Global Macro Trading Journal
- Thread starter Daal
- Start date
Still not sure where that capital is going exactly... and the greater risk to the fiscal integrity of the euro is not that Greece, Spain et al leave, it's that they stay and get bailed out on a trillion-scale.
Why do you think the Bundesbank is basically saying "Go for it dipshits, we want you to leave:"
The impact of a Greek exit from the eurozone would be substantial but "manageable", Germany's Bundesbank said, raising pressure on Athens to keep its painful economic reforms on track.
http://www.telegraph.co.uk/finance/...says-Greek-euro-exit-would-be-manageable.html
Precisely -- such a scenario would be so horrendous, in fact, that betting odds are on Germany caving at the last minute -- and the ECB unleashing the printing press -- rather than allowing a bank run on the entire continent to take hold.
It's a massive game of chicken... and much what I said before: It's not that a Greek / Spanish / Italy exit is intrinsically bearish for the euro -- given the immediate and long term fiscal improvements such would bring -- but rather that uncertainty and economic disruption surrounding a potential exit, and the potential for a massive liquidity cave-in at the last minute (LTRO to the Nth), is high.
I think Eur/USD could head down to 1.2500, then bounce off those lows. If so, SPX declines, then reverses like what happened today.
Yep, and Germany borrowing at zero...
Gillian Tett arguing that the euro zone's inherent advantages as a single currency bloc are basically already shot.
But those flows aren't leaving the euro -- just going elsewhere within the bloc.
As another explanation, one could argue for a general collapse in lending activity and monetary velocity as business conditions seize up -- but that's different than outflow, and arguably self-correcting on resolution / increased export competitiveness as euro declines.
http://ftalphaville.ft.com/blog/2012/05/23/1012581/capital-is-leaving-europe/
"Perhaps more interestingly, the main reason behind the negative overall portfolio flows was the activity of eurozone investors, who bought â¬60bn of foreign assets, mainly bonds and money market instruments. This is the largest foreign investments in almost 1.5 years."
And this was MARCH data
"Perhaps more interestingly, the main reason behind the negative overall portfolio flows was the activity of eurozone investors, who bought â¬60bn of foreign assets, mainly bonds and money market instruments. This is the largest foreign investments in almost 1.5 years."
And this was MARCH data