Exit stage left – all too hard

Greece

Well my favorite Finance Minister is on the outer, all because he knows more about the economy, than all the idiots behind the IMF and EU plus creditors, Germany, France …the list is endless.

I have commented in a previous thread ‘Goodbye Yanis’ – it was obvious then, that Yanis knew too much and would be forced out. The EU has effectively done this in all negotiations.

So Greece is to call a referendum, July 5th. Choppy waters until then, but bear in mind please that the Greek people do not want to leave the Euro. Neither do Brussels mind you, as then they have to deal with Portugal, Spain, Italy and now France.

The Greeks have it too good in the Euro, around one third are government employees or beneficiary recipients. A lot of votes, depends on whether the younger generation ends up voting. All in all though a volatile period for every investor.

On stock markets, Greece markets are suffering – big time.

Want to gamble – in a ‘win win’ situation, then one would look at those companies in Greece with little or no debt and a good business – and no banks are not a good business. Big phat disclaimer, but similar to the Russian markets when the oil price dropped – the Russian stock market was oversold and recouping value nicely. You have to have the money though.

Puerto Rico

Okay, read about the U.S. Legal opinion on the Bond sharks some time ago and this Country was off my radar. Most South American countries, including Brazil are having a hard time.

Commodities ain’t recovering for some time, so just pick a country.

My apologies on that one, PR – the country is bankrupt and the American hedge-funds will suffer the most – yes the piranha bond buyers will lose all their monies – real bugger … (not)

Whilst we are on South America, Brazil. Suffering through oil price collapse have actually increased the interest rates to attract capital. The currency having taking a huge deflationary hit over commodity prices and lowering interest rates are now caught between a rock and a hard place.

So which country will be next?

That is the problem with currency wars, all good until you need some other people’s money to be invested – the tide is turning – and oil prices, due to demand, will continue to decline.

China

Which I do not love to talk about.

The economy that has to suffer a depression to reawaken the powers that be, that a consumer based economy is a tough ask, the hard landing not avoided due to composite of debt and the population has a social disease.

Gambling.

Millions of mums and dads invested in the only real casino outside of Macao – stock market.
At least it is no longer copper.

The Government was fully aware of the problems associated with the stock market, intervention into this area all too little and far too late.

Government is doing its best to reignite the factories, but the debt on all levels crippling.

The history of the U.S. Great Depression being rewritten, one hopes that it will be short lived depression and that social issues will be short.

Those with money getting it out of China, in very inventive ways to avoid government restrictions, but hello real estate booms in US, Canada and Australia (east coast).

Then we have a compounding problem for coal export countries, demand for thermal coal dropping, the Government placing huge investments in renewable energy. Ke sera sera – hmm that means Australia will continue to suffer (must be hard for Stevens to work out what to do next with the Aussie dollar – as with all central bankers – clueless.)

U.S. Fed Reserve

Well appears that the Fed Reserve is playing ‘ping pong’ media.

“A September interest rate hike is “very much in play” if the U.S. economy continues to strengthen – now the quote continues but this point is interesting, as the U.S. is technically in recession. Yes the only thing moving upwards against bad economic data is the minimum wage. Oops now to continue ..”though the Federal Reserve could also wait until December to start tightening policy,” an influential Fed official William Dudley, said in a Financial Times interview.

New York Fed President William Dudley, quoted in the Financial Times, said, “It would not shock me if we decided to lift off in September, or it wouldn’t shock me if the data were a little softer and it caused us to wait.”

What they are doing is ‘testing the market’ and watching markets on this absolute hypothesis of either September or December- it is September by the way so nothing to worry about.

USD will jack up, short Euro and long USD, as nothing will stop capital departing the threat of Grexit – July 5th the referendum – then we shall see whether Tsipras can lay the blame on his constituents.

Investing in general – look someone had a go at me the other day about stock markets, they know little about bonds or capital flows – just the fact that the ASX dropped two percent and China crashing.

Well China is self explanatory- stay away – unless you read mandarin.

If China stuffed and puts out misinformation on manufacturing and exports, how can anyone trust anything else coming out of China?

On stock markets generally, a correction is around ten percent, a crash is around twenty percent plus.

What is two percent?

A hiccup – but that does not condone investing in stocks – why would anyone invest in Banks when on ASX, four of the top 6 companies are Banks?

In Oz, remember that majority of lending is to real estate, what happens when values collapse?

Fed up with hearing that real estate prices double every ten years, good in lower interest rate environment (post 1987) but this is 2015 – review history (1976 through to 1984) them the fucked up years.

Gold miners?

Well from my point of view researched the lot, a collapse in the gold price below a US$ 1,000 would be great for the industry – as it will get rid of the chaff – those left standing with little or no debts, good mineral assays and low cost mineable deposits will be the winners.

Then you have mining companies, like duh….. all raw materials are dropping due to lack of demand – which country on the globe has a demand for commodities?

Oil, get real and accept the new norm for oil prices may just be US $60 per barrel and below (hazard a guess at US $35 as the low ;0) – not saying that in 2017 there will not be some froth in the market, but a long bloody wait for any return.

If anyone says China, they have rocks in their head and know very little about the current state of play. China is even reducing thermal coal imports, as they switch to renewable energy – so with manufacturing declining rapidly, this means less energy production through lower demand.

Japan’s demographics plus Abe’s economics – nothing meaningful, in fact will lead to a further f@cked up economy and lower Yen.

America?

Europe?

England?

So if one looks at stocks, at least pick companies that have manageable debts, local (or US) markets and good management, do not overlook an inelastic product.

As I have said before all Countries stock markets will rise when governments deflate currencies. Quite a normal reaction, those with cash trying to preserve value.

Remember that the world is to reset financially, volatility is the name of the game. Everything that you think will happen won’t when you want it to, will when you won’t.

In the U.S. companies export sales will be affected by the higher currency value.

Yes all too hard… With exception of currencies – capital flows dictate values.

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