Macro Digest: “Nobody ever goes to the store to shop because it’s too crowded.” - The US slow-down confirmation is here

US Q4 revisions is out tomorrow and will show a slow-down from 2.6% to 2.0% most likely: (Source: Bloomberg – WECO US)

 

 

This makes Q3(2014) the peak in this cycle and I expect QoQ growth in the US will hit ZERO by Q3 or Q4 – there are several factors for this including rising real rates, mal-investment into energy but most importantly is the falling earnings in the US.

 

Societe General – Global Quantative Research does an excellent report titled: Global Earnings Estimate Analysis – Is the US heading back into recession:

 

I have borrowed the main chart – which shows how the six month change in 12m Earnings Per Share coincides with US GDP – not pretty and definitely NOT what neither Janet Yellen and Wall Street promised me less than two months ago.

 

 

 

 

US quarterly GDP has been 3.0 since 1970 and 2.6% since 2000 – with big swings:

 

 

I see a repeat of the growth pattern from late 2006 into 2008.

 

The market is focused on the telegraphed June potential Fed hike, but this week Janet Yellen speech clearly have got people thinking as she again introduced inflation concerns and "data watching"…. In other words we need to again look at the actual economy and its performance which is a bad news for the happy campers in the equity market.

 

 

This chart will soon have relevance for all asset classes' – It shows the outperformance on expectations from Europe over the US. May I add EXACTLY the opposite of consensus two month ago, except for a few analysts. US data has consistently done worse than expected.

 

 

The point however is US data been worsening for a long time – I personally think we are in period where we yet again hand-over the growth engine from the US to emerging market but via a significant new low in growth which will make Europe looks good. The expected path for me is:

 

Slow down confirmation in the US over the next two month – that will kill the improvement in Europe by end of Q2 and leave it stabile - not growing for the year, meanwhile emerging market will come back as market realize the FOMC is years away from 'talking up' rates. The June or September initial hike (if it comes) will still leaves FOMC 100 bps above Wall Street on its projected long-term path for growth – A Wall Street who on their own is also too optimistic about future growth. Fed sees 3.0-3.5% on this "dots" while Wall Street sees 2.5-3.0% on average. In other words there is room for a +100 bps correction to the sustainable long-term growth which will render 10 Y rates a 1.0-1.5% before we over with this part of the cycle, which I label: Restarting the business cycle.

 

Restarting the business cycle as policy measures, QE and targeted "help" for banks is running if not out time then out of impact on the economy. The inequality and low salary to GDP base simply can't produce enough domestic consumption anywhere for the middle class to be able to afford the products the stock market listed companies produce.

 

The chart below is my July 2013 projection of rates – as you will note the "calendar" needs to be moved further forward… 2014 in chart is now 2015 due to Bank of Japan and the constant hope of "lift off" in rates, but the actual pricing rhythm has been relatively precise and predictive.

 

 

There is a few more charts which needs my (and maybe your attention)

 

Port of L.A traffic has collapsed. Yes, some of it is to do with strikes and unions but…. Look at size of drop! Deeper than March 2009!

 

 

Have no illusions – US short-term rates is rising:

 

 

The outlook for Europe remains… more of the same:

 

 

 

Conclusion:

 

Macro

 

We are in a "in between period" -  where the US will slow-down and ultimately hand-over the growth engine to emerging market by the earliest Q4-2015 but firmly in 2016. Problem is emerging market not ready due to high US dollar debt and waning commodity prices and Europe is still too weak to contribute net to world growth leaving a growth vacuum for new growth.

 

Europe will show one more month of improving data, then global slow-down EM and US will drag down the data to flat performance – Europe will still do better than expected in 2015 but not enough to constitute a real improvement yet.

 

Markets

 

I still only have one very strong view and that's 10 YR fixed income will trade 1.5% even potentially 1.0% this year – everything else will lag this move by 9 month – so in other words if low in yields comes in Q3 (as I expect) then the summer of 2016 will be the lift-off we all have talked about.

 

The US Dollar will peak this quarter and probably have peaked for this cycle – The weaker US Dollar will stabilize commodities and emerging market creating the conditions for a hand-over end of this year. The US dollar should be very sensitive to this relative slow-down in the US, especially as Europe is a-synchronically improving.

 

Gold remains top of my list for new investment – I'm long and adding – I have also re-sold Brent/Crude as the marginal cost of producing oil is still rising, meaning global impact still is negative net-net. Jeremy Grantham excellently argues that for world to benefit from falling energy prices it has to come with falling marginal cost. The opposite is the case now: lower prices, higher production/extraction costs.

 

The stock market…..Not time yet to call the top, but preparing special report on valuations and models, or the lack of it…. Conclusion will be: There is potential for a 5-10% year but also for a 25% correction. Really totally binary, problem of course being that the market is very expensive by traditional standards, but this is hardly normal times. The expected return for reference over 1, 3 and 10 years can be seen below – the upside that first year still can carry market higher, the downside the next 9-10 years!

 

Source:  Novel Investor, Feb. 20^th, 2015

 

 

Finally,

 

This is a must read note on my main concern for this market: The lack of real market making capacity:

 

Lawrence Goodman, Feb, 25^th, 2015:  Center for Financial Stability: Liquidity shortage- Houston we got a problem

 

 

Safe travels,

 

Steen

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

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The Greek 'reform' is a farce

Please translate link if you don't read German.. BUT..

so called promises..

Is to...

Fight petrol smugling 1.5 bln
Fight cigaret smugling 0.8 bln
Get 2.5 bln corporate taxes already owned in...

If this is accepted by EU.. its a victory for non compliance and a big loss for Germany and the EU.

This is the absolute peak in extend and pretend... I can't imagine a worse deal for both sides...

It does nothing for Greece ability to move agenda forward and adress the real issues..

EU financial examination losses all credibility.. or what's left of it..

Next up is further extensions of debt deadlines, zero credit for any nation who does not want to commit to reforms...

Sad sad day for Greece and Europe, but also shows that we need new solutions...

Safe travels

Steen

________________________________
From: Steen Jakobsen
Sent: 23. februar 2015 08:30:26
To: Steen Jakobsen (SJN)
Subject: Griechenlandkrise: Politiker drohen mit Nein zu Milliarden-Hilfen - International - Bild.de

http://m.bild.de/politik/ausland/griechenland-krise/neue-milliardenhilfen-sind-beantragt-39878166,variante=S,wantedContextId=17410084.bildMobile.html




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DKK: Something is rotten in the state of Denmark..at least according to Hamlet...

I have fielded quit a few calls on the DKK over the past three weeks – todays in the Macro Digest I "answered" these calls once and for all:

 

https://www.tradingfloor.com/posts/macro-digest-reasons-to-be-fearful-heres-three-3598696

 

 

Something is rotten in the state of Denmark (At least according to Hamlet)

 

I have answered hundreds of calls on the Danish peg and here's my take:

 

There are three main points to observe, but first let's acknowledge that the Danish peg has been in place since 1982. Denmark's link to the deutschmark has served Denmark well. And you can rest assured for Denmark it's not the euro as such we are pegged to, it's Germany and it's been like that since day one!

 

1.) The Danish central bank is doing exactly what we expect from it and according to the rule book on pegs. Lowering, penalizing, increasing the cost of carry by taking rates down. For the central bankers it's a "time issue" – they feel they can do this longer than the market has time or patience for. They have a good track record having spent 270+ billion DKK during 2010-2012 and of course several interventions since 1982. I would wager – everything being equal – they could intervene easily for six month but also for 12 months, except that:

 

2.) The weakness of the DKK peg is not the DKK, but the EUR. Which make the analogy with Swiss central bank more acute. Should we see a Grexit and/or Brexit we would expect more pressure on the DKK. Foreign reserves are less than 30% of the balance sheet at present but could increase to unacceptable levels of 80-100% of GDP. The fight is basically: 'Time vs. Size of balance sheet of the Danish Central Bank'.

 

3.) The pertinent question however is: Why have a peg to EUR if Denmark never has any intention of joining the single currency? There needs to be a political discussion in Denmark on this issue, but I will wager that if push comes to shove Denmark would rather join the EUR than allow a 10% revaluation. The reason for has multiple explanations but the simplest one is the size of the Danish financial system. The pension sector on its own is 160% of GDP rising to 200% in the next twenty years. The liabilities is in DKK, but most of assets in EUR. The yield curve is in EUR. Elementary Dr. Watson!

 

Yes, it's a free option. Yes, the loss potential is small, but I have to admit I don't lose sleep over the DKK, knowing that should we have real issues we would probably be replacing Greece in the EURO if everything becomes unhinged.

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

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Macro Digest: DKK peg, FED hike in June, Grexit - Stress Indicators for week 7

Something is rotten in state of Denmark, as Hamlet famously said, but I guess apart from a much needed comment on DKK from me, which most people seems to get wrong, there is also major divergence in the market:

 

The Stress Indicators are clearly showing more risk-on again, except a few exceptions, but the main chart for this week is this "stunning" chart showing Citigroup's Surprise Economic Index on Europe and the US: Yes, as expected Europe did stabilize even before ECB did QE – ironic, but a clear case of macro policy makers, again, missing the boat to do what they always should be doing as priority one through three: Nothing!

 

 

 

More evidence is creeping into Retail Sales in Europe – A twitter from this morning: (@RobertAlanWard)

 

 

 

Another "shocker" for the consensus crowd is the inflation expectations which is now headed north…… exactly when the deflation hype reaches its new peak!

 

The last couple of days there is also growing disbelief in weaker US Dollar – where is the follow through the impatient consensus asks? Well, looking at the risk-reversal an old rule says that "the trend" remains in place as long as someone is willing to pay more than 2% for having the PUT rather than CALL… risk reveral… so USD bears should get more gratification soon…

 

 

The Dynamic Danger Duo – Greece and Russia – remains a "wall of worry" everyone is willing to climb(ignore?) – You know my take on Greece: GREXIT – and on Russia, similar to Greece, I just don't see how a de-escalation of rhetoric is going to help a vulnerable Putin in domestic politics. A smart observer said this morning on Danish Radio that Russia have one intention only – to destabilize Ukraine enough to make impossible for Europe to extend EU invite and for NATO to step up. He may not even be interested land-grapping but "merely" to make sure it remains contested.

 

 

Russia CDS and 10 YR Greece rates remain elevated, but in time of writing "hope is in full glory again" – on this headline from New York Times: Greece to propose a debt compromise plan to creditors. Someone needs to explain how: Greece can promise to reinstate pension bonuses, cancel property tax, end mass layoffs and raise minimum wage in country with no funding, and then expect Europe to "bridge them more money"? I'm not making a case whether it's fair or not, only how does it works?

 

My "ultimate risk indicator" though AUD/JPY is reluctant to follow the lead from equity and stock markets:

 

 

Please see attached PDF for full range of Stress Indicators:

 

Conclusion/Comment:

 

Monetary Policy:

 

FED/FOMC is now looking at a June hike – it will probably almost be "in spite" as I doubt US economy is lift-off ready by June, although a number of bloggers and pundits are making valid claims it has already happened:

 

Matt Busigin, Macrofugue.com, "Say goodbye to the new normal" has some excellent work and charts to supports his view that we are already in lift-off:

 

The major issue, of course, being that this lift off has been called many time before and as the chart does show – the action has been sideways on this way to measure GDP – yes, we slight uptick now, the same uptick, by the way which happens every year, this time of year. Growth has constantly "turned down" as the year progress.

 

Here is same chart – January each year circled – Yes, its higher now clearly, but let's await full impact of energy collapse. Only 9.000 jobs was lost in January's count of oil workers, and with CAPEX collapsing globally there is more coming from this sector, clearly….

 

Furthermore consumer spending in the US is 70% of GDP, it's relative stable as the US consumers always likes a bargain, especially a fully financed bargain @ zero interest rate. What happens when/if Fed hikes in June?

 

 

But… you ask: If Europe is doing better, at least better than expected, and the US is at higher end of growth range what is then missing?

 

Well over the last eight years of this crisis growth have come from two sources only(60% from EM and 40% from the US): The US and Emerging markets. US has been 2.2% for the years 2010-2014, and in 2014 2.4% - right, so what is issue with EM?

 

It's the US financing:

 

Chart from Bridgewater courtesy of Jamie MCGeever:

 

 

The strong US Dollar is now a real issue. For growth, for emerging markets and for world to turn "up" we need lower US Dollar. Simply.

 

I guess my analysis really says: Recent "historic data" points to improvement which is NOT supported going forward due to the constraints of capital flow, increased volatility, and geo-political risk. It will NOT stop FED from hiking in June, but it will probably take the EURO below 1.1000 before this US strength move is over.

 

Now to something is rotten in the state of Denmark:

 

I have answered 100s of calls on the Danish peg so here is my take:

 

There are three main points to oberserve, but first lets acknowledge that the Danish peg has been in place since 1982. That is has served Denmark well to linking to the Deutschmark, and remain assured for Denmark its not the EURO we are peg to, its Germany been like that since day one!

 

1.)    The Danish central bank is doing exactly what we expect from them and according to the book on pegs. Lowering, penalizing, cost of carry by taking rates down. For them it's a "time issue" – the feel they can do this longer than the market has time patience for. They have a good track record having spent 270+ billion DKK during 2010-2012 and of course several interventions since 1982. I would wager "everything being equal" they could intervene easily for six month but also 12 month except:

2.)   The weakness of the DKK peg is not the DKK, but the EUR. Which make the analogy with Swiss central bank more acute. Should we see a Grexit and/or Brexit we would expect more pressure on the DKK. Foreign reserves is less than 30% of the balance sheet presently but could increase to none acceptable levels of 80-100% of GDP. The fight is basically: 'Time vs. Size of balance sheet of Danish Central Bank'

3.)    The pertinent question however is: Why have a peg to EUR if Denmark never have any intentions of joining the EUR?  There needs to political discussion in Denmark on this issue, but I will wager that of push comes to shove Denmark would rather join the EUR than allow a 10% revaluations. The reason for has multiple explanations but the simplest one is the size of the Danish financial system. The pension sector on its own is 160% of GDP rising to 200% in the next twenty year. The liabilities is in DKK, but most of assets in EUR. The yield curve is in EUR. Elementary Dr. Watson!

 

Yes, it's a free option. Yes, the loss potential is small, but I have to admit I don't lose sleep over the DKK, knowing that should we have real issues we would probably be replacing Greece in the EURO if everything becomes unhinged.

 

Strategy:

 

Still long 70% in fixed income. Looking to increase commodity exposure. Long Alpha Gold. Long US Dollar & Gold in FX. Short EUR. Very small exposure as discontinued pricing is my main concern. Market trades big intra-day ranges without real momentum. I need clarification on economics but also on Greece, politics and Russia. I doubt I will have it hence I expect more volatility – great opportunities to come but now… it's wait-and-see.

 

Safe travels,

 

Steen

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

Macro Digest: Bureaucrats over Democracy, the French Indemnity (1871-73) lessons from Michale Pettis

Dear All,

 

Michael Pettis': Syriza and the French indemnity of 1871-73 (really about Greece) is a must read.

 

An extremely long and somewhat difficult text but Michael Pettis is an important thinker and have great knowledge of balance sheets and economics…. A MUST READ – if not pre-NON FARM, then certainly printed for the weekend.

 

I have chosen a few "things" from the article – but the analogy of the French Indemnity and overall concept of that "the ultimate deal" is clear, but the path uncertain…..is appealing and well argued.

 

Adding my own flavor to this – having spent considerable time with many clients and hedge funds – my view is best described by a piece done by GaveKAL yesterday called: "Greeks gaming themselves out" written by Anatole Kaletsky:

 

"The dominance of bureaucracy over democracy is one core principle on which the EU institutions will never compromise"

 

Elegant, true and the very definition of pretend-and-extend. The "system" is kept in place due to political capital invested and the deficiency of the players in Michael Pettis words : " I worry about the terrifyingly low level of sophistication among policymakers and the economists who advise them when it comes to understanding balance sheet dynamics and debt restructuring"

 

Simply the present crop of bureaucrats and policy makers is educated, formed in time where IMF, World Bank, ECB, and central banks mattered – their one trick pony strategy of imposing austerity blindly got them "booted" from Asia since Asian crisis, and now from Greece…

 

We are in my view at the end of the "rainbow" – policy makers have made themselves obsolete. Central bankers are now all reduced to cutting rates and "exporting their problems to other" through currency devaluations. This is, hopefully, the end of central bankers and bureaucrats as economic Generals – a line I touched on my piece post SNB dramatic action: Endgame for central bankers

 

My conclusion:

 

GREXIT is the only way to maintain pretend-and-extend for policy makers. They can't allow non-compliance as it will mean wider "loss sharing". Let me stress a GREXIT is not what I want, but my for now analysis of the most likely outcome.

 

Michael Pettis argues well and much better than I could for the opposite compromise, but I don't, personally, think we REALLY want a deal. What we want is a new mandate for change – a final goodbye to a world where buying time and investing in paper money is incentivized through QE and regulation and at the expense of  education, productivity and people.

 

We had eight years of doing nothing, maybe it's time to do something?  Yes that 'something means taking loss', new beginnings, but DO NOT underestimate economies ability to rebound if set free – again Michael Pettis shows this by Frances unique ability. My model base for this year remains:

 

Low in growth, inflation expectations between Q2 and Q3 – a sharp increase in velocity of money, marginal growth and inflation to occur in Q4 (a perfect 9-12 month lag from 50% drop in energy) – so 2015 does become a year of change for me politically and economically.

 

Strategy wise I worry. I have been doing this since pretty much the DKK peg started (1982) and right now intraday volatility is exploding, fixed income and equity products trades with same 206d actual volatility (12%-ish both) and market never been more illiquid.  We are correlating to one – both in the market and geo-politics. Binary – black or white only.

 

Complacency prevails:  I have just today had five people, before lunch, tell me there are no alternatives to equity due to negative interest rates! Probably! This old dog would rather buy something which is cheap, out-of-style like commodities (DBA & DBC)

 

Don't forget a market with negative yield MUST by definition have an expected return on all asset going forward which will collapse (one asset is competing with another only to the marginal return is higher…..). I.e: Low bond yield, means less return in other assets to.

 

Buying Gold now – adding more to DBA and DBA is my first major change to my long Fixed Income in place since Q3-2013. I will reduce bonds over next two quarters, but still see 10Y US below 1% and German Bunds below 1%.

 

Safe travels,

 

Steen

 

 

 

http://blog.mpettis.com/2015/02/syriza-and-the-french-indemnity-of-1871-73/?utm_source=Pieria+Subscribers&utm_campaign=dcf6b10b8b-Newsletter_15_23_2013&utm_medium=email&utm_term=0_deda1ba8c1-dcf6b10b8b-13226617

 

Even if the question of who is to "blame", Greece or Germany, were an important one, the answer would not change the debt dynamics. It would take the equivalent of Ceausescu's brutal austerity policies in Romania, which were imposed during the 1980s in order for the country fully to repay its external debt, to resolve the Greek debt burden without a write-down. Given that Ceausescu's policies led directly to the 1989 revolution, which culminated in both Ceausescu and his wife being executed by firing squad, the reluctance in Athens to imitate Romania in the 1980s is probably not surprising.

 

While everyone probably agrees that Greece simply cannot proceed without debt forgiveness, less widely agreed, but no less obvious in my opinion, is that there are a number of other European countries that also need debt forgiveness if they are to grow

 

In summary, I think there are several points that those of us who want "Europe" to survive should be making.

 

1.  The euro crisis is a crisis of Europe, not of European countries. It is not a conflict between Germany and Spain (and I use these two countries to represent every European country on one side or the other of the boom) about who should be deemed irresponsible, and so should absorb the enormous costs of nearly a decade of mismanagement. There was plenty of irresponsible behavior in every country, and it is absurd to think that if German and Spanish banks were pouring nearly unlimited amounts of money into countries at extremely low or even negative real interest rates, especially once these initial inflows had set off stock market and real estate booms, that there was any chance that these countries would not respond in the way every country in history, including Germany in the 1870s and in the 1920s, had responded under similar conditions.

2.  The "losers" in this system have been German and Spanish workers, until now, and German and Spanish middle class savers and taxpayers in the future as European banks are directly or indirectly bailed out. The winners have been banks, owners of assets, and business owners, mainly in Germany, whose profits were much higher during the last decade than they could possibly have been otherwise

3.  In fact, the current European crisis is boringly similar to nearly every currency and sovereign debt crisis in modern history, in that it pits the interests of workers and small producers against the interests of bankers. The former want higher wages and rapid economic growth. The latter want to protect the value of the currency and the sanctity of debt.

4.  I am not smart enough to say with any confidence that one side or the other is right. There have been cases in history in which the bankers were probably right, and cases in which the workers were probably right. I can say, however, that the historical precedents suggest two very obvious things. First, as long as Spain suffers from its current debt burden, it does not matter how intelligently and forcefully it implements economic reforms. It will not be able to grow out of its debt burden and must choose between two paths. One path involves many, many more years of economic hell, as ordinary households are slowly forced to absorb the costs of debt — sometimes explicitly but usually implicitly in the form of financial repression, unemployment, and debt monetization.  The other path is a swift resolution of the debt as it is restructured and partially forgiven in a disruptive but short process, after which growth will return and almost certainly with vigor

5.  Second, it is the responsibility of the leading centrist parties to recognize the options explicitly. If they do not, extremist parties either of the right or the left will take control of the debate, and convert what is a conflict between different economic sectors into a nationalist conflict or a class conflict. If the former win, it will spell the end of the grand European experiment.

 

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

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The only chart to watch: EUR CNY (or why 1.1000 buyer is probably China)

Is it total random that China have "allowed" weaker CNY ever since QE from Europe was announced?

 

Is it likely China in real terms is bidding 1.10 EURUSD / selling 1.40 or 1.35 to manage their massive reserves?

 

Is the FX war in feel speed now?

 

Answers – correct ones :

 

No, Yes, Yes….

 

EURCNY chart from Bloomberg  - model (hat-tip: Matt) is daily…

 

 

Underneath this the CAPITAL account in China has moved into deficit – Correct, deficit despite record high trade surplus (…and the very reason why China was biggest issuer of US Dollar debt in 2014)

 

Link: Capital account shift into the red  (China Daily)

 

 

This morning PBOC move the fixing to outside the band for 1^st time in 21 month, in move "designed" to keep Yuan stable and limit volatility in capital flows. LINK, but market still sees further measure both of which will mean weaker CNY, according to the link from Bloomberg the two options are: A widening of the Yuan trading band and guiding the exchange rate lower by adjusting the fixing against the greenback. In typical Chinese fashion they start by a "head-fake" the other way (as any old fashioned market maker would do it… J)

 

The bigger issue for China is the US dollar funding dependence both to close the capital account deficit, but also as a potential "margin call" on China….if US dollar goes outside 1.10 EURUSD level, which is why I believe China is the big buyer below and with a vested interest.

 

The bottom line is…. China has have gained 5% vs. EUR since start of the year – meaning EUR CNY now moving more than USD CNY (YTD: -0.5%) – the new conclusion becomes: China will keep CNY stable, but buy EURUSD here for reserve management purpose, if this does not steady EURUSD, then they will allow further widening of band. Remember a currency trade have two parts – China seems to have decided on moving on EURO before CNY – for now…

 

Safe travels,

 

Steen

 

PS: Of course if its 1.10 or 1.05 is for China to decide but generally they use technical analysis to find support and resistance levels.

 

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Investment Officer

 

Saxo Bank A/S  |  Philip Heymans Allé 15  |  DK-2900 Hellerup
Phone: +45 39 77 40 00  |  Direct: +45 39 77 62 23  |  Mobile: +45 51 54 50 00

 

Research: http://www.tradingfloor.com/traders/steen-jakobsen

Please visit our website at www.saxobank.com

 

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Greece new strategy is called: Folk Theorem and its a game theory deviation from Nash equ.

I must say I am fascinated by Folk theorem – also because its "root" is very Soros – which is probably the last think Greece wants…. The believe Nash Eq. is not stabile, but constantly looking for new eq…. like it…..please read v. v. interesting…for context.

 

Interview with Greek Finance Minister on BBC newsnight… (He may need some tips who to handle himself on tv….)

 

https://www.youtube.com/watch?v=BiIO4YciewU&feature=youtu.be

 

 

This "apparently" is his strategy and a big part of his work in Game theory – of course I don't know this for sure but its very interesting context never the less…

 

Folk Theorem: http://en.wikipedia.org/wiki/Folk_theorem_%28game_theory%29

 

 

 

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