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USDTRY Target 10, 12
[2018-09-17   11:44 GMT]

on Monday the Turkish currency suddenly tumbled in thin trading on what some attributed was a Reuters reports that Erdogan has asked authorities to scrutinize the board of a major local bank Isbank, with the president reportedly focusing on the role the main Turkish opposition party, the Republic People's Party (CHP) played on that board.

Separately, Bloomberg reported that in an attempt to aid Turkey's ailing banks, the government would unveil measures to help banks tackle the expected pile-up of bad loans resulting from the lira’s plunge and soaring interest rates. Specifically, the plan will seek "to mitigate the need for capital injections and propose carving out non-performing loans" which could be transferred into a state-designated "bad bank."

The plan will be unveiled on Thursday when Erdogan's son-in-law and Turkey's Treasury and Finance Minister Berat Albayrak, announces a medium-term economic program with fiscal and macroeconomic targets for the next three years.

Shares of Turkish banks rallied on the news. The plan, if confirmed, will be a welcome move for bank investors as even before the currency crisis worsened in August, Turkey’s banks - which recently dumped 20% of their gold to shore up liquidity - were struggling to deal with a pile-up of bad debt and restructurings.

The Week of the Pound
[2018-09-17   07:36 GMT]



The pound kicked off a big week for Brexit talks on an upbeat note, holding above $1.30 and nudging higher again after a dip on Friday. Sterling has been highly sensitive to the risks surrounding a no-deal Brexit in recent months, with a perceived increase in the chances of the UK crashing out of the EU without a deal in six months’ time one of the drivers behind a significant increase in bets against the currency during August.

Since the start of September, however, the British currency has climbed as investors have grown more confident a UK-EU agreement could be as little as eight weeks away. Recommended The Big Read Deal or no deal? May’s moment of truth on Brexit 4 hours ago There are signs leaders in Brussels believe a deal is possible — and quickly — but concerns linger it will not be ratified in the UK.

Ahead of a meeting with EU leaders in Salzburg this week, Theresa May has moved to bring wayward Tory Brexiters into line, and curb the ambitions of others — such as former foreign secretary Boris Johnson — ahead of the annual party conference.

The Conservative party leader has said in a BBC interview that MPs will have a choice between her deal, or no deal. Bearish bets against the currency declined in the week to September 11, according to an analysis of data from the US Commodity Futures Trading Commission by Goldman Sachs.

Non-commercial traders, or firms that speculate on the exchange rate, cut their net short positions in sterling by $0.6bn to $5bn overall. The move by hedge funds, which had been responsible for the extent of the negative sentiment against the pound, was even more pronounced, according to Goldman.

Leveraged funds reduced their net short positions in the pound by around $1.5bn — although they cut their short positions in euro by even more, nearly $3bn. At pixel time, the pound was trading up 0.15 per cent against the dollar on the day at $1.3084 and just under 0.1 per cent higher against the euro at €0.8888. FT

No one knows what Turkey's central bank will do today
[2018-09-13   05:04 GMT]

When Turkey's inflation rate surged to a 15 year-high of 18 per cent earlier this month, the country's central bank vowed to take action at its next rate-setting meeting. That meeting is today, and analysts don't have a clue what the bank will do.

Some believe Turkey could walk back its signals from last week and continue to buck economic orthodoxy by keeping its benchmark rate at 17.75 per cent. Others believe the central bank will go big and announce a 725bp hike, to a rate of 25 per cent. “The lesson of history is that CBRT builds expectations and then under delivers.”

When Turkey's central bank held off from raising interest rates in July, the lira slid dramatically against the dollar: the currency has lost roughly 40 per cent of its value this year. Given the substantial amount of dollar-denominated debt held on Turkish balance sheets, a devaluation of this magnitude makes repayment all the more expensive, so the central bank might hike rates this time around to stabilize the lira.

Much of the confusion about what Turkey's central bank will do stems from uncertainty about how much grip President Recep Tayyip Erdogan has on determining monetary policy.

Considering Erdogan just appointed himself the chairman of the country's $50bn sovereign wealth fund, and appointed his son-in-law turned Finance Minister as deputy, it would not be a complete surprise if the self-avowed “enemy of interest rates” prevails. FT

BoE, ECB and CBRT rate decisions
[2018-09-13   05:00 GMT]

Equity indices across Europe are expected to open lower on Thursday morning ahead of several central bank meetings. Yesterday, White House said that it had invited Chinese officials to restart trade talks. As a result, the dollar struggled to make gains on Thursday while the Chinese yuan held gains.

In Europe, the focus seems to be on monetary policy with three meetings scheduled. The Bank of England and the European Central Bank are due to announce their latest decisions at lunchtime in Europe. Analysts are not expecting any changes in policy but will be monitoring the statements carefully.

In Turkey, the central bank is expected to increase interest rates to compensate for the depreciation of the Turkish lira.

Market players will also keep an eye on the U.K. government, with a cabinet meeting scheduled to take place Thursday morning. Prime Minister Theresa May is set to discuss the issue of a no-deal with the European Union over Brexit CNBC

Turkey’s Building Boom Sags
[2018-09-11   10:20 GMT]

Turkey’s construction boom has begun to unravel, threatening to deepen a currency crisis that has sent ripples through global markets and alarmed investors amid a broader emerging markets selloff.

Across Turkey, scores of construction projects have been canceled or frozen in recent months and dozens of companies are straining to pay their foreign-currency debts as the local currency weakens, according to investors and executives in the sector.

Many firms are now selling below construction costs as Turkey’s backlog of unsold houses has swelled to around two million, enough to cover four times average annual new sales.

“The construction sector in Turkey is sick, even on the verge of a coma,” said Tahir Tellioglu, chairman of the Building Contractors Confederation of Turkey, which has 120,000 member companies. “70% of all private construction work has stopped or slowed down.”

Gold And Silver Are Acting Like It's 2008
[2018-09-11   06:09 GMT]

2008 has special significance for gold bugs, both because of the money they lost in August of that year and the money they made in the half-decade that followed. Today’s world is beginning to feel eerily similar.

In 2008 the periphery crisis spread to the core, threatening to kill the brand-name banks that had grown to dominate the US and Europe. The markets panicked, with even gold and silver (normally hedges against exactly this kind of financial crisis) plunging along with everything else. Gold lost about 20% of its market value in a single month. Silver also fell harder than gold, taking the gold/silver ratio from around 50 to above 80 — meaning that it took 80 ounces of silver to buy an ounce of gold.

The world’s governments reacted to the crisis by cutting interest rates to record lows and flooding the financial system with credit. And precious metals and related mining stocks took off on an epic bull market. So it’s easy to see why the investors thus enriched look back on 2008 with nostalgia.

Now fast forward to Autumn 2018. The global economy is booming because of artificially low interest rates and massive lending to all kinds of subprime borrowers. One group of them – the emerging market countries – made the mistake of borrowing trillions of US dollars in the hope that the greenback would keep falling versus their national currencies, thus giving them a profitable carry trade.

Instead the dollar is rising, threatening to bankrupt a growing list of these countries – which, crucially, owe their now unmanageable debts to US and European banks. The peripheral crisis, once again, is moving to the core.

And once again, gold and especially silver are getting whacked. This morning the gold/silver ratio popped back above the 2008 level.

So are we back there again? Maybe. Some of the big western banks would probably fail if several major emerging markets default on their debts. And historically – at least since the 1990s – the major central banks have responded to this kind of threat with lower rates, loan guarantees and, more recently, massive and coordinated financial asset purchases.

So watch the Fed. If the EM crisis leads to talk of suspending the rate increase program and possibly restarting QE, then we’re off to the races. Just like 2008.

 

 

Bearish Oil
[2018-09-11   06:04 GMT]

A relatively new development in global oil markets has unfolded in recent months, one that has replaced another new development that also has the ability to also roil oil markets. Renewed concerns of a heightened trade war between Washington and Beijing are bringing more pressure on global oil markets than the impending removal of more than 1 million barrels per day (bpd) of Iranian oil due to fresh U.S. sanctions, ushering in two market movers that traders did not have to wrestle with just a few months ago. Iran is OPEC’s third largest crude oil producer.

President Trump will likely move ahead this week with more duties for Beijing, putting in place another $200 billion in tariffs on Chinese goods, Bloomberg reported on Friday, citing six people familiar with the matter. The move would mean that around 50 percent of Chinese exports to the U.S. would be subject to extra duties. Beijing, for its part, has threatened to retaliate with $60 billion worth of new duties on U.S. imports to China.

Trump has threatened to up the ante even more, stating recently that he’s ready to put new tariffs on all $505 billion worth of Chinese products imported to the U.S. The problem for China is manifold since it simply can't go toe to toe with the U.S. in a retaliatory tit-for-tat fashion since the U.S. imports nearly five times the dollar value in goods from China than China imports from the U.S. According to the U.S. Census Bureau, China imported only $129.9 billion in U.S. goods last year compared to some $505 billion the U.S. imported from China.

In short, while renewed sanctions against Iran, which kicked in last month, are largely factored into the price of oil, and more sanctions leveled directly against Iran’s energy sector to hit on November 4 seem to be already factored in, trade tensions and lower economic growth and weakened oil demand have yet to run their full course. When, and particularly, how trade tensions will end is anybody’s guess at this point.

September 11, 2018
[2018-09-11   05:57 GMT]

Memory: Crashing into World Trade Center & Pentagon. It's been 17 years since the attacks of September 11, 2001

Goldman Bear-Market Risk Indicator
[2018-09-10   08:19 GMT]

A Goldman Sachs Group Inc. indicator designed to provide a “reasonable signal for future bear-market risk” has risen to the highest in almost 50 years. The firm’s Bull/Bear Index, which is based on measures of equity valuation, growth momentum, unemployment, inflation and the yield curve, is now at levels last seen in 1969. While the gauge is at levels that have historically preceded a bear market, Goldman strategists including Peter Oppenheimer wrote in a note last week that a long period of relatively low returns from stocks is a more likely alternative.

Crypto-Mania Collapse Update: $638 Billion Gone
[2018-09-10   06:19 GMT]

Bitcoin is down 68% from its peak, and is back where it was on October 31, 2017

Ethereum collapsed 86% from its peak and is back where it was over 15 months ago

Ripple XRP has collapsed by 92% from its peak on January 4, 2018, and is back where it had been over 15 months ago.

Bitcoin Cash has collapsed 89% from the peak to $469

EOS has collapsed 78% and is back where it had been on December 7

Stellar shot up in six weeks from about 3 cents to 86 cents by January 3, 2018, and has since collapsed 78% to 19 cents

Litecoin peaked on December 18, 2017, at $353 and has now plunged 85%

Of the nearly 2,000 cryptos, there are many that have become worthless and trading volume in them has died down. Even among the larger ones, there are plenty that have plunged 90% or more. In other words, most of that wealth has already vanished or was transferred to sellers who took that hated fiat money and laughed all the way to the hated bank. What remains is a mop-up operation that may drag out for a while, kept alive by some exciting but fleeting moments of hope.

The world has not learned the lessons of the financial crisis
[2018-09-10   06:10 GMT]

Banks must now fund themselves with more equity and less debt. They depend less on trading to make money and on short-term wholesale borrowing to finance their activities. Even in Europe, where few banks make large profits, the system as a whole is stronger than it was. Regulators have beefed up their oversight, especially of the largest institutions that are too big to fail. On both sides of the Atlantic banks are subject to regular stress tests and must submit plans for their own orderly demise. Derivatives markets of the type that felled AIG, an insurer, are smaller and safer. Revamped pay policies should prevent a repeat of the injustice of bankers taking public money while pocketing huge pay-packets—in 2009 staff at the five biggest banks trousered $114bn.

Argentine Credit Line,
[2018-09-06   06:35 GMT]

While Emerging markets crisis has no end in sight, Argentina’s economy minister sounded upbeat on Wednesday about clinching a new deal with the International Monetary Fund after two days of talks in Washington, and said had sought U.S. support for securing approval from the IMF’s board.

The peso ARS=RASL closed 1.38 percent stronger at 38.52 per dollar on Wednesday, marking a rare pause in losses that have shaved more than 50 percent off its value this year, making it one of the worst performing emerging market currencies.

Economy Minister Nicolas Dujovne said he believed a deal to release early disbursements from a $50 billion standby loan agreement with the IMF could be put to its board by the end of the month, helping to shore up investor confidence in Latin America’s third-largest economy.

Argentina has already received $15 billion from the credit line, which was agreed upon in June but has failed to clear up concerns about the country’s ability to pay off its debt.

Dujovne denied a report by local Argentine media outlet Infobae that Argentina was also in talks with the U.S. Treasury Department for a $5 billion to $10 billion credit line. Dujovne said that while Argentine officials had not spoken about direct financing from the United States, he had spoken with U.S. Treasury Secretary Steven Mnuchin about backing Argentina’s bid to win the IMF’s approval for a new deal. The United States controls 16.52 percent of votes in the IMF, the largest of any country by far.

On the eve of the talks with the IMF this week, Macri’s government announced ambitious new targets to balance next year’s fiscal deficit, to be paid for with new taxes on exporters and steep spending cuts.

But markets remained skeptical, with the peso losing 5.25 percent of its value against the dollar in the first two days of the week, despite the central bank selling $458 million on the local spot market.

Bitcoin News,
[2018-09-06   04:56 GMT]

Interesting 'fall-off-a-cliff' Bitcoin yesterday yielding Head & Shoulder pattern where the hard landing on the neckline rectifies a bunch of fives

The Fun of the Pound
[2018-09-05   07:03 GMT]

The next few months are going to be fun for pound traders.

The pound fell below $1.29 on Monday after U.K. Prime Minister Theresa May’s Brexit strategy came under attack from both Europe and her own party over the weekend. With each side warning of the risk of no deal, investors are becoming increasingly sensitive to Brexit headlines.

“What is quite hard for markets to work out is how much of this is political noise and how much of it is genuinely moving the probability of no deal,” said Mike Amey, a managing director at Pacific Investment Management Co., adding the fund is hedging risks by not having big sterling positions either way.

While market participants still see no deal as unlikely, the approaching endgame is a prospect that pushed a one-month options gauge of swings in the currency up by nearly 50 basis points on Monday to a three-week high above 8 percent. That came after comments last week by European Union Chief Negotiator Michel Barnier sent sterling up by 1 percent before falling back.

The headlines will keep on coming. U.K. Brexit Secretary Dominic Raab admitted that the October deadline for a deal may be pushed back, and there is increasing talk of an extra emergency U.K.-EU summit in November. U.K. lawmakers will return this week from a summer recess and any proposed Brexit deal would have to be voted on before the U.K. leaves the bloc in March.

Will EURUSD Head To Par?
[2018-08-29   06:55 GMT]

This chart is dedicated to the weekly chart with the moving average of 20 and 50. The sell cross has coordinated a plummet of 22% on average. The latest pummel has reached only 10% and if history is of indication, the average of 22% should be executed targeting PAR & below.

ForexSurvivor Today: 375%
[2018-08-28   06:43 GMT]

With Nasdaq closing above 8,000 threshold, an unprecedented high, ForexSurvivor Trading Program – OCTOPUS – has called for closing all trading short, medium, and long term positions that started in 05 August 2017. The statement has procured 375% Return on Investment ROI within the assured twelve months (August 2017 – August 2018) and Investors will be released the 30% ROI as per contract-promised by September 2018.

Untradeable,
[2018-08-20   06:55 GMT]

The Turkish lira has effectively become untradeable.

The currency fell Friday as the prospects of further U.S. sanctions and downgrades by S&P Global Ratings and Moody’s Investors Service spurred uneasiness before Turkish markets close for a weeklong public holiday. As things stand, the fear is that there’s little investors can do to protect themselves from the turbulence.

Offshore investors with lira assets will be faced with a difficult question. Either to close their lira position, convert to dollars and exit, or to continue bearing lira risk. In the absence of an improvement in U.S.-Turkey relations or a credible economic program, we think the outflows will accelerate.

Turkey Survives Temporarily
[2018-08-16   06:04 GMT]

If the wire is very true that Qatar pledges to invest $15 Billion with its strategic ally Turkey, that means that Turkey has lost in a matter of few weeks over $30Billion when its currency was devalued harshly under a political plot.

On the other hand, the "enemy of my enemy is my friend," Germany’s chancellor Angela Merkel and Turkey’s President broke the diplomatic ice and during a phone call, Merkel said that the "Turkish economy's strength is important for Germany." They also discussed the current situation and agreed on a meeting between Treasury and Finance Minister Berat Albayrak and the German ministers of economy and finance.

Today, Erdogan is set to speak with France’s President, Emmanuel Macron.

Will call the rescue effective once USDTRY is set to close below 5.00. Technically, a bounce is expected to meet 6.6.

Iran Endangers Its Own Oil,
[2018-08-14   06:47 GMT]

Indian Oil Corp, the biggest refiner in India, has purchased a total of 6 million barrels of U.S. crude oil for delivery between November and January, as it has started to look for a replacement of Iranian oil cargoes ahead of the U.S. sanctions on Iran’s oil exports returning in early November.

Iran is said to have started to offer India cargo insurance and tankers operated by Iranian companies as some Indian insurers have refused to cover oil cargoes from Iran in the face of the returning U.S. sanctions on Tehran.

Hindustan Petroleum was said to have cancelled a crude oil shipment from Iran after its insurer refused to provide coverage for the cargo on concern about U.S. sanctions.

India’s imports from Iran could start to slow from August as some big Indian refiners worry that their access to the U.S. financial system could be cut off if they continue to import Iranian oil, prompting them to reduce oil purchases from Tehran.

Crush the Kremlin Ruble,
[2018-08-14   06:25 GMT]

The immediate sanctions coming into force are limited to banning exports of US electronics to Russia. But it’s what comes next that is perplexing. Washington is saying that if Russia does not give a “guarantee” on halting the future use of chemical weapons, and if Moscow does not allow international inspectors into its country to monitor alleged chemical weapons – then the second wave of sanctions will be applied within 90 days.

The subsequent round of sanctions include banning Russian state-owned airline, Aeroflot, from operating flights to the US. The impossibility of Russia meeting Washington’s absurd demands make the further application of sanctions inevitable.

A separate bill is passing through Congress which is planning to hit the Russian banking system, aimed at preventing international transactions.

Senators sponsoring that bill have labeled it “the sanctions bill from hell”. The title of the proposed legislation says it all: “Defending American Society From Russian Aggression Act”. Senators John McCain, Lindsey Graham, Robert Menendez and Ben Cardin, among other Russophobes who are pushing the bill, are explicit about the objective. They say the measures implemented will “crush the Kremlin”.

The chances are paltry that President Trump will use his executive power to block the forthcoming sanctions. The political climate in the US among the intelligence agencies, lawmakers and the mainstream media has become saturated with anti-Russian hysteria. The US is an oligarchy in throes of insanity beyond democratic accountable to its people.

Already this week’s announcement of more offensive economic incursions on Russia sent the Russian economy plummeting. The ruble, bonds and stocks all nosedived. This is an attack on Russia’s vital interests. An economic Barbarossa.

For Washington this seems to be open season for sanctions. It’s not just Russia and Iran on the receiving end. China, Canada, the European Union, Turkey, Venezuela, North Korea, among others, are also being battered with American economic warfare, either under the name of “sanctions” or indirectly using the rhetoric of “tariffs”.

From the conflict in Ukraine, to the alleged annexation of Crimea, to Moscow’s principled support for Syria being traduced as “supporting a dictator”, to alleged “meddling in US elections”, and much more, Russia has shown huge reserves of stoicism and self-discipline in tolerating what can only be called gratuitous American aggression.

The crazed American rulers are pushing the world to the brink by their belligerence. Washington has heretofore given notice that it is not interested in diplomacy, dialogue, or negotiation. It only has one mode of conduct – war, war, war.

Some of Wall Street’s biggest banks are warning investors to steer clear of Russian assets after the ruble’s worst week since the 2015 oil crash amid mounting risks of crippling sanctions from the U.S.

Both Republicans and Democrats in Congress have called for tough measures against Russia in the wake of last month’s summit between President Donald Trump and his counterpart Vladimir Putin. Still, the outlook for passage of the bill submitted last week remains uncertain, particularly since the U.S. Treasury warned that sanctioning sovereign debt could cause instability in global markets.

The U.S. is more likely to apply sanctions selectively to avoid “collateral damage” than to pass the bill in full. Pressure on Russia, however, is only likely to rise further in the near term, he said in a note.

Reduce holdings of Russian assets because the tail risk from potential sanctions is “just too large.” High foreign ownership of Russian sovereign debt means that sanctions would have a big impact on bond yields.

However, No decision can be taken on the bill until the House returns from summer recess next month, leaving a cloud of uncertainty over markets until then.

First Coup D'état, then Lira Political Plot
[2018-08-13   06:20 GMT]

The lira tumbled as much as 11 percent against the dollar in thin trading in Asia, before trimming losses after the nation’s Banking Regulation and Supervision Agency stepped in to limit swap transactions on the battered currency.

Turkey will announce measures to calm markets on Monday, according to Treasury and Finance Minister Berat Albayrak. On The other side, Turkey’s friction with the U.S. is weighing on the lira, and is unlikely to improve anytime soon.

The drivers of the lira’s decline are very specific to Turkey – therefore it should not derail the positive fundamentals in other emerging markets over a longer-term.

Goldman Sachs warned 10 days ago that further lira depreciation to 7.1 would erode all of Turkey's banks' excess capital.

Don't forget though, as Erdogan said earlier in the day, "they have dollars, we have god." Good luck buying a mocchachino with some 'gods.'

This is a textbook currency crisis that’s morphing into a debt and liquidity crisis due to policy mistakes. The way things are going, markets need to be prepared for a hard landing in the economy, corporate defaults on foreign currency debt, and possible bank failures.

Erdogan is left with three options: 1) Hike rates (he said he wouldn't), 2) Enforce Capital Controls (he said he wouldn't), and 3) Confiscate Gold/Dollars (he never said he wouldn't).

Be wary: It is yet another evidence of the train wreck that monetarists cause in economies. Those that say that “a country with monetary sovereignty can issue all the currency it wants without risk of default ” are wrong yet again. Like in Argentina, Brazil, Iran, Venezuela, monetary sovereignty means nothing without strong fundamentals to back the currency. Turkey’s lenders and governments made the same incorrect bet that Argentina or Brazil made. Betting on a constantly weakening US dollar and that the Federal Reserve would not raise rates as announced. They were -obviously wrong.

Raising rates to 18% does not encourage anyone in Turkey to keep money in the bank when the risk is to lose all the money. Rates went from 8 to 17.5% and the crisis worsened. It will not stop because of slightly higher rates.

Nucleus Dollar,
[2018-08-10   07:27 GMT]

The dollar has literally become the atomic bomb that no one else has. Disobey and sanctions would be unleashed so economy explodes. The pain in the Emerging Market Currencies has started to feel the hell - China‘s Yuan, Argentine Peso, Turkish Lira, Iran Rial, and now Russia Ruble.

Turkish Black Friday: Lira Plunges 13%,
[2018-08-10   07:05 GMT]

Between the pessimism notions of “Black Friday” and the number “13,” banks in Turkey will start a collapse mode similar to the oldish financial crisis saga of “Too Big To Fail” of 2008.

The Turkish lira hit a fresh record low amid a souring of diplomatic relations with the U.S. Traders sought out traditional havens in U.S. Treasuries and the yen. Turkish investors are looking to President Recep Tayyip Erdogan his son-in-law, Treasury and Finance Minister Berat Albayrak to calm their nerves when they speak Friday for the first time since the latest selloff began.

The government set a growth target of less than 4 percent, down from 5.5 percent on Thursday, a sign that authorities were taking whack at fixing the $880 billion economy’s vulnerabilities since a market meltdown sparked by last week’s U.S. sanctions. Yet the move has proved inadequate to temper investors unease.

Let’s not forget the Turkish central bank has a 5 percent inflation target and has not met it over the past decade.

Early Friday Erdogan called on Turks not to panic, according to state-run Anadolu Agency. “Don’t forget this: if they have got dollars, we have got our people, our right, our Allah,” he was cited as saying.

USDTRY TARGET REMAINS AT 10 WITH NO SINGLE INCH OF AMENDING

Watchdog doesn’t see the situation as critical yet: The European Central Bank has grown concerned about the exposure of some euro zone banks to Turkey following the lira’s plunge, the Financial Times reported. Banco Bilbao Vizcaya Argentaria SA, UniCredit SpA and BNP Paribas SA are particularly exposed after the Turkish currency lost more than a third of its value this year. The risk is that Turkish borrowers may not be hedged against the lira’s weakness and could start to default on foreign-currency loans.

Goldman Warns A Seven
[2018-08-09   05:41 GMT]

After its worst day in 10 years, the Turkish Lira's early rebound is already starting to fade amid denied rumors of US officials predicting Lira's demise, a record high yield at its bond auction, and Goldman warning of the collapse of Turkey's financial system

Turkey's 10Y bond yield topped 20% for the first time ever and Turkey's Treasury sold 539.7 million liras of 5Y debt today at 22.1% compound yield.

With tensions remaining high, the U.S. Embassy in Turkey has denied news in Turkish media that a U.S. official predicted the lira would weaken to 7 per dollar, calling the claim an entirely baseless "lie."

Goldman Sachs warns that further lira depreciation to 7.1 would erode all of Turkey's banks' excess capital.

Within the current backdrop, we view banks as being vulnerable to Turkish Lira depreciation given that it impacts:

(1) capital levels due to a meaningful portion of FC assets, which increase RWAs in local currency terms on Turkish Lira depreciation,

(2) asset quality and cost of risk, as Turkish Lira volatility can put stress on borrowers’ ability to repay as well as underlying collateral values. Moreover, Lira depreciation leads to higher provisioning requirements for FC NPLs, though banks are hedging this risk and can offset the impact through trading income.

Saudis Dump Canadian,
[2018-08-09   05:35 GMT]

The authoritative tone of Canada towards Saudi Arabia is rejected by Russia, adding that the Kingdom had the full sovereign right to manage its own affairs.


The Saudis have escalated their fury towards Trudeau's "progressive" propaganda. Having expelled the Canadian ambassador, froze new trade and investment with the G7 member, suspended a student exchange program and halted Saudi Arabian Airlines flights to Canada, the Saudis are stepping up their pressure very directly.


The FT reports that the Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost.”
Third-party managers are estimated to be mandated to invest more than $100bn of Saudi funds in global markets, executives say. While the proportion of that figure invested in Canadian holdings would be “fairly small in absolute terms,” the asset sale sent a strong message, one of the people said.


The sell-off began on Tuesday and underlines how the Gulf monarchy is flexing its financial and political muscle to warn foreign powers against what it regards as interference in its sovereign affairs. “This is severe stuff,” said one banker.



New Turmoil: Russia,
[2018-08-09   05:29 GMT]

New Turmoil: Russia,
The ruble tumbled, sliding to the lowest level since November 2016, Russian CDS blew out and Russian stock and bond markets plunged after Russian Kommersant newspaper published the full text of the US bill which seeks to impose "crushing sanctions" on Moscow for election meddling.


The ruble dropped more than 2%, sliding as low as 65 per dollar, and breaking out of a range it’s traded in since April, after traders had a chance to read the full text of the sanctions draft introduced last week by a bipartisan group of legislators.
The liquidation panic set in after it was revealed that the bill includes proposals to sanction new sovereign debt and banking transactions, effectively a repeat of the US sanctions imposed on Russia in 2014 following the Ukraine coup, which sent the Ruble plunging from the mid-30s to below 70 in the span of a few months.


As Bloomberg notes, traders are particularly concerned by a clause that calls for prohibiting "all transactions in all property and interests in property" of some of the country’s largest lenders. The listed banks, Sberbank, VTB Bank, Gazprombank, Promsvyazbank, Rosselkhozbank and Vnesheconombank all saw their stocks tumble in response.


“Sanctions will remain a risk, so we have had a cautious stance particularly in the corporate space," said Shamaila Khan, who holds Russian bonds as a director of emerging-market debt at AllianceBernstein in New York. "Sanctioning sovereign debt will be a last resort and corporate debt and individuals are a more likely target."


The State Department said the sanctions tied to the use of chemical weapons are expected to take effect around August 22. A second round of sanctions will be imposed later unless Russia meets conditions including providing assurances it will no longer use chemical or biological weapons.


No action will be taken on the draft until the House is back from summer recess in September, leaving room for more market jitters through the end of the month. But with President Donald Trump calling for closer ties with Russia, and the U.S. Treasury warning earlier this year against sanctioning the sovereign debt market, it’s uncertain the bill will make it into law.


"Russia continues to become more and more isolated and the ruble will continue to weaken. Capital flight will accelerate. That’s generally negative for asset prices"


TARGET: 100

Turkish Lira, No Courage to Stand Up to Politicians,
[2018-08-03   09:59 GMT]

The Turkish lira pared its decline against the dollar after inflation accelerated less than forecast in July.

Government bonds also trimmed losses after consumer prices rose an annual 15.9 percent in July compared with the median economist forecast of 16.3 percent in a Bloomberg survey. The currency had earlier slumped to a record low as investors remained on edge over tensions with the U.S.

The data brings some relief to Turkish markets that have been hit by U.S. sanctions on two government ministers over a detained American pastor and concerns about the central bank’s willingness to tackle inflation that is three times its target. Still, the fourth month of accelerating inflation has eroded the real policy rate to less than 2 percent and leaves Turkish assets particularly exposed to a shift in investor sentiment given the economy’s large external financing needs.

“This number is not going to let the central bank off the hook. The pressure is still on. The central bank and Treasury and Finance Minister Berat Albayrak “need to wake up and quickly to roll out some credible policy responses.”

The lira climbed as much as 0.1 percent after earlier touching an all-time low of 5.1146 per dollar. The currency was down 0.2 percent at 5.0782 per greenback as of 11:41 a.m. Istanbul time. The yield on 10-year government bonds fell as much as 9 basis points after the inflation numbers before rising 4 basis points to 19.08 percent.

The central bank is scheduled to next meet on Sept. 13. Policy makers unexpectedly left rates on hold last week, saying the economy was slowing, and it wanted to see the impact of 500 basis points of hikes since April. But many investors worry that it acted too late to contain a more than 25 percent slide in the lira his year, and that it is coming under from President Recep Tayyip Erdogan not to raise borrowing costs further.

The bank obviously does not have the courage to stand up to politicians and pursue a more restrictive policy.

Gold’s Appeal Waning,
[2018-08-03   09:53 GMT]

Gold’s appeal has waned, even amid ongoing trade-war tensions, partly because of an upbeat outlook on the U.S. economy that’s strengthened the dollar.

While gold is traditionally viewed as a haven in times of uncertainty, U.S. tax cuts and the Federal Reserve’s guidance for more interest-rate hikes has made the dollar an attractive alternative. There are other signs of investors getting out of gold -- holdings in exchange-traded funds are at a four-month low and money managers are holding their biggest bearish bet on record.

Trading In August,
[2018-08-01   07:25 GMT]

Gold has not confirmed a bottom yet and the low seems far from expectations.

AUDUSD has consolidated for a whole month within 150 pips signifying trend continuation: downward.

Sterling may revive a bit and the upbeat will sound like a dead cat bounce. Low is yet to be sealed.

EURUSD has managed charting a descending triangle along with a thin trading in July – quite an impressive wave ahead targeting 1.1200 when technical confirmation below 1.1530 is alarmed.

Have a Happy Holidays and be careful of thin trading in August

Lebanon, Iraq Uncover Scam Network Targeting Lebanese Banks
[2018-08-01   04:40 GMT]

Lebanese and Iraqi security services have uncovered an Iraqi network that spread false information about Lebanese banks in order to extort them, and several of its members have been arrested, Lebanon’s official National News Agency said Tuesday.
The agency cited an Iraqi statement issued by the national intelligence service on Monday. The network’s members claimed to have millions of dollars in assets in the banks, but the supporting documents were forged, the statement said. The intelligence service said the network attempted to defraud Bank Audi SAL, but didn’t say whether any money was extorted.
The bank issued a warning about the scam in a July 17 statement, saying it had been the subject of “fabricated, cheap and untruthful rumors on certain social media platforms, all of which are completely inaccurate and totally fallacious.”
Bank Audi is one of several Lebanese banks operating in Iraq and other cities in the region. Lebanon’s banking sector has remained stable amid political upheavals, an influx of 1.5 million refugees who have strained the country’s resources and slow economic growth.

Iran Rial Death Spiral, Can Be Stopped by Gold,
[2018-07-31   12:18 GMT]

Iran's rial has entered a death spiral, with the rial losing a stunning 12.5% in one day and annual inflation surging to 203%. To stop the death spiral, Iran should establish a gold-backed currency board.

The chart shows the downward roller coaster ride the rial has been on during the past six months, as well as this weekend’s free fall. As the chart indicates, the official IRR/USD rate is 44,030; whereas, the rate in the black market (read: free market) is 112,000. That widespread rate is now measured by a huge black-market premium of 154%. This means that those who are privileged and have access to the official exchange rate can turn handsome profits of 154% in the blink of an eye.

To stop the rial’s death spiral immediately, Iran should install a currency board and anchor the rial to gold. With such a currency board system, Iran would still have its rial. But, instead of being a junk currency, it would be as good as gold.

The currency collapse was encouraged by the US announcement in May that it was pulling out of the 2015 nuclear deal, that lifted certain sanctions in exchange for curbs to Iran's atomic programme. The US is set to reimpose its full range of sanctions in two stages on August 6 and November 4, forcing many foreign firms to cut off business with Iran.

Scrambling to put a floor under the rial, Iran’s central bank late Sunday promised new measures to restore calm. It didn’t say what those measures were, but they will likely be the first major moves for the new central bank governor Abdolnaser Hemmati.

CRUDE OIL
[2018-07-31   08:05 GMT]

SHALL WE ENJOY THE WAVE OF THE BEAR FLAG AS TOP SEEMS IN PLACE?

Rare And Beautiful,
[2018-07-31   08:00 GMT]

This is one of the rare and beautiful patterns of consolidation that lasted ONE month within 250 pips. The peak below 1.5900 has been attacked three times with no success while the valley above 1.5650 only one time.

The close beyond the mentioned bi-level is very crucial for the next trend to take a form of another 250 pips. The AUD fundamental aspect along with the release of FOMC interest rate of this week should be an added value to the signal to avoid a false break.

Descending Triangle,
[2018-07-30   06:44 GMT]

AUDCAD has been patterned well some geometrical formations that pinpoint to further plunging in the days ahead. What we got so far is impressive:

  1. Rally that started in May has ended at the 50% of the plummet that started in mid March.
  2. July, a descending triangle formation has not been prohibited.

Both factors conclude that an unprecedented low for 2018 will be on the making. The risk is set once a close above the 50% is triggered, an unlikely scenario this week. Further, you mat narrow down the risk by exiting once a close above last week’s high is confirmed.

Euro Backed by Buoyant Economy,
[2018-07-30   06:22 GMT]

The shared currency fell the most in a month against the dollar Thursday after the European Central Bank repeated its pledge to keep interest rates unchanged “at least through the summer of 2019.” But that projection was coupled with an upbeat view of the euro-zone economy, where ECB President Mario Draghi saw price pressures strengthening amid ebbing global trade tensions.

Some analysts saw this as a mismatch that could spell tighter monetary policy coming earlier than markets are currently pricing, in turn boosting the euro.

“The assumption of rates being on hold ‘at least through the summer’ appears inconsistent with the fundamental backdrop,” said Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce. “Despite the immediate correction, over the medium run the euro can and should trade higher.”

CIBC predicts the euro will end this year at $1.18, in line with the Bloomberg currency survey, before climbing to $1.23 by mid-2019 and then ending next year at $1.28, a level not seen since 2014. While the median forecast in the Bloomberg survey has weakened in recent months, it still projects euro strength, estimating the exchange rate at $1.26 by the end of next year.

 

Rate Decision of Six Banks,
[2018-07-30   06:18 GMT]

It is a different week and very heavy one; BOJ to have the inauguration to be followed by five other banking rate decisions including our FED decision. Bear in mind as well, that fundamental data is heavy from Dollar, NZD, GBP, and concluding the week with the booming of NFP.

This week may call all holiday vacationers back to desk a cause de volatility which would be implied for the rest of the month. Fasten your seat belt and watch!

FTSE
[2018-07-19   05:36 GMT]

FTSE OWES THE CHART A NICE DESIGN:

  1. BULLISH FLAG
  2. INVERTED H&S
  3. RETRACED 38%

THE BULL SIGN SHOULD TRIGGER A NEW HIGH

CLOSE < 38% NEGATES

Silver Line
[2018-07-04   09:25 GMT]

Silver levels between 16.35 and 16.05 are crucial. History shows that bumping onto these levels create an atmosphere of support, which is nowadays a strong resistance. One can summon up that a close above 16.35 is bullish and a close below 16.05 is bearish. The close above 16.35 may give a new impulse toward testing 17.20 and above again, or may fail and hint for a drop back below 16.05. Close below 16.05, expect a wash out towards 14.00 and much lower – which is being traded recently.

Gold Polyline
[2018-07-04   09:08 GMT]

Gold levels between 1263 and 1235 are crucial. History shows that bumping onto these levels create an atmosphere of consolidation - such condensed track record is shown in the blue polyline at the beginning of 2016 and 2017. Converging both-polyline and one can summon up that a close above 1263 is bullish and a close below 1235 is bearish. The close above 1263 may give a new impulse toward testing 1380 again, or may fail at the ascending TL near 1300/1320 and hint for a drop back below 1235. Close below 1235, expect a wash out towards 1200 and much lower.

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