Main Course: Europe
Merkel favours a Fast Track Treaty Change approach. Allow me to laugh. Lets say… if you had actually managed to create some backstops during that oh-so-fatefully-and-obviously-defunct 6 day meeting (which must be the fastest pace of events in which anything has ever happened in financial European politics) – which resulted in Greece reorganizing its bailout less than a month later, the EFSF not getting enough leverage or even a pitch book, and yields across the euro-area periphery skyrocketing even on changes in governance stamped “Bundesbank” – things might actually not look so bad at this juncture. Now, getting every country to fundamentally change the terms on which they have signed up for the euro-area in the first place in a faster time frame and expecting this hodgepodge to work seems like utter gibberish to me. You had your several years, but greed for either money (periphery) or political power and dreams of world domination ([hollow] core) made you run too fast. Now, why won’t the same influences bring you down 10 years from now, assuming you sign a treaty change in the next 10 minutes?
10 hours, 10 days, or 10 weeks, just wondering when the next massive pressures occur on your fellow currency.
Quick note 1: yen
Now, things are simmering along pretty OK in most world markets, but why on earth is the yen falling? (Coming back up to 78 to the dollar, was at 78.2.) is it in a very delayed fashion trading off the economic outlook discussions of the IMF and ratings agencies? Dollar strength? Reflection of the pressures that will come on Tokyo from Osaka’s new Mayor (Toru Hashimoto) if he actually manages to turn things around and is the new victor of Osaka Castle after Tokugawa Ieyasu? Who knows…
Quick note 2: gold
What the? Jumps at each major market open – Tokyo, London, New York – and remains pretty much flat after that. London/NY had increasing volatility as they should, and then also more pronounced negative slopes, but still, highly odd. Anyway, took out last week’s high at 1708 in dollar terms, and looks like it’s pricking higher with some resistance at 1715 (2-week-ago support turned resistance) and then again of course the 1720 level. Still remember that one? Most risk assets are showing slightly similar patterns, but as I mentioned earlier, gold is the only one with the strict volatility profile of tighter ranges (Tokyo/china trading most prominently) and also rather naturally holds up better.