16.67
    SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME) SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
    SHANGHAI FIRST GOLD FIX: $1260.95 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1252.61
    PREMIUM FIRST FIX: $8.34

    This post was published at Harvey Organ Blog on June 16, 2017.


  • Quiet Start To Quad Witching: Stocks Rebound Around The Globe, BOJ Hits Yen

    Today is quad-witching opex Friday, and according to JPM, some $1.3 trillion in S&P future will expire. Traditionally quad days are associated with a rise in volatility and a surge in volumes although in light of recent vol trends and overnight markets, today may be the most boring quad-witching in recent history: global stocks have again rebounded from yesterday’s tech-driven losses as European shares rose 0.6%, wiping out the week’s losses.
    USD/JPY climbed to two-week high, pushing the Nikkei higher as the BOJ maintained its stimulus and raised its assessment of private consumption without making a reference to tapering plans, all as expected. Asian stocks were mixed with the Shanghai Composite slightly softer despite the PBOC injecting a monster net 250 billion yuan with reverse repos to alleviate seasonal liquidity squeeze, and bringing the net weekly liquidity injection to CNY 410 billion, the highest in 5 months, while weakening the CNY fixing most since May. WTI crude is up fractionally near $44.66; Dalian iron ore rises one percent. Oil rose with metals. Treasuries held losses as traders focused on Yellen hawkish tone.
    The MSCI All Country World Index was up 0.2%, and after the latest global rebound, the value of global stocks is almost equal to that of the world’s GDP, the highest such ratio since th great financial crisis, BBG reported.

    This post was published at Zero Hedge on Jun 16, 2017.


  • Brexit, Germany and Asia

    Britain’s general election went horribly wrong, with the Conservatives forced into a putative coalition with the Democratic Ulster Party. Theresa May’s failure to secure a clear majority has provoked indignation, bitterness, and widespread pessimism. The purpose of this article is not to contribute to this outcry, but to take a more measured view of the situation faced by the British government with regards to Brexit, and the consequences for Europe. In the interests of an international readership, this article will only summarise briefly the current situation in the UK before looking at the broader European and geopolitical consequences.
    While it would be wrong to dismiss the precariousness of Mrs May’s position, there are some positive factors, which are being generally ignored. Most importantly, Brexit negotiations are due to start next week. These negotiations matter more than anything else on the government’s agenda, so are a unifying force. Mrs May recognises this, which is why she has brought Michael Gove back into the cabinet (as Environment Secretary), and Steve Baker as a minister in the Brexit ministry. Gove is a committed Brexiteer with a track record as a capable minister, and Baker was the motivating influence behind the parliamentary campaign for Brexit.

    This post was published at GoldMoney on JUNE 15, 2017.