- Tensions with Russia over Ukraine are seen as transitory but could cause market volatility in the near-term. Deflation in Europe is viewed as a more structural issue that will affect markets for the long-term.
- The ECB is expected to take a three step approach - enhancing terms for T-LTROs, finalizing stress tests, and delivering their own version of quantitative easing.
- Three top investment opportunities are seen in European deflation trades benefiting from ECB action, peripheral European equity with upside from an inflated bubble, and Japanese equity benefiting from further stimulus.
Fasanara Capital Investment Outlook | February 1st 2015
1. Seismic Activity On The Rise
2. No Volatility No Gain
3. The Role Of Optionality
4. Crystal Ball
5. Deflation Is A Multi-Year Process
6. Three Big Trades for 2015
‘Deflationary Boom Markets’
‘Deflationary Boom Markets’ is the name of the game. Deflation forces Central Banks into action. Central banks to push Bonds and Equities higher, inflating the bubble some more, although on a rougher path and with higher volatility than we got accustomed to in recent years.
1. Reflation Phase To Be Temporary, More Downside Ahead
Earlier on in 2016, ‘random and violent markets’ went off to panic mode out of (i) fears over China’s messy stock market and devaluing currency, (ii) plummeting oil price, (iii) strong US Dollar. Today, we believe complacent markets are similarly illogical and over-shooting, this time on the way up. As we re-assess the validity of the underlying risks, we expect a shift in narrative in the few months ahead and a sizeable sell-off for risk assets.
2. Four Key Conviction Ideas
We analyze below our key ideas for the next 12 months:
Short Chinese Renminbi Thesis. In Q1, China only managed to keep GDP in shape by means of graciously expanding credit by a monumental 1 trn $. Unsurprisingly, at 250% total debt on GDP, you cannot borrow 10% of GDP per quarter for long, without a currency adjustment, whether desired or not.
Short Oil Thesis. Long-term, we believe Oil will follow a volatile path around a declining trend-line, which will take it one day to sub-10$. Within 2016, we expect global aggregate demand to stay anemic and supply to surprise on the upside, inventories to grow, primarily due to the accelerating speed of technological progress.
Short S&P Thesis. To us, the S&P is priced to perfection, despite a most cloudy environment for growth and risk assets, thus representing a good value short, for limited upside is combined with the risk of a sizeable sell-off in the months ahead.
Short European Banks Thesis. We believe that micro policies at the local level, while valid, are impotent against heavy structural macro headwinds, and only the macro environment can save the banking sector in its current form in the longer-term. Macro structural headwinds for banks these days are too heavy a burden (negative sloped interest rate curves, deeply negative interest rates, deflationary economy, depressed GDP growth, over-regulation, Fintech), and will likely push valuations to new lows in the months/years ahead.
Fasanara Capital Investment Outlook | February 1st 2015
1. Seismic Activity On The Rise
2. No Volatility No Gain
3. The Role Of Optionality
4. Crystal Ball
5. Deflation Is A Multi-Year Process
6. Three Big Trades for 2015
‘Deflationary Boom Markets’
‘Deflationary Boom Markets’ is the name of the game. Deflation forces Central Banks into action. Central banks to push Bonds and Equities higher, inflating the bubble some more, although on a rougher path and with higher volatility than we got accustomed to in recent years.
1. Reflation Phase To Be Temporary, More Downside Ahead
Earlier on in 2016, ‘random and violent markets’ went off to panic mode out of (i) fears over China’s messy stock market and devaluing currency, (ii) plummeting oil price, (iii) strong US Dollar. Today, we believe complacent markets are similarly illogical and over-shooting, this time on the way up. As we re-assess the validity of the underlying risks, we expect a shift in narrative in the few months ahead and a sizeable sell-off for risk assets.
2. Four Key Conviction Ideas
We analyze below our key ideas for the next 12 months:
Short Chinese Renminbi Thesis. In Q1, China only managed to keep GDP in shape by means of graciously expanding credit by a monumental 1 trn $. Unsurprisingly, at 250% total debt on GDP, you cannot borrow 10% of GDP per quarter for long, without a currency adjustment, whether desired or not.
Short Oil Thesis. Long-term, we believe Oil will follow a volatile path around a declining trend-line, which will take it one day to sub-10$. Within 2016, we expect global aggregate demand to stay anemic and supply to surprise on the upside, inventories to grow, primarily due to the accelerating speed of technological progress.
Short S&P Thesis. To us, the S&P is priced to perfection, despite a most cloudy environment for growth and risk assets, thus representing a good value short, for limited upside is combined with the risk of a sizeable sell-off in the months ahead.
Short European Banks Thesis. We believe that micro policies at the local level, while valid, are impotent against heavy structural macro headwinds, and only the macro environment can save the banking sector in its current form in the longer-term. Macro structural headwinds for banks these days are too heavy a burden (negative sloped interest rate curves, deeply negative interest rates, deflationary economy, depressed GDP growth, over-regulation, Fintech), and will likely push valuations to new lows in the months/years ahead.
3 Jan 2009: a bottom in breakevens, commodities, and global yields?Laeeth Isharc
The response of the authorities has been without precedent - the US has a new president, and perhaps confidence in the new administration may stave off the worst consequences of the epidemic contagion of fear - for now, at least. It is certain that for the time being we shall avoid the 29-33 collapse that was associated with every sovereign issuer in Europe except Britain, and much of Latin America and Asia defaulting as well as large numbers of banks in the US (in the days before deposit insurance).
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
We live in an interconnected world and geopolitical developments in Ukraine and Syria are bound to add volatility in global geopolitical environment and influence small and large economies around the world.
Further, the economic environment is undergoing an unusual shift, through unorthodox and new policy making in Japan, US and Europe.
In such a situation small sized GCC economies, which are also dependent heavily on commodity prices and transit of goods, should exercise caution, and not get swayed by the rosy pictures stock markets around the world are painting.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Contagion fears flowing through markets this weekHantec Markets
Fear of contagion is flowing through financial markets into this week. We look at how political risk is impacting on safe haven flows and the dollar. How are markets reaction and what are the implications for the analysis of forex, commodities and equities?
No bubble trouble; stocks are still reasonably priced. This credit cycle has unique characteristics that continue to make high-yield bonds attractive. Interest-rate volatility poses greater risk than higher rates themselves.
FOMC meeting crucial for forex and commoditiesHantec Markets
After the huge swing in positioning for the Fed to turn dovish, this week's meeting of the FOMC will be crucial for the medium term outlook on financial markets. We look at the impact on forex, equities and commodities markets in the coming days.
The global economy is improving overall, with the U.S. and U.K. leading the way. We expect higher GDP growth from the U.S. to support risk assets in the third quarter. We continue to expect a rise in U.S. interest rates in 2014, though eurozone policy may help slow a near-term increase. We favor credit, prepayment, and liquidity risks, which we express in allocations to mezzanine CMBS, peripheral European sovereigns, select EM sovereigns, and interest-only (IO) CMOs.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
3 Jan 2009: a bottom in breakevens, commodities, and global yields?Laeeth Isharc
The response of the authorities has been without precedent - the US has a new president, and perhaps confidence in the new administration may stave off the worst consequences of the epidemic contagion of fear - for now, at least. It is certain that for the time being we shall avoid the 29-33 collapse that was associated with every sovereign issuer in Europe except Britain, and much of Latin America and Asia defaulting as well as large numbers of banks in the US (in the days before deposit insurance).
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
We live in an interconnected world and geopolitical developments in Ukraine and Syria are bound to add volatility in global geopolitical environment and influence small and large economies around the world.
Further, the economic environment is undergoing an unusual shift, through unorthodox and new policy making in Japan, US and Europe.
In such a situation small sized GCC economies, which are also dependent heavily on commodity prices and transit of goods, should exercise caution, and not get swayed by the rosy pictures stock markets around the world are painting.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Contagion fears flowing through markets this weekHantec Markets
Fear of contagion is flowing through financial markets into this week. We look at how political risk is impacting on safe haven flows and the dollar. How are markets reaction and what are the implications for the analysis of forex, commodities and equities?
No bubble trouble; stocks are still reasonably priced. This credit cycle has unique characteristics that continue to make high-yield bonds attractive. Interest-rate volatility poses greater risk than higher rates themselves.
FOMC meeting crucial for forex and commoditiesHantec Markets
After the huge swing in positioning for the Fed to turn dovish, this week's meeting of the FOMC will be crucial for the medium term outlook on financial markets. We look at the impact on forex, equities and commodities markets in the coming days.
The global economy is improving overall, with the U.S. and U.K. leading the way. We expect higher GDP growth from the U.S. to support risk assets in the third quarter. We continue to expect a rise in U.S. interest rates in 2014, though eurozone policy may help slow a near-term increase. We favor credit, prepayment, and liquidity risks, which we express in allocations to mezzanine CMBS, peripheral European sovereigns, select EM sovereigns, and interest-only (IO) CMOs.
Swedbank was founded in 1820, as Sweden’s first savings bank was established. Today, our heritage is visible in that we truly are a bank for each and every one and in that we still strive to contribute to a sustainable development of society and our environment. We are strongly committed to society as a whole and keen to help bring about a sustainable form of societal development. Our Swedish operations hold an ISO 14001 environmental certification, and environmental work is an integral part of our business activities.
Audience Perceptions of Product Placement in Reality TValex_walton27
This is a presentation I made on the current progress of the research I am conducting on audience perceptions of product placement in reality television.
As the ‘sanctions war’ heats up, Will Putin Play his gold card ?GE 94
The topic of ‘currency war’ has been bantered about in financial circles since at least the term was
first used by Brazilian Finance Minister Guido Mantega in September 2010. Recently, the currency
war has escalated, and a ‘sanctions war ’ against Russia has broken out. History suggests that
financial assets are highly unlikely to preserve investors’ real purchasing power in this inhospitable
international environment, due in part to the associated currency crises, which will catalyse at least
a partial international remonetisation of gold. Vladimir Putin, under pressure from economic
sanctions, may calculate that now is the time to play his ‘gold card ’.
De acuerdo con el último informe difundido por Crédito y Caución, las insolvencias de muchas de las economías europeas se mantendrán muy por encima de los niveles de 2007 en 2014 y 2015.
El panorama económico mundial se ha deteriorado en los últimos seis meses. El ritmo de crecimiento en la zona euro y China ha sido más débil de lo esperado y la intensificación de la crisis geopolíticas referentes a Rusia y al Estado Islámico en Oriente Medio han minado la confianza internacional.
The article was divided into the following sections-
1) Setting the scene
2) Visualizing the fall
3) Delving Deeper
4) Timeline of events
5) Impact on the Russian Economy
6) Finding positives in negatives
7) Conclusion
8) References
My outlook for the year, written in December last year. Overly pessimistic unfortunately but with Spanish yields now over 6%, we\'re not out of the woods yet! (Pls note I did not write the China stocks or currency section.)
This presentation considers the possibility of a second recession in the face of the ongoing European Debt Crisis, misguided attempts to address the crisis through austerity and struggling world economies. It also reflects on the impact of the probable break-up of EU’s currency union, measures to avert the scenario and vulnerable positions of the economies of the USA, China and India to more trouble in the Euro-zone.
The doomsday scenario has been summarized by Martin Wolf of Financial Times (May 17, 2012):
“The mechanisms at work would be powerful: bank runs; the imposition of (illegal) exchange controls; legal uncertainties; asset price collapses; unpredictable shifts in balance sheets; freezing of the financial system; disruption of central banking; collapse in spending and trade; and enormous shifts in the exchange rates of new currencies.
.
The Global Economy in 2014 – 5 Key Trends - Global Perspectives White Paper -...GECKO Governance
Every year Global Perspectives publishes its annual white paper covering the 5 keys trends we see impacting the global economy in the year ahead.
This year we will look the major global economies and examine the major trends that will influence them over the next twelve months.
Sign up for all our white papers on the site or email:-
shane@globalperspectives.co.uk
there will be 2 articles attached may you please summarize the artic.docxbarbaran11
there will be 2 articles attached may you please summarize the articles attached seperatley and add a bibllography and opinion to each (must be at least 2 pgs double spaced)
Japan’s Swinging Bonds — A Future Economic Crisis
ARTICLE
COMMENTS (1)
BONDS
JAPAN
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By Vincent Cignarella
The inability of Japanese government debt to stop gyrating wildly poses a significant threat to the country’s climb out of its two-decade economic mire.
In the past six months, Japanese 10-year bond yields have swung like a pendulum. The huge swings were never more prescient than Thursday, when the yield jumped over 1.0% for the first time in over a year.
That volatility poses a significant threat to Japan, specifically through the balance sheets of its banks. In a statement clearly acknowledging those risks, Bank of Japan Governor Haruhiko Kuroda said Friday that it is “extremely desirable” for the nation’s debt market to be stable.
When it comes to government debt, Japan’s biggest banks are all in. Consolidated financial statements of
Mizuho Financial Group
8411.TO
0.00%
and Mitsubishi Financial Group show they each hold 23% of total assets in Japanese national government and a variety of government agency bonds.
As that debt vacillates in price so do the banks’ Tier 1 capital asset ratios and presumably their ability to lend and create loans. Japanese banks would face 6.6 trillion yen in losses should interest rates rise broadly by one percentage point, according to the Bank of Japan.
One week into 2013, 10-year government bonds climbed in yield to nearly 0.85% from early December lows of 0.69%. They then fell dramatically to 0.44% in early April only to climb again violently to the 12-month high on Thursday. All that interest rate volatility and so far, no inflation in sight.
Recent gross domestic product figures from Japan showed growth of 3.5% on an annual basis but the GDP deflator, a measure of inflation printed at a decline of 1.2% from a year earlier. That is 14 consecutive negative quarters.
If these government bond yields continue to gyrate beyond the central bank’s control and no inflation comes, the government stands to lose credibility domestically.
That credibility is already somewhat in question given during his first term as prime minister, Shinzo Abe lacked the political power to follow central bank action with his own government reform. Without that reform, Abe’s goal of 2% inflation within two years is in grave peril.
If he has any doubts about the need for government action, look no further than U.S. Personal Consumption Expenditures, the Federal Reserve’s favorite indicator for inflation, was 2.5% in 2008 before the global financial crisis took hold. Now almost five years later and massive quantitative easing from the Fed, the PCE is just 1.1% because there has been no help from fiscal policy.
The importance of credibility is even greater in Japan, where local investors finan.
On November 2, 2010, EIU Senior Economist Leila Butt, presented the Economist Intelligence Unit Global Outlook in Boston. Key points in this presentation include:
- Most economies are growing again
- Emerging markets are booming
- Unemployment remains very high
- Consumers are rebuilding balance sheets
- Countries are heavily indebted
- Deflation is a risk in rich countries
- Asset bubbles are a risk in emerging markets
Fasanara Capital | Investment Outlook
1. Fake Markets: How Artificial Money Flows Kill Data Dependency, Affect Market Functioning and Change the Structure of the Market
Hard data ceased to be a driver for markets, valuation metrics for bonds and equities which held valid for over a century are now deemed secondary. Narratives and money flows trump hard data, overwhelmingly.
‘Fake Markets’ are defined as markets where the magnitude and duration of artificial flows from global Central Banks or passive investment vehicles have managed to overwhelm and narcotize data-dependency and macro factors. A stuporous state of durable, un-volatile over-valuation, arrested activity, unconsciousness produced by the influence of artificial money flows.
- Passive Flows: The Prehistoric Elephant In The Room
- ETFs Are Taking Over Markets
- The Impact of Passive Investors on Active Investors: the Induction Trap
- How Narratives Evolve To Cover For Fake Markets
- Defendit Numerus: There is Safety in Numbers
- What Could We Get Wrong
2. Be Short, Be Patient, Be Ready
Markets driven by Central Banks, passive investment vehicles and retail investors are unfit to price any premium for any risk. If we are right and this is indeed a bubble (both in equity and in bonds), it will eventually bust; it is only a matter of time. The higher it goes, the higher it can go, as more swathes of private investors are pulled in. The more violently it can subsequently bust.
The risk of a combined bust of equity and bonds is a plausible one. It matters all the more as 90%+ of investors still work under the basic framework of a balanced portfolio, exposed in different proportions to equity and bonds, both long. That includes risk parity funds, a leveraged version of balanced portfolio. That includes alternative risk premia funds, a nice commercial disguise for a mostly long-only beta risk, where premia is extracted from record rich markets that made those premia tautologically minuscule.
Fasanara Capital | Investment Outlook
1. The Future Is Wide Open: Avoid The ‘Illusion Of Knowledge’ Trap
The single most dangerous thinking trap / optical illusion for investors today is to look at Trump, Brexit and Italy Referendum as non-events, buried in the past. We believe that 2017 may likely be driven by the same factors that failed to shape 2016. The non-events of 2016 are likely to be the drivers of 2017. Finally, we will get to find out if Brexit means Brexit, if Trump means Trump, if a failed Italian referendum means early elections and a membership of the EMU in jeopardy down the line.
2. Structural Shift: These Are Transformational Times
The macro outlook of the next years will be influenced the most by these structural trends:
› Protectionism, De-Globalization & De-Dollarization. In Pursuit of Inclusive Growth
› End of ‘Pax Americana’. The ascent of China. Geopolitical risks on the rise
› End of ‘Pax QE’. Markets without steroids, but still delusional.
› 4th Industrial Revolution: labor participation rate falling from 63% to 40% in 10 years?
3. Our Baseline Scenario: Bubble Unwind, Equities and Bonds Down
Starting this 2017, our major macro convictions are as follows:
› Global Tapering to progress
› US Dollar to keep grinding higher
› European Political Instability to worsen
› US Equities to weaken
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
where can I find a legit pi merchant onlineDOT TECH
Yes. This is very easy what you need is a recommendation from someone who has successfully traded pi coins before with a merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi network coins and resell them to Investors looking forward to hold thousands of pi coins before the open mainnet.
I will leave the telegram contact of my personal pi merchant to trade with
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
The Evolution of Non-Banking Financial Companies (NBFCs) in India: Challenges...beulahfernandes8
Role in Financial System
NBFCs are critical in bridging the financial inclusion gap.
They provide specialized financial services that cater to segments often neglected by traditional banks.
Economic Impact
NBFCs contribute significantly to India's GDP.
They support sectors like micro, small, and medium enterprises (MSMEs), housing finance, and personal loans.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Fasanara Capital Investment Outlook | September 1st 2014
1. 1 | P a g e
“Learn how to see. Realize that everything connects to everything else.”
― Leonardo da Vinci
2. 2 | P a g e
September 1st 2014
Fasanara Capital | Investment Outlook
1. TENSIONS WITH RUSSIA ARE TRANSITORY FACTOR FOR MARKETS. We believe that a late face-saving de-escalation is still likely, as it is in the best economic interest of both parties, most importantly Russia’s: Europe faces recession risk, while Russia faces default risk, a replay of 1998.
2. DEFLATION IS STRUCTURAL FACTOR. We believe deflation is structural in Europe and likely to affect market dynamics for long. Europe is entangled in secular stagnation, resembles Japan in the early 90’s. Here then, the role that the ECB will choose to play holds the key to market action in the foreseeable future.
3. WE EXPECT THE ECB TO FOLLOW THREE STEPS PROCESS:
a. Enhancing already generous terms for T-LTROs to maximize take-up, while stepping up rhetoric over QE
b. Finalizing a benign AQR / stress test, and putting it behind us
c. Delivering ECB’s own version of QE
4. WE SEE THREE TOP VALUE OPPORTUNITIES IN CURRENT MARKETS
a. EUROPEAN DEFLATION TRADES: ECB’s activism and deflation are two weapons firing in same direction. Rates to move lower, credit spreads to narrow, risk premia to implode, interest rate curves to flatten. Bund yields moving flat to below JGBs, Italian 10yr BTPs at 2% yield by year end, below 100bps spread over Bunds and 60bps over OATs; Greek 10yr GGBs at below 5%
b. OPTIONALITY ON PERIPHERAL EUROPE EQUITY UPSIDE. ECB will step up its game, further inflating the bubble. Most upside materializing in the equity of Italy and Greece, primarily in the financial sector. Record levels of implied vol and availability of option-type instruments allow 2x to 3x payout ratios
c. JAPAN SECOND PHASE OF ABENOMICS: activism to be stepped up, further inflating the bubble in equity. Yen to weaken. Private-sector credit spreads at rock-bottom levels offer outsized payout ratios to hedge failure of Abenomics
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ECB at the Center Stage
Over the course of the summer period thus far, European shares and European yields tumbled on the double push of (i) geopolitical tensions out of Ukraine and (ii) new evidence of deflation and weakness in aggregate demand emerging distinctively.
- How tensions with Russia can evolve from here is impossible to call. However, we tend to believe that a slow face-saving de-escalation is still likely, as it is in the best economic interest of both parties, most importantly Russia’s. Politics should trump economics for only that long, until the ugly face of economic implications shows up.
- On the other hand, we believe deflation is structural in Europe and likely to affect market dynamics for months to come. Europe is entangled in secular stagnation, which has just started to show up in deflation terms, helped by a flawed fixed currency regime. Here then, the role that the ECB will choose to play holds the key to market action in the foreseeable future.
Russia/West Tensions: Late De-Escalation Our Baseline Scenario
Contrary to our expectations, the stand-off between Russia and the West over Ukraine failed to de- escalate, as political and personal considerations prevailed over economic interests. To us, Russia has the most to lose in the confrontation, as the risk of outright default looms ahead. It was not long ago in 1998 when Russia experienced its last default, only few years before Putin rose to power.
Dangerously, the Russian economy looks similar enough to the economy of 1998, having failed to progress much on other sectors of the economy beyond energy and power / metal and mining. A disappointing outcome, considering Russia had one of the fastest rising middle classes globally. Its dependence on the gyrations of oil pricing remains the same as back then. Critically, oil is in secular decline, as global demand lags, energy efficiency progresses, alternative sources of energy are made available (from shale to renewables). A steady influx of technological advances can only maintain such trend, while any breakthrough discovery is set to accelerate oil implosion, at some point down the road. Quite tellingly, not even geopolitical tensions spanning all the way from Ukraine to the Middle East to most of North Africa managed to spur a sustained recovery in oil prices.
True, there was an unsustainable fixed currency regime back in 1998 (followed by a 70%+ devaluation of the Ruble in one month), an economy still transforming itself from Soviet-era format. But differences between now and then do not go enough beyond that. Inflation is not much lower today than it was in 1998 before the crisis: single-digit trending lower in 1998, single-digit trending higher in 2014. International reserves are higher today than they were in 1998 (table), but External Debt is also much higher today than it was back then (4 times over).
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Russia debt/GDP is less than 10% if you take into account pure public debt, a misleading metric. Relevantly, Russia’s total indebtedness denominated in foreign currency stands at 715bn$, mostly from the private sector (CBR’s numbers). Compares with 30bn$ non-public foreign debt in 1998, 464bn$ in 2008. It is 36% of GDP, and the highest in absolute value of any emerging markets except China. Such debt needs rolling, for in excess of 10bn$ every month. That is staggering when compared to 375bn$ of public FX reserves (which could be just 324$ if one were to deduct the Yukos settlement), at a time when Russia is under embargo-like conditions with most other advanced nations in the world.
Back in 1998, Russia experienced a sharp contraction in GDP at -5.3% and high unemployment rates, followed by three years of strong pent-up recovery (+6.4%, +10%, +5.3%). Back then, Russia recovered strongly on the back of (i) strong commodity cycle, (ii) IMF/World Bank rescue loans (iii) access to international capital markets. Compared to today’s (i) large-scale economic isolation, (ii) weak commodity cycle and (iii) war expenses.
On the other hand, it is estimated that Europe risks approx. 0.5% of GDP knocked off 2015 numbers were the tensions with Russia to escalate from here, resulting in further sanctions. Not a rosy scenario, given a Europe-wide near-zero growth. It means recession. Still, not a default scenario.
Dependence over gas supply is at ca. 30% for Europe overall (close to 100% for select Eastern European countries). Not a great situation for Europe to be in, surely. Still, that incidentally luckily coincides with Europe being Russia’s largest client. Surely a better client than the best alternative available, China, when it comes to price negotiations. At some point, Russia may decide that dealing with the soft Europe’s energy commissioner is more convenient than having to deal with China’s energy minister, after all, especially once the latter knows he is the sole off-taker left out there.
The lackluster performance this May of Gazprom after signing a 400bn$ behemoth 30yr gas deal with China may serve as a stark reminder: it is price too, not just quantity.
Number crunching make us believe that a resolution to the Ukraine crisis should be manageable, as it is in the best interest of parties, and most relevantly in the best interest of Russia, making such de-escalation possible and probable. We factor that in our assumptions over the remainder of 2014.
Critically though, de-escalation might take weeks/months, not days. Seasonally, Russia may feel its bargaining power is enhanced by the incoming winter period and trading of gas supplies into Europe, possibly making de-escalation slow to materialize and more noise possible in the near term. Ukraine’s President Poroshenko called for early parliamentary elections at the end of October, and is unlikely to blink just before that (an interesting analysis on that can be found here). Again, more noise in the short-term cannot surprise.
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Deflation in Europe is Just Beginning
Differently than Russia/West crisis, the problem of deflation in Europe is far more structural of an issue, likely to hold the stage for the foreseeable future.
As often stated, we believe Europe looks like Japan in the early 90’s. Similarly to Japan, Europe has few unmistakable connotations at interplay:
- High level of indebtedness, drawing resources away from productive investments into sterile debt service.
- Overvalued currency, especially to peripheral European countries (30% overvalued against D-Mark, 40%+ overvalued against the rest of the world). Peripheral Europe is experiencing a currency crisis as if they borrowed in foreign hard currency.
- Secular trend of falling working population mixed with falling productivity rates.
The data released in the past few weeks provided evidence of European growth having grounded to a halt for most countries, including Germany. Italy dipped in triple-dip technical recession, while France slowed down concerningly and even Germany contracted in Q2. All the while, inflation averaged 0.3% for the Euro Area as a whole, well below the ECB target and on a clear downtrend.
In Japan in the early 90’s, it took four years for disinflation to become deflation, under the push of a strong Yen and with the help of an inactive Central Bank dismissing such risk until late.
Likewise in Europe, the EUR is far too strong when measured against GDP growth prospects and productivity trends. A misleading current account surplus of 200bn only managed to make it stronger (overshadowing imbalances across countries in Europe), together with a shrinking balance sheet of the ECB for almost Eur 1 trn on deleverage flows and LTROs repayments.
In crafting crisis resolution management, European policymakers blamed the lack of reforms for the low levels of productivity, whereas Europe was suffering from a structural lack of demand. A much more dominant problem. Given that, the ECB balance sheet was allowed to shrink for almost two years now, the EUR was allowed to strengthen against most currencies around the world (which were actively engaging in the opposite effort, one of bold currency debasement, ranging from the US, to the UK, to Japan.. including even Switzerland and Norway), and austerity was imposed to shrink fiscal deficits. The candidly stated goal was to drive Internal Devaluation across peripheral European countries, so as to close the competitiveness gap to northern Europe: output contractions, wage declines, fall in prices. Almost the opposite of what should have happened if the problem was diagnosed as one of deficient demand. Tightening fiscal and monetary policies took place in Europe for two consecutive years, all the while as most other large economies were engaging in the polar opposite.
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Nomen omen. Internal Devaluation in Southern Europe is itself an intentional form of deflation. It should have been confined there where it mattered to level off imbalances across nations in Europe. Instead, the laboratory experiment failed as it metastasized around.
Globally, other structural forces were inductive of deflation, from robotics and technological advances shedding jobs and depressing input prices (the Amazon effect), to low energy prices (on shale gas revolutionary discoveries and the end of the Commodity super-cycle), to weaker than potential growth, slack in the labor market, weaker dollar on ZIRP policies, Yen devaluation exporting deflation, China slowing down, etc.
The result is that Germany’s GDP itself is in tatters, even before considering the damage to be from trade wars with Russia. Deflation took hold and derailed the improvement in the soft data and surveys projected earlier on.
The problem with deflation is that minuscule levels of GDP growth are unable to drive unemployment lower and unable to prevent debt ratios from grinding higher and posing a larger threat down the line. Mathematically, as primary budget balances are lower than the difference between real GDP growth and real interest rates on public debt, the debt/GDP ratio is set to rise, from already alarming levels.
Italy, is the main vulnerability here, as a debt/GDP ratio might reach 140% by the end of this year, thanks to disinflation and GDP contraction, and despite austerity and a 2% primary surplus on GDP. By the same token, thanks to zero inflation rates, real rates are too high in Italy, standing at over 200bps above France and 250bps above Germany.
Zero inflation is like death penalty to debt-laden countries. It has been estimated that Italy would need a primary surplus of ~8% if it wanted to stabilize its debt/GDP at zero inflation, which means just stopping it from moving even higher. Spain would need a primary surplus of 2%+, instead of current negative 1.44%. Which means more austerity and more contractionary policies, to cause more internal devaluation than it is currently the case, more declines in unit labor costs, more salary cuts, more unemployment, less consumer spending, less corporate investments. In Italy, for example, average salary would have to be cut by an additional 30%/40% before closing the competitive gap to Germany. This does not account for the fact that inflation in Germany is itself on the verge of becoming negative, making the necessary adjustment even more painful than that.
The good side of the story is that we believe that the ECB and fiscal authority will be forced into further action from here, in an attempt to avoid a fully-fledged debt crisis and a long period of Japan-style depression.
Germany is the key determinant of European policymaking, all too obviously, and we believe they might be about to give in to request for expansionary policies, both fiscal and monetary.
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Few reasons for it:
- The German economy itself is contracting, hardly a satisfactory result after many years of implementation of their policy recipe.
- German inflation itself is borderline negative. Europe-wide inflation expectations have dis-anchored from 2% desired line, falling off 20bps in August alone (both 10y and 5y5y forward inflation swap curve). Any concern about price stability and Weimar-style inflation risk should have been put to rest by now.
- German concerns with moral hazard on the side of weaker European member states should have abated by now, as most political parties have embraced structural reforms as essential, and married their political agendas to it. Government in France, Greece and Spain have already spent their political capital embracing the German agenda, being now certain to lose in future elections, while the Italian government is close to do the same, having credibly committed itself to reforms. Germany faces the best mainstream political parties in Europe they can aspire to; any future coalition is most certain to be less receptive of German’s diktat than these ones. The calendar of national elections across Europe next year and beyond should serve as a countdown. Thus, we believe Germany should be prepared now for a relaxation of austerity policies and spreading the adjustment process of fiscal consolidation over a longer time horizon, while opening up to real monetary stimulus.
- Confrontation with Russia, while it may ease over time, surely highlights the urgent need for a common defense policy / energy policy across Europe, helping the case for integration in Europe in the short-term, softening German resistance to more expansionary policies.
In summary, we believe the ECB will be allowed to engage in non-conventional monetary policies, their version of QE, pushing equity and bonds higher in Europe, compressing spreads and yields further, within the next 6/12 months.
Whether it is going to be enough to avert a currency/debt crisis in Europe in the long run is a different matter. We think that there is a genuine case to be made for seeing dissolution of the currency union down the line, in an attempt to save the European Union. Early days to visualize that, though. What matters to the financial markets is the next twelve months - the foreseeable future - and we believe the next twelve months to be highly supporting of financial assets in Europe, both bonds and equity.
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Incidentally, we have for European assets and the ECB the same feeling we have for Japan and the BoJ. Abenomics has a high chance of failure, in the long term. Nevertheless, on the road to perdition, chances are that efforts will be stepped up and more bullets shot in an attempt to avert the end game. As stakes are raised, financial assets will be supported and melt-up in bubble territory, doing so at the expenses of a more turbulent end-game in the years ahead.
Deflation to worsen from here, ECB behind the curve but active, to be forced into stepping up its game
We believe that the ECB has already been preparing ground for its game plan. Draghi has likely front-ran its committee when he released a more dovish Jackson Hole speech than expected by most, opening up to his dissatisfaction for inflation expectations to have started a dangerous descent. From here, we expect the ECB to eye a three-step process:
- Enhancing already generous terms for T-LTROs to maximize take-up, while stepping up rhetoric over QE-type policies
- Finalising a benign AQR / stress test, and putting it behind us
- Delivering on ECB’s own version of QE
1) Enhancing TLTROs, while visualizing ECB’s own version of QE
The easiest step to implement would be a further enhancement of T-LTROs conditions, which could be delivered as early as this week and before the first take-up of it in September (the second one will be in December). Increasing the generosity of terms attached to TLTROs might increase their take-up, a key measure of success for the T-LTROs’ programs.
It should be clarified that T-LTROs are not necessarily leading to an expansion of the ECB’s balance sheet, which is so important if one want to see the EUR devaluing and inflation ticking some higher. Indeed, new T-LTROs allocations coincide with earlier LTROs repayments. The balance sheet of the ECB will expand as a consequence of T-LTROs only if take-up is large enough ad in excess of LTROs residual redemptions. Thus, the need to relax further the terms of the LTROs, while ramping up the rhetoric about fully-fledged QE.
TLROs terms and conditions could be relaxed in various ways: for instance, (i) costs-wise, by eliminating the 10bps spread over the refi rate and (ii) quantity-wise, by increasing the initial allowance above 7% of banks’ real economy loan books. As argued in past Outlooks, Draghi was a master of war when war was fought via ‘cheap talks’ only (‘whatever it takes’ language proved
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more effective than first LTROs hard cash): he can legitimately be expected to be more effective now that he provided himself with plenty of levers to play with.
Rhetoric over QE has started already with the shift in commentary at Jackson Hole. Preconditions to QE have been met, as expectations have come down: 10y, 5y and 5y5y forward inflation break- evens have all come down, and decisively so in August alone. 10y inflation swaps have fallen to below 1.50%, 100bps below US. 5yr inflation forwards are below 1%. 5y5y forwards are now below 2%. Spot inflation is 0.3% in Europe (from 2.5% in mid-2012). All of this happening in a global disinflationary environment, where 70% of the 32 OECD countries have domestic inflation rates below 1%. Zero inflation. The pretext of price stability is available here like never before for Draghi to grab and front-run its Committee.
On the other hand, conditions to avoid QE are hard to see anytime soon. It would take a sizeable uptick in activity data (Industrial Production in primis), a rebound in soft data / surveys, a spike in inflation expectations, a spike in the oil price, a speedy devaluation of the EUR (which is only too slowly materializing). Waiting for such conditions to come into play is costly. It could amount to gambling, on the side of Draghi and policymakers in northern Europe.
2) Finalising AQR / Stress Tests with a benign outcome
Here, our working assumptions are as follows:
- AQR to be a catalyst event for European markets at large. Results released at end of October. Come the end of October, and the European banking system will be judged clean by market participants. No more uncertainty holding off investors from pouring capital in equities trading at a fraction of their tangible book value.
- AQR to be pretty much of a non-event, in so far as it will lead to no need for massive capital actions on the side of relevant banks.
In the last months, worrisome expectations around AQR and the possibility of certain banks to be in major need of capital, have exerted a powerful cap over the banking sector. Ever since the 5th of June ECB’s meeting, the underperformance of banks vis-à-vis the overall market has been staggering, driving the overall European market in a downward spiral. A commonsensical reading of events saw the ECB’s announcement over T-LTROs falling short of expectations, while geopolitical tensions in Ukraine and a string of bad data releases helped accentuate the weakness of European equities: meanwhile, the black cloud of AQR’s uncertain outcome was looming ahead and coming due.
As the AQR is put behind us by late October, uncertainties over banks’ capital needs will fade away, and the upside potential break free.
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We believe that the AQR will prove to be a smooth and benign process for most relevant banks out there, owing to (i) large capital raising in the last couple of years (not just equity but hybrids too) and owing to (ii) the vested interests of the ECB itself, skating on the slippery slope of disinflation.
- Importantly, several if not most banks have strengthened their capital base meaningfully in preparation of AQR, by means of new issues of equity and contingent convertible debt, and by means of deleverage through asset sales and declining loans to household and businesses.
- AQR was designed to make sure the health of banks’ balance sheet was certified by a more credible authority than the banks’ own internal ratings, so as to clear off uncertainties, restore credibility, and prepare banks for increasing lending to the real economy, thus expanding the money supply.
- Incidentally, however, a prolonged AQR period is proving to be counter- productive enough already. While proposed with good intentions, it entailed unintended consequences. By pushing banks into capital replenishment, banks have cut on new lending, thus pushing so many businesses to the edge, especially in peripheral Europe. Net bank lending to the private sector in Europe fell again in July by 1.6%, mainly due to Italy and Spain. Such outcome has hardly helped real GDP formation, new investments in Capex, hiring plans. In Italy 75% of total employment is provided for by small and medium sized businesses, similarly to Spain: as they historically relied almost exclusively on banks’ funding, cutting their largest source of capital at a time when (i) taxes are raised on austerity programs, (ii) labor market rigidities are slow to reform and (iii) economy is outright contracting, is the most certain way to make sure unemployment grinds higher. No wonder that consumer spending and retail sales went on free fall. Internal devaluation, unemployment, economic contraction and disinflation within peripheral Europe were given a definitive help by the vacuum created by the period leading up to the AQR/stress tests.
- Successfully overcoming the AQR will prove cathartic for the banking sector in Europe and the European equity markets at large. A positive and smooth outcome of AQR is most important to banks in Europe but is as important to the ECB itself, we believe.
- A gross failure of AQR would entail massive self-inflicted pain, with repercussions difficult for the ECB to project. Including the possibility of a fresh debt crisis in Europe, where local banks own the bulk of government bonds. Take Italy, for example, where some Eur 500 bn are owned by local banks, which might be forced into further deleverage.
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- Finally, consider that T-LTROs are going to be successful if their take-up is substantial. But that viciously depends on AQR too. Their take-up on T-LTROs can only increase banks’ borrowing, therefore affecting leverage ratios, therefore somewhat impacting AQR results themselves, inevitably. AQR is expected to be completed by October/November this year. T-LTROs bids are submitted for September’s or December’s take-up. December’s take-up should be more substantial than September, as banks borrow / bid for liquidity with clarity of mind over AQRs. Unless, of course, AQR itself is severe enough to decide for them.
If the AQR outcome might have been uncertain before, it should be less uncertain now: economic contraction, deflation and weak capital markets are a potent mix helping the odds of a benign AQR, as its vested interests go viral.
3) ECB’s own version of QE, Together With Fiscal Program
The ECB has accelerated its investigation on ABS direct purchased by appointing Blackrock as adviser on the matter.
Sovereign QE should be determined to be part of it too, although not as effectively as it has been in the US. Still, as we argued earlier on, real rates in Italy are still 200bps higher than in France and 250bps higher than in Germany. That is 2 times the full yield of a 10yr duration risk on Bunds: too much to live with, in a deflationary world, at ~140% debt/GDP. In case of some sort of Sovereign QE, we would expect Bund yields to set even lower than JGBs in Japan across the curve (JGBs have been as low as 0.50% on 10years and 1.50% on 30years govies).
Private assets, including equities, could be included in some part. Caveats will need to apply to minimize risks of moral hazard for peripheral European countries engaged in structural reforms. Other caveats will need to apply to attach conditionality to QE policies, and hand-over of parts of sovereignty.
Monetary policy could run in parallel with a large ECB-financed Europe-wide fiscal program, traded against structural reforms, targeting underinvested European public goods. Infrastructure projects across the energy sector (where a energy plan for Europe is badly needed), energy savings/efficiency and telecoms could be a start. The Bruegel think tank offers few ideas here.
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Implications of Deflation + ECB’s Activism: Yields & Spreads to Compress to Minuscule Levels, Equity Melt-Up First
As discussed in our previous Outlook, ECB policies and deflationary forces are two weapons firing in the same direction. From here, odds are high for European rates to move lower, credit spreads to narrow, risk premia to implode, interest rate curves to go flatter. That is financial repression at its best, with the added help of deflationary forces, putting any sort of risk premia and rate differentials under attack.
Without the ECB policy move, such process was less obvious. In the absence of an active ECB, such deflationary forces could have failed to drive rates lower and spreads narrower, as credit and risk spreads could have widened massively on fears of a replay of the sovereign and liquidity crisis of late- 2011, mid 2012. Credit spreads could have widened out well in excess of base rates moving lower. An active ECB, moving decisively and unanimously (including Weidmann), helps generate the expectation of mutuality across Europe, rendering deflationary expectations even across European countries.
From our June Outlook: ‘’Pushing lower a 10year German bund yield of 1.35% might be difficult (although Japan shows the downside is still wide), but forcing lower a 2.75% yield on a BTP is easier, as it offers twice the yield of a Bund, for the same Central Bank. So it is easier to push down a 6% yield on a Greek govie (and its CDS at 450bps over), on the presumption of mutuality and ECB backstop. For the time being, until further notice’. Fixed income-wise, we expect yields to plummet, spreads to narrow further: Italian BTPs at 2%, and at 100bps spread over Bunds, 60bps over French OATs; 10year Greek yield at 5% and below, soon enough’’.
The impact on equity we expect is one of melt-up, at least in a first phase, pushing them into bubble levels, not supported by fundamentals but rather by the mix of lower yields, zero inflation rates, modest economic growth. Against this backdrop, we believe that the activism of the ECB can lead into 20%/30% upside for equities in Southern Europe, especially in the financial industry. Our favorite markets are Italy and Greece, which we think have the potential of being best performers in the next 12 months, although with heavy (realized) volatility along the way.
Opportunity-Set: Greece, Italy, Japan
We see three main opportunities in the current market environment:
- Optionality on Peripheral Europe Equity Upside
- European Deflation Trades
- Japan Second Phase of Abenomics
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(1) Optionality on Peripheral Europe Equity Upside
Our one liner on Europe could read as follows: European policymaking may fail (too little too late), the EUR may break few years from now, but before that happens the ECB will step up its game, further inflating the bubble across European debt and equity markets.
For the next 1 to 2 years we see the most upside materializing in the equity of Italy and Greece, primarily in the financial sector.
Record low levels of implied volatility (even lower than realized) and the availability of option- type instruments offer the opportunity to play this upside in optional format, with potential for 2x to 3x payout ratios.
Greece
Greek banks are the most interesting they have been in 10 years. They have never been cheaper than they are today, yet they have not been better capitalized and transparent about the true value of their assets in many years. Despite raising some 11bn$ new equity, despite narrowing their funding gap by re-accessing debt capital markets at record-low cost levels, their stocks fell to levels not even seen during the Lehman-moment or the Greek sovereign crisis in 2010-2011.
Few specters drove such bloodbath:
- Banco Espiritu Santo sudden bankruptcy, a month after a blue-sky equity offering, sent tremors across the European financial sector, raising concerns over the opacity of banks in peripheral Europe and the possibility for new BES-type discoveries during the AQR process. Weakness across the board, special emphasis given to peripheral Europe: Greece looks the most like Portugal for location and size.
- AQR examination looming ahead and fast approaching, at a time where banks are battered globally by litigation risks (Barclays, BNP, DB etc.), are hit by profit warnings (Erste etc.), are jumping to default (BES). Greek banks currently already discounting the need for further capital action.
- Geopolitical tensions in Russia/Ukraine, and their impact on already-anemic European growth, let alone chance for global conflict
- Political uncertainty in Greece ahead of February elections.
- ECB’s intervention in early June judged by markets as insufficient, leading to strong underperformance of banks over the rest of the market ever since.
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We expect such factors to work in reverse between now and year-end and drive a powerful recovery in Greek banks:
- We expect Greek banks to be in small to no need of capital after AQR is completed. They currently discount the need to return to the markets for sizeable amounts. NBG, Piraeus, Alpha have just release numbers: all good, exceeding expectations. NBG, for example, shows Capital Adequacy Tier I ratios of 16.2% (double the 8% regulatory capital requirement), positive net operating profit (and rising above expectations), loan-to-deposit ratio of 83%, provision coverage at 56%, new NPLs rolling off (new +90days loans are 30% lower than last quarter, pace of new credit impairments slowed, 75% lower formations than in 2012). JPMorgan estimates Basel3 CET1 2014E of 18.3%, and 19.5% in 2016E, B3CET1 ratio post stress test of 13.6% vs 5.5% capital minimum. Sure, AQR can disclose not as good an asset side as these banks believe they have (especially when it comes to residential mortgages recovery assumptions, restructured loans’ marking, SME’s NPLs). Nevertheless, the buffer is now substantial and we believe that any new capital exercise will be limited. Investors’ fears are overdone.
- BES is an isolated case. One of a handful of family-ran banks left in Europe. It won’t be able to cap the sector for long, no more than Enron and Lehman were able to, at their time.
- We expect the ECB to have a vested interest in a less-than-disruptive AQR, especially in Greece, for the reasons given earlier in this Outlook.
- We expect the Russia/Ukraine stand off to ease over the next few months, as Russia will want avert default, for the reasons given earlier in this Outlook
- ECB’s T-LTROs are more effective than the market is currently considering them; more generous terms, if granted, will benefit banks first. Plus, the ECB will be forced into stepping up its game.
- Greek GDP was the outlier in Europe these days, together with Spain, exceeding expectations for two consecutive quarters, trending to show a positive Greek GDP growth number for Q3 (and a positive annual 2015 number for the first time in six years).
We can only hope the weakness lasts longer to be able to pick up the pieces at even more distressed levels in the last month left before AQR, as a consequence of Russia’s noise or the SPX correcting, but we sense that we may have seen the bottom already. Our view is that, within the next six months, as the AQR is past us, as Russia/Ukraine crisis eases off or stabilizes in gridlock, as the ECB steps up its game, Greek banks will adjust upward. Optionality plays target up to 3x multiplier here (we will expand on specific terms at our Investor Presentation later this month).
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Italy
Italy disappointed as of late, well beyond market’s or our expectations. GDP contracted in Q2, leaving the country in technical triple-dip recession. Stocks corrected as investors fled the country. If one were to project the trajectory from here, Italy would be bankrupt in less than two years. A debt crisis is all it takes to tip the balance, as the a lethal mix is served: Debt/GDP hitting 140% by year-end, a debt denominated in foreign currency (the Euro), GDP contracting again after falling 10% in absolute levels in six years (being now where it was in 2000), Industrial Production falling 26% in six years, youth unemployment at 43%, implementation of structural reform agenda lagging behind on shameful resistance by hard-to-die political establishment, Renzi’s popularity just starting to wane.
However, we believe the days of reckoning for Italy are to be postponed. Italy is the key to the European project, and the European authorities have at their disposal the tools to engineer such postponement. Now that Germany’s economy itself is contracting, now that outright deflation is about to enter the stage, now that Russia refreshes the old fears that once brought Europe together, now that ruling parties across Europe are the best subjugates Germany can ever aspire to, the time is right to fire what is in the arsenal and try to fix it. The ECB is the main player here, together with a large fiscal program, as explained earlier on in this Outlook.
Against this backdrop, we see large catch-up upside on Italian stocks and bonds within the next 6-12 months. Again, optional formats are both preferable and available to play the view. Catalyst to be the same as presented above: ECB’s policy, AQR’s cloud dissipating, Russia easing off its stance, spreads compressing further.
Fixed income wise, we see BTPs ending the year at 2% absolute yield on the 10yr tenor, for a spread of 100bps over Bunds and 60bps over OATs. Catalyst to be the same as presented above: ECB’s policy, deflation biting.
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(2) European Deflation Trades
Disinflation is just about to turn into outright Deflation in Europe. The ECB is active but most likely already late in the game, behind the curve, and unable to prevent deflation from kicking in. There are important consequences for rates and spreads in Europe, together with the level of the EUR itself:
- Rates to reach new lows, especially in the far end of the interest rate curve, especially in Germany. Bunds 10yr yields moving flat to JGBs, Bunds’ 30yr yields below JGBs
- Spreads to compress, both between peripheral debt and core European debt, and across the curve. Italian 10yr BTPs at 2% yield by year end, and at below 100bps spread over Bunds, below 60bps over French OATs; Greek 10yr GGBs at below 5%
- Risk premia to implode, interest rate curves to flatten. Curve spreads to tighten, volatility spreads to compress, cross-spreads to narrow.
(3) Japan Second Phase of Abenomics
Our recap views on Japan could read as follows:
- Abenomics may likely fail, eventually, but before that efforts will be stepped up, further inflating the bubble in the equity markets. BoJ may be close to confirming its QE operations for 2015 and even increasing their magnitude from already monumental levels.
- Two years from now, the Yen is significantly weaker than it is today in both a Abenomics’ failure scenario and a more benign scenario. Currency debasement is either the result of a successful laboratory experiment of the BoJ or the poster child of its failure.
- Private-sector credit spreads are at rock-bottom levels and offer the best payout ratios to hedge failure of Abenomics in the years to come. We start an accumulation program here, as spreads can hit bottom in the next six months.
Position-wise, our baseline for Japan scenario is two-phased:
- First phase: Short Yen, Long Equity, Tighter Credit Spreads
- Second phase: Short Yen, Lower Equity, Higher Rates / Credit Spreads
As we run out of space here, we will expand on actual portfolio trades’ terms and conditions and execution strategy in our Investor Presentation.
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Cross-Markets Recap
Before we go, to recap, our current and expected positioning for the few weeks to come is formed against such convictions as:
- US: neutral on real economy, neutral to bearish on equity, bullish on bonds short term but bearish medium term
- Europe: bearish on real economy, bullish on equities and bonds
- Within Europe, long Italian equities, long Greek banks, long Disinflation
- Japan: bearish on real economy, long equities for nominal rally, short yen, hedged on tightness of rates/credit spreads
- China: bearish on economy, inevitable GDP slow down exposing imbalances, but market has priced it in for the short term. Thus, tactically long segments of the market there
- Emerging Markets – neutral on real economy, neutral to bearish on equity, open eyes on Argentina, Eastern Europe buying tactically on possible dips
What I liked this month
The Russian Crisis in 1998 - Radobank Read
A Case Study of a Currency Crisis: The Russian Default Read
Grieving Russians begin to question secret Ukrainian war – FT Read
Europe needs new investments, not new rules – Bruegel Read
Sharp decline in intra-EU trade over the past 4 years - divergence between the Euro Area and the European Union as a whole is almost non-existent Read
W-End Readings
Japan and the EU in the global economy Read
Understanding the challenges for infrastructure finance Read
Argentina – Sliding Down A Slippery Slope Read
South Korea will reach zero inhabitants by 2750 Read
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Thanks for reading us today. For those of you who may be interested, we will offer an update on our portfolio positioning to existing and potential investors during our Bi-Monthly Outlook Presentation to be held on Tuesday September the 23rd at 5.00PM. Supporting Charts & Data will be displayed for the views rendered here. Specific value investments and hedging transactions will be analyzed. Please do get in touch if you wish to participate.
Francesco Filia
CEO & CIO of Fasanara Capital ltd
Mobile: +44 7715420001
E-Mail: francesco.filia@fasanara.com
Twitter: https://twitter.com/francescofilia
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