Upcoming Event Risk discussion

[bbmac]

interesting week ahead - fundamentally speaking !

Germany's Merkel may be losing grip on power and with some key votes coming in the german partiament re the Eu bailout it could see her lose power and thereby throw the Eu debt crisis wide open. http://www.telegraph.co.uk/news/wor...slumps-to-defeat-in-home-state-elections.html

Italy's resident clown-in-chief Berlusconi looks more and more delusional as the days go by and is struggling to balance the books. http://www.cnbc.com/id/44390918

ECB and Boe rate (and qr decisions) due later this week and it is widely anticipated that ECB will be more dovish thus ending chances of any October rate hikes, previously indicated...Boe also likely to be dovish with a possible extension to Qe ? Fed's meeting later in September already extended by one day and with Friday's Nfp the latest amongst soft data realeased there, there is a good chance of QE3 there ? Allin all the cummulative effect of these scenarios playing out could impact £ and $ negatively against $ ?

There is probably little doubt that the politicians/central bankers are going to inflate themselves out of the debt problem in the absence of credible growth

Uk's Pmi services due Monday 0930am London, and any further weakness could see more pressure on £..conversely a climb could see some £ relief on the kneejerk (+?)


G/L

 

[bbmac]

Uk's Services sector Pmi (discussed in post above) released earlier today showed a big fall to 51.1 from 55.4, a knee-jerk bearish response re £ occurred followed by a rally and a further fall to 6061 so far in gbpusd. The release occurred in the context of bearish conditions overall reflected in downtrends on 1hr/4hr/daily gbpusd.

Eurusd under pressure too re the ongoing debt malarky...will be intersting to see how rest of week plays out -re these developments:
http://www.forexcrunch.com/eurusd-free-falling-on-debt-crisis-complications/

Uk Industrial and Manufacturing numbers next re Uk data on Wednesday 0930am London.

G/L

 

[Liquid validity]

Re: interesting week ahead - fundamentally speaking !

Germany's Merkel may be losing grip on power and with some key votes coming in the german partiament re the Eu bailout it could see her lose power and thereby throw the Eu debt crisis wide open. http://www.telegraph.co.uk/news/wor...slumps-to-defeat-in-home-state-elections.html

Only two ways the Euro will go:

1/ Centalise eurozone finanacial control and policy (i.e. Germany essentially prop everyone else up)
2/ Euro currency experiment is accepted as a failure and dissolved (not easy due to complex intertwined Euro finances.

Anything else is just a stay of execution delaying the inevitable hard decisions.

 

[bbmac]

Weds 21st Sept 0930am London

Lifted from Forexcrunch.com:

Uk Boe's Mpc last meeting's minutes: With no change in the interest rates nor the QE program, the focus remain at the meeting minutes. Last month, we’ve witnessed a shift in the position of two members that previously voted for a rate hike. So currently, no member wants a hike. Only one member, Adam Posen, voted for an expansion of the Asset Purchase Facility (QE) program by 50 billion pounds. If one more member voted with Posen, or if the committee discussed this seriously, the pound will drop.

-and at same time-

Public Sector Net Borrowing:Tuesday, 8:30. The current government in Britain vowed to cut public spending and manged to distance itself from other debt struck countries, though at a price. Last month saw a surprising surplus in the government’s flow, of 2 billion. This helped the pound. A small deficit is likely now.

G/L

 

[bbmac]

Uk services PMI 0930am today

lifted from forexcrunch.com;

Services PMI:Wednesday, 09:30. The biggest sector is kept for last. Growth is still seen here, although it disappointed badly last month with a big drop to 51.1 points. Another erosion is likely now. A dip under 50 will sound the recession bells.

Current Account: Wednesday, 09:30. This is a late figure, lagging after the smaller scoped trade balance. Nevertheless, its wide scope and low frequency make it important. In Q4 2010 and Q1 2011, the deficit stood at around 10 billion pounds. A small drop in this deficit is expected now.

G/L

 

[bbmac]

Eu decision day

Could be a big day for several asset classes and the whole 'risk-on / risk-off' environment re the Eu plan to relieve Greece of a lot of it's debt burden, and pprovide for any other member states that get into trouble etc...

Most commentators are not expecting a 'comprehensive' agreemeent and think it will fall short of what is required.

A market reaction to it whether a deal is finalised otr not is a big probability and although it seems obvious that for eg Eurusd will sell off on the above scenario - anything can happen.

G/L

 

[bbmac]

Re post above

Re Eu decision - If Eurusd reacts it is very likely that the strongly correlated gbpusd will go with it. A I trade mainly that instrument........the 4hr chart below shows the downside potential support/rbs factors on this pairing, ie previous near-term obvious swing lo's (potential support) and hi's (potential rbs,) fibs from the main 4hr and 4hr/daily swing lo's from and including 5270 (current yearly lo) to current daily hi 6042 (Daily R1,) and the ascending trend lines. Not shown here are the Calculated pivots but Weekly pivot is @/around 5851 with Weekly S1 and Monthly Pivot @/around 5731/5720 respectively.


Should price react positively to any announcement ...@ and above current daily Hi (@ Daily R1) is:

6035-42 previous 1hr swing hi zone -co-existant with- 6042-84 prev 4hr/daily swing hi zone incl 6072 = Wkly R1 @/around and Daily R2 @/around 6081
6103 61.8% 6617-5270
6110-6127 prev daily sw lo zone (non immed) incl 6117 Monthly R1 @/around and Daily R3 @/around
6163-6206 prev 4hr sw hi zone incl 6173 = 76.4% 6454-5270, 6181=61.8% 6746-5270 and 6194 = Wkly R2 @/around
6240-77 prev daily swing lo zone (non-immed)
6300 76.4% 6617-5270

Whatever happens and if you are trading the immediate aftermath if and when it comes lol!

G/L

Current 4hr:

Current 1hr to the upside is here:

 

[bbmac]

Re Eu meetinng.

Interim communique is very non specific re numbers...no real detail yet. I am thinking that they will really have to 'pull something out of the bag' to exceed or equal what markets are looking for , anything less (still the higher probability) is likely to disappoint. As for the immediate and longer term market reaction ? Well - follow the money is the best advice.

G/L

 

[bbmac]

greece

Greek referendum could throw a spanner in the works ? MF Global filkes for Chapter 11 and Italy sees 10 year money go above 6%...The fat lady hasn't sung in the Eurozone yet ?

Other Eu debt related stuff to watch out for:

--Tuesday, Nov. 1: Mario Draghi replaces Jean-Claude Trichet as president of the ECB.

--Wednesday, Nov. 2: Portuguese T-bill auction.

--Thursday, Nov. 3: ECB policy meeting. Spanish and French bond auctions.

--Thursday, Nov. 3-Friday, Nov. 4: Meeting of G-20 leaders in Cannes.

--Monday, Nov. 7: Meeting of Eurogroup finance ministers.

--Tuesday, Nov. 8: EU finance ministers meeting. Greek T-bill auction.

--Thursday, Nov. 10: Italian T-bill auction.

--Friday, Nov. 11: EUR2.0 billion of Greek T-bills mature.

--Monday, Nov. 14: Italian bond auction.

--Tuesday, Nov. 15: Greek T-bill auction.

--Wednesday, Nov. 16: Portuguese T-bill auction.

--Thursday, Nov. 17: Spanish and French bond auctions.

--Friday, Nov. 18: EUR 1.3 billion of Greek T-bills mature.

--Sunday, Nov. 20: Spain holds general election

--Thursday, Nov. 24: General strike in Portugal

--Friday, Nov. 25: Italian T-bill/bond auction.

--Tuesday, Nov. 29: Italian bond auction. Final Portuguese budget vote.

G/L

 

[bbmac]

Uk Q3 GDP prelim

This is how forexcrunch.com sees it :

*.Nationwide HPI: Tuesday, 7:00. This is a relatively early publication of the changes in house prices, making its impact significant. After a disappointing drop two months ago, prices ticked up by 0.1% last month. A similar and small rise is likely now.

*Uk Q3 GDP pre-lim: Tuesday, 9:30. This is the first release of GDP for the third quarter of 2011. There is a good chance that Britain’s economy contracted. In Q2, the economy grew by only 0.1%. It followed two quarters of an equal growth and contraction at the same scales of 0.5%. If the economy stalled or contracted, the pound is likely to take a hit. A rise of above 0.2% will be good enough for rises.

*.Manufacturing PMI: Tuesday, 9:30. This is usually an important indicator that has a strong impact on the pound, but this time it is overshadowed by the GDP release. Britain’s manufacturing sector returned to grow last month with a PMI of 51.1 points, above the 50 point mark. This came after two months in contraction zone. A small dip is likely now.

Go where the money goes.

G/L

 

[bbmac]

Uk Q3 GDP prelim

I'm thinking re Uk's Q£ Gdp-prelim due in 1/2hr or so...+0.4% will likely see some £ buying on the knee-jerk and +0.1% or less likely some £ selling on the knee-jerk. Noticed Clegg etc doing the rounds yesterday announcing new economic stimulus - coincidence ? I should coco ! Draw your own conclusions.

G/L

 

[bbmac]

Uk Q3 GDP-prelim

0928 saw release of the Uk Manuf PMI - 47.4 well below forecast and previous, and tipped back unbder the 50 level which is considered recessionary...knee-jerk sell off in £, the 0930 Q3 Gdp and +0.5% better than prev/forecast and a small knee-jerk £ rise followed by a further drop to 5942 as i write this.

Would seem the Pmi has tempered any Gdp react so far ?

G/L

 

[bbmac]

Greek Referendum

As an aside - it's funny isn't it, the Greek Pm says '..Oh We forgot to ask the people...maybe we should do that..' and the rest of Europe scream 'Oh no - don't do that..' It's a sh1tty deal for the Greeks anyway and as Russia and Argentina have found out in the recent past, Sovereign default isn't the end of the world !

Anyways, politics aside, if the Greek Referendum goes ahead ie if The terrible twins morphed into one - 'Merkozy' don't scupper it first, what a day that might be as result is announnced - either way really...a No vote could see the biggest collapse in markets since Lehman and a Yes vote - probably a relief rally.

Anything can happen, - bring it on !

G/L

 

[robster970]

Do you not think a default is already priced in?

I'm finding the news driven reaction quite fascinating too. It does make for interesting times.

 

[pboyles]

Apparently the Greeks are forcing through changes to the military command. Seems like a strange thing to be worried about in a financial crisis. Obviously they havnt come as far as they would like to think since their days as a military junta. A military coup in the eurozone would be quite a turn up for the books.

Greek military leadership changes spark opposition outcry - Telegraph

 

[bbmac]

Hi Mate

No I absolutely don't think that a 'real' default is priced in let alone a No vote in said referendum. The aim thus far by the Eu has been to keep it orderly 'voluntary haircuts' on the debt etc...a No vote would open up all kinds of possibilities.

Whatever happens though, follow the money !

G/L

Do you not think a default is already priced in?

I'm finding the news driven reaction quite fascinating too. It does make for interesting times.

 

[MajorDutch]

Hi Mate

No I absolutely don't think that a 'real' default is priced in let alone a No vote in said referendum. The aim thus far by the Eu has been to keep it orderly 'voluntary haircuts' on the debt etc...a No vote would open up all kinds of possibilities.

Whatever happens though, follow the money !

G/L

I totally concur with you BBmac a real default contagion even is def not priced in.

 

[MajorDutch]

I think there are a lot of opportunities for traders at present and in the coming years, volatility is just nuts at present. The equity markets are locked in a tug of war between QE/bailouts and potential sovereign debt collapse/nasty contagion/toxic derivative event. It is fascinating. The Greek story is like a soap opera, I def would not rule out a coup in Greece and G-pap going off to Cannnes leave the door wide open to a few politicians/army officers getting together and effectively throwing him out. G-pap has made an insane move with this referendum curve ball, the guy has some serious cohonas to face down the french and germans after that. If I was Greek I would want to come out, start up the printing press and devalue the new drachma get exports moving and in 5 years they will be sorted. If they take this bail out they will still be shafted 5 years on. There are a lot of vested interests floating around, a lot of rumours about CDS triggers. Some people/institutions will go pop over these CDS's and it is all down to lunatics like Gpap. absolute fascinating time.

I am researching some Italian bank stocks as we speak, if you get in at the right time you could do very well.

 

[robster970]

I'm not sure I agree with you both, simply because it has been obvious from the outset that the greeks have had no stomach to pay off the debt.

What probably isn't priced in is how the eventual default will affect Europe politically and what it means for the union. That is what I think is driving things around, not the systemic risk of an orderly or disorderly default itself.

Anyway, just may twopenneth.

 

[bbmac]

2nd estimate of Uk's Q3 GDP

U.s Holiday w/e effectively begins tomorrow with the Thansgiving Bank Holiday, and a lot of traders likely taking Friday off too...low volumes likely going into the London afternoon tomorrow therefore but ahead of that - 0930am gmt sees the 2nd estimate of the Uk's Q3 GDP number - 1st estimate being +0.5%...any upside or downside revision is likely to see at least a knee-jerk gbpusd reaction. Although unlikely an upside revision of +0.2% or more could see some £ relief whereas any -0.2% or more downside revision could see some £ pressure. A smaller +/- 0.1% revision is more difficult to say, but in a bearish market -0.1% is likely to see a bigger reaction than +0.1 % ?

Time will tell,

G/L