Tuesday, 4 August 2015

Some macro thoughts

Just time for a few quick macro thoughts.

European credit - Standard & Poor's has changed the outlook for the European Union from stable to negative after the bloc's support for Greece and following Britain's decision to vote on leaving the EU. The decision means the US ratings agency could lower its grade of the European Union – now at AA+ — in the next two years. “The EU's repeated use of its balance sheet to provide higher-risk financing to EU member states [most recently including Greece], without the member states' paying in capital,'' was one reason behind the revised outlook, S&P said.  Tough fiscal backdrop.

Greece – 17% fall in the Greek market yesterday, some banks -30%. ‘There are a lot of orders in the system that are not executable’ said one trader so expect more volatility. ESMA confirms 4-week renewal for Greek short selling ban as per Bloomberg.

China – local market helped by short selling ban: “Shanghai Comp Up Over 2% As Some Brokerages Ban Short Selling On The Back Of Regulatory Change”.  No wonder no longer the world’s most liquid market…
 And bringing together Europe and China...

Australia – Australian dollar catching a bid on this: “The Australian dollar is adjusting to the significant declines in key commodity prices” (link here). Of course it has had a shocker over recent years…

Talking about FX got to agree with this on the US dollar

Puerto Rico - “First Default By U.S. Commonwealth In History: Puerto Rico Fails To Make Required Debt Payment”.  Ok so only missed a US$58m payment but another creditor vs debtor issue. Great graphic (below) in this report.

Finally always interesting to see a low r-squared:


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