Farmer Diaries

This morning while doing my usual, review of the markets, and really some of the numbers are strange.  First off, yield over the past 24 hours they've been going up -- 6 bps.  Now, 6/100 of a percentage point doesn't sound like much, but its a lot.  The problem is that no one knows why the sell-off is occurring. The markets are quiet, (a little down, but nothing really serious), and yet oil prices are going up real fast (again, sure the Saudi's are bombing Yemen again, but really that's northing new. Things are strange, I mentioned two weeks ago that the market was expensive -- its just off its 2007 high (when looking at e/p10y) so its considered "toppy" but its been there for a while.  My guess is that the rats are getting nervous,  Facebook had a crappy performance based on fundamental problems in the sector -- there's just so much space for revenue growth, and overall cost of buying new customers has risen.  Numbers out of China are disappointing...

According to some sources capital controls are now in place -- not really, or at least not yet. Rumours are that local governments have been instructed to "swept" all cash deposits to the central bank. So far this news has only appeared on a few "crazier" websites ( Zerohedge ) but in reality this is not what it appears to be. In fact, local government have been told that all free cash has to be forwarded to the central bank so that the most urgent payments are made first, while the others languish.  There's simple not enough money for all the bills so Greece will pay the most important first (mortgage & insurance), and see later about the others.  This of course, with the advent of credit default swaps, could get ugly real fast, because lots of agreements have cross trigger clauses that active when "a default" occurs.  What used to be simple now can become complicated real fast... Yesterday, Greece's minister of finance pointed out the obv...

The dollar has been on a tear of late, the Yen the Euro and closer to home the CAD have all seen their value fall against the US dollar.  The impact has been to make America less competitive -- in those segments where things are not priced in dollars, and make many raw material rather expensive.  Can it continue? GS and DB take similar views; the strength of the USD is here to stay -- the number being discussed are the Euro trading around 0.80 to the USD -- down from a peak of nearly 1.47 five years ago.  The Yen that flirted around 120 to the US dollar (although its come back a bit). So, the charts above show the USD against the Yen, CAD, Euro and Sterling, and the direction are identical (don't be fooled by the reporting convention -- in all cases the USD is getting stronger). What is driving the USD?  Well for start, the American economy remains the only "game in town", of the entire G8 gang its the only that that is seeing strong economic growth ...

actually the real news is that in March 2015, American cops killed twice as many people as the UK did in the past 100 years... and China with a population of nearly 1.2 billion killed only 14... What is wrong with cops in America, what's with the assault weapons? Over the past few weeks I thought there was a media blitz blaming  cops as a new "war in America", turns out its not that, its really that American  cops are killing the citizenry in greater number than virtually anyone else. what a strange country

Although corporate world is not doing so great with numerous earnings recasting... the world's stock market continue to operate near "all times high".  The question is why?  My guess is liquidity; there's a perception that markets will correct but that "They" (the investors) will be able to get out before the solids hit the fan. I really have no opinion on the market, but there remains a global weakness (ok China's PMI was just above 50 a few days ago -- which means expansion), but still it remains that Europe is a trouble, Japan just had its 5th or 6th failed bond auction (BoJ monetised the debt instead -- printing more Yen), and America's 4th quarter of 2014 and the first of 2015 are looking weak. Oil prices that should be a massive stimulus for the global economy -- down from $105 to $51 should have acted as a massive stimulus engine, in fact it did help the US a bit, but the rest of the world saw virtually nothing in terms of GDP growth stimu...