Hello,
at first glance I have to say unfortunately, for last week: same business as usual in recent weeks. Is exactly what happened, what did the last few weeks, said. Since the end of the QE-Programme markets become more volatile, risky assets tend weaker, credit spreads are larger.
The relationship of the QE-Programme is in the MSCI Chart increasingly clear:
2 interesting developments of the last week I found but then it is worth mentioning:
The euro, in many media said many dead, saw a small comeback.
good for the financial markets? No, unfortunately not. Why? Because now that happen, I have a little premature at 13.3. have feared. (Context EUR / USD and equity markets:
http://franzlischka.blogspot.com/2010/03/mein-ublicher-senf-zur-aktuellen_13.html )
The appreciation of the euro was only marginally the U.S. dollar, instead a massive for Australian dollar and other currencies instead of carry trade system:
Ouch, I can say. This looks like a massive short squeeze. Must be so because some traders have been positioned all wrong.
The EUR / USD appreciation, however, was relatively restrained. Sequence for the remaining markets: the popular carry trades like AUD / USD were destroyed last week right as possible. And so what has long been very negative for the equity and other markets:
After I read already grad short on the euro and in any case every time on quantitative easing: reading lately constantly the ECB would have started with the purchase of the bonds PIIGS QE their own program. I think that is plenty of covered. For a few reasons. That the program is sterilized by weekly deposits, is only the technical aspect, so, strictly speaking, by definition, can already be no QE. Despite of this, virtually exchanged good against "bad" money. Important for me is the volume of the program: In the first week, the ECB bonds bought at € 16 billion, the buying of MBS bonds alone (the largest, but not only part of the QE of the Fed) had a volume of $ 1.25 trillion ! They are completely different dimensions. The sterilization of weekly deposits indicates also suggest that the ECB does not intend to hold the bonds for long. Within the ECB, the program was already controversial. Axel Weber, the most likely successor Trichet (from November 2011) announced his displeasure for a central banker also incredibly sharp known in the media. Here, the ECB clearly politically driven over and will never stand resolutely behind the program, unlike in the United States, where Bernanke's reputation as the man with the helicopter more than justice.
was at the economic data's in the U.S. this week so some disappointments (Initial Claims, Leading Indicators). The most important economic indicator for me was the last week but the weekly published MBA Purchasing Index, which measures the applications for mortgage loans (only for purchase, refinance it for its own index). It reflects the feared to boom-and-bust scenario, in consequence of the Home Buyer Tax Credit, on 30 April ended:
Only a strong increase, then a fall to a new 13-year low. That will still mean a couple of excellent April data, but devastating Maidaten. And the next problem is anyway already: Reset The next wave of mortgage.
Here the age-old and well-known chart from Credit Suisse:
If your time to "mortgage resets" googling, which might best equal web for pictures and not in, but you will find lots of similar charts. Here are some results:
http://www.thefinancialphysician.com/blog/wp-content/uploads/2009/12/mor.gif
http://www.americalsenior.com/images/Mortgage% 20Resets % 20Part% 202.jpg
http://www.dawnsellssandiego.com/blog/wp-content/uploads/2008/12/adjustable-rate-mortgage-reset-schedule.JPG
message is always the same: After the subprime crisis is
2007/08 from now on the Alt-A and option ARM crisis. The message this week that foreclosures have increased in Q1 to a new high, there should be only the first hint. The charts say the height of the crisis until the end of 2011 ahead. Can
's are in the U.S. housing market even worse? Yes, I would argue. The heavy losses of recent years have not yet revised the Anstige the bubble years. According to Robert Shiller (data from www.irrationalexuberance.com) showed house prices in the U.S. by the end of the 2nd World War to the bubble inflation barely. Even here, though, the "real" value of the property will be accepted. Well, by then a big drop of roughly 20% of it:
And not only that every boom is followed by a crash, the prices are not on the realistic value, but far below suppressed. To exaggeration Following is a top to bottom. Is like a law of nature. And the sole reason I can not even imagine that would be a further correction circuit to 20%. The ground, we see 2011/12 probably only much lower. And that will still be due to a peculiarity of the U.S. Mortgages: As I've written a couple of times, the Immobileinbesitzer liable in most U.S. states do not personally for their mortgage, but only with her house. The result is that the issue of "strategic default" (so much as a voluntary bankruptcy) more important. Already, according to estimates 20-25% of all mortgages "under water", ie the house is lower than the mortgage debt. If prices continue Covered the situation will worsen further. For many homeowners, it pays to be simply nothing at all to stand for the mortgage now. The legal situation is here as an implicit put option on the house price. This could lead to a vicious cycle: falling prices lead to more defaults, this will push prices ever, as does additional defaults.
Yes, everything is not exactly rosy.
If I derive my macro picture looks to me the "Big Picture" in something like this:
The (preliminary) QE-end and a renewed crash on U.S. real estate markets have for me for the next 2 years strong deflationary character (it could be obtained by the QE-program-related "risk on" / "Off Risk Behaviors in the financial markets as well inflations-/deflationsgetrieben Watch). For the next time for me to dominate the deflation trade. And that is a very negative environment for all "risky assets". Conversely, because I was asked many times lately, whether at the level of a short position in the Bund future is not nearly a "No-Brainer" would be: No, I do not think. I do not know how low rates fall even more, but I think much more deeply most can imagine.
Only when the U.S. housing market his land, you'll be building the vast amounts of money that were pressed by central banks in the markets (and certainly the next few years yet), a significant inflationary pressures. So in the great inflation-vs. Deflation debate I see my position in time-dependent: After a surprise to many recent deflationary shock in this and next year will rotate the picture until around 2012. Only then will the time of the inflation trade. Oil $ 200, Gold $ 10,000? No idea, but not sure now.
And so until next time!
Greetings
Franz
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