Macro Digest: Can you spell "c-o-n-t-a-g-i-o-n" ? Weekly macro chart

I can't be the only one fed up with Greek timelines, potential outcomes, worst case scenario's and a Europe entirely driven by politics and not business or people.

 

The good news is that "pretend-and-extend" has died, the bad news that finding the 'exit' will be difficult and volatile. My favorite analogy is that of the game of musical chairs:

 

 

In the classic game one chair is missing when the music stops – in the present Greek/Pretend-and-extend game there could be three, even four chair missing.

 

Don't let anyone tell you there are not any "contagion" of risk, or better look over this week selected chart from Steen's Stress Indicators, but the bottom line advice from me remains: Let the market take your investment decisions! Prices and markets will find the path of least resistance not Merkel, Hollande or God forbid Tsipras. They are all utterly lost thinking they have the solution or that in the lack of clarity the only game in town is buying more time.

 

Here is the vote of the Danish jury on contagion:

 

The non-containment looks infected – Germany vs. Italy 10 yr tenor:

 

 

 

DAX is hard up against the its floor with three test – traditionally when range bound the fourth test is the important one:

 

 

The containment is looking unhinged in the land of unintended consequences: Bulgaria (weak financing) vs. Germany:

 

 

 

And now on to our regular broadcast:

 

Someone told me sell off not too bad – did I miss something (4 trillion US dollar is gone)  – global valuations of stock markets:

 

The surprise this week and the explanation for EURUSD "strength" – the risk reversal is turning up! Not down (the extra price paid for buying put over call is falling)

 

 

 

Old fashioned predictor like High Yield all of the sudden again explaining sell in stocks!

 

 

 

Marginal cost of capital remains elevated……

Bond volatility keeps rising:

 

 

 

Banking CDS's don't like the smell….

 

Remember the biggest risk remains the "musical chair" game – il-liquidity is the real risk as bloated VaR books will force liquidation of positions into a market with no bids only offers.

 

The Grexit odds remains at 75%

 

Be safe,

 

 

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