Tuesday, May 31, 2011

Today's M^3 - Got Volatility? Greek Market up 6.8% for the Day

Greece gets back-to-back mentions in our daily Major Market Moves feature. The EU decided they had let things slide long enough and finally announced the inevitable bailout. If you are shocked/dismayed/bewildered/all-of-the-above that another bailout was put in place then you haven't been paying attention for the last three years. There's still plenty of room in the price of oil for governments to hand out more money and pile on more debt.

From the New York Times:

While the agreement for as much as 60 billion euros ($86 billion), would in theory address Greece’s need for cash this year and next, it puts off for the time being a restructuring, hard or soft, of Greece’s huge debt burden

At the deal’s heart would be an informal understanding that the private sector holders of Greek government bonds might be persuaded to roll over their debts, or extend new loans when their older obligations come due.

The voluntary roll-over clause is a new twist that I hadn't heard of before. How exactly is that going to be enforced? Any deal who's "heart" consists of an unenforceable "persuasion" is not worth the paper it's written on, if in fact there was anything put in writing. It very well could be that the entire arrangement was communicated through winks and nudges.

The immediate reaction in the stock markets around the world, and specifically Greece and Cyprus, was resoundingly positive. Greece's main index was up 6.8% and Cyprus, which lately has been joined to Greece's hip, was up 7.1%.

(Click on the image for a larger view. Click here for an updated listing of global equity indexes.)

The news that the world has been saved is taking a bit longer to reach the investors in some countries:

Monday, May 30, 2011

Today's M^3 - Greek Stock Market Down 2.4% Today

With all the fireworks going off in Europe, eventually I would have to mention one of the PIIGS in an M^3 post. Well today is the day. The main Greek equity index (FTSE/ASE 20 Index) is down 2.4% while the FTSE/ASE Midcap Index is down almost double that.

(Click on the image for a larger view. Click here for an updated listing of global equity indexes.)

What is worth noting is that Greece wasn't the worst performer for the day. That honor goes to Peru. There's a contentious election going on there right now and one of the leading candidates, Ollanta Humala, is seen as being bad for business.

From bloomberg:

Presidential polls published yesterday showed support for Congresswoman Keiko Fujimori fell, narrowing her lead over Humala before the June 5 vote. Fujimori led by 4.1 percentage points in a poll by Datum Internacional compared with 5.1 percentage points in a May 26 poll. A survey by Ipsos Apoyo showed the candidates in a statistical tie.

Humala pledges to revise Peru’s free trade agreements and change the constitution to strengthen the state’s role in the economy.

This isn't the first time we've mentioned Peru. On the 14th I mentioned how the Peruvian stock market was down over 25% for the year. Since then it made a resounding comeback as Humala's polling numbers deteriorated.

Anyone with advanced knowledge of the polling data could frontrun the hell out of this.

Sunday, May 29, 2011

Today's M^3 - Laos Stock Market Down Over 20% in the Past Month

Today's Major Market Move features an equity index from the Laos People's Democratic Republic (who might want to consider conquering some additional territory so that cartographers can use their official name). The Laotian stock market is down over 20% in the past 30 days.

(Click on the image for a larger view. Click here for an updated listing of global equity indexes.)

This is looking like a post-IPO crash, except in this case it's for their entire stock market, which just opened for trading in January.

The Lao Securities Exchange is scheduled to start trading the shares of two state enterprises on January 11, state media reports said Wednesday.

Communist Laos, one of the world's poorest countries, in October announced plans to open a stock exchange with two prominent state enterprises - EDL Electricity Generation Company and the Bank pour le Commerce Exterieur Lao (BECL) - as its first listed stocks.

Saturday, May 28, 2011

Today's M^3 - Serbian Dinar Strengthens 12% Against the $ Since January

For today's Major Market Move we feature the Serbian Dinar which is now 12% stronger vs. the US $ since the end of January.

(Click on the image for a larger view. Click here for a current listing of commodity futures gains/losses.)

The move is not surprising considering that the Serbian Central Bank's 2 week lending rate is hovering around 12%.

Serbia’s central bank may hold Europe’s highest benchmark interest rate as it waits to see the effect of three increases this year and a stronger dinar on inflation, a Bloomberg survey showed.

The Belgrade-based Narodna Banka Srbije will leave its two- week repurchase rate unchanged at 12.5 percent when it meets on May 12, according to 10 of 21 economists. Seven see the bank raising the rate by a quarter-point and three expect an increase to 13 percent. One predicts a cut to 12.25 percent.

A 12% rate of return in a currency that is in a trend of strengthening against the dollar has to look pretty attractive to a US based investor right now.

Currency Arbitrage Opportunity?

A few days back it was announced that the central bank in Belarus was devaluing the currency by 50%. I commented at that time how I couldn't find any data providers that were listing the new rate. I just went back again, and the only online data provider I can find that is showing the new rate is Bloomberg.

(Click here to go to Bloomberg's currency page)

Neither Yahoo nor www.exchange-rates.org have picked up the new rate yet.

Friday, May 27, 2011

Today's M^3 - FC-OJ Futures up 11% for the month

Today's Major Market Move: The best performing commodity over the past 30 days has been frozen concentrate orange juice - up 11.8% over the last 30 days.

(Click on the image for a larger view. Click here for a current listing of commodity futures gains/losses.)

However since the end of January it's only up 6% so it's a little early to be talking about an orange juice bubble. The main driver for the price move is the expectation of more "apocalyptic" weather patterns, specifically hurricanes.

From the AP:
Orange juice futures rose 3.3 percent Friday as investors weighed the possibility that hurricanes could disrupt the supply of oranges.

The price of frozen orange juice futures typically begins to increase as the hurricane season gets under way. Orange juice futures rose 5.8 cents to settle at $1.8285 a pound, the highest since late February.

Wednesday, May 25, 2011

Today's M^3 - Silver on the rebound, up 10% in the past week

Today's Major Market Move: After the drubbing that silver took recently, it's now reversing course and moving back up. As long as oil stays away from $150/barrel and US treasury rates remain at rock bottom levels, the threat of more QE will hang in the air. This in turn provides support for PM prices.

(Click on the image for a larger view. Click here for a current listing of commodity futures gains/losses.)

Tuesday, May 24, 2011

Today's M^3 - USDPYG Strengthens 13% since January

Today's Major Market Move - The Paraguay Guarani is up 13% vs. the US Dollar (USDPYG) since the end of January. Here's a look at the best performing currencies during that time frame.

(Click on the image for a larger view. Click here for a current listing of currency crosses vs the USD.)

Maybe we're looking at the world's next reserve currency? In all seriousness, I don't think too many people would've picked Paraguay's currency as the one that's strengthened the most since the beginning of the year. Some of the other currencies on that list can be explained. Serbia has some of the highest interest rates in the world. The Swiss Franc is benefiting from the European crisis and its 'safe haven' status. The Eastern European currencies (Hungary, Romania) were beaten down so far a year ago that, in absence of a default, they were due to have a nice rebound.

Monday, May 23, 2011

Today's M^3 - Bangladesh Stock Market down 6% in a day

Today's Major Market Move - If you're feeling bad about today's 1% drop in the U.S., for those of you not invested in the Bangladesh stock market you can take consolation in the fact that we're not down 6%.

(Click on the image for a larger view. Click here for a current listing of gains and losses in the global indexes.)

According to my abacus, that equates to roughly a 700 point drop in the DOW. Now most people might argue that this means absolutely nothing to anyone here in the U.S., but I'm of the personal opinion that it's worthwhile to keep an eye on these outlier countries. The initial rumblings of another global crisis will appear on the fringes first, in a similar fashion as they did with Iceland.

Belorussian Ruble Devalued by 50% Overnite

Watch out savers, maybe you're better served by emptying your accounts right now (for those of you who have something left after your pre-rapture spending binge) and heading off for a week in Vegas fulled with $200/hour pool cabanas and high priced slots. Not sure what the Belorussian equivalent is of sin-city but it's irrelevant at this point since the damage has already been done.

The Belorussian central bank has devalued their currency by 50% overnight.

My alerting application missed this move since it's not showing up on any of the websites that report exchange rate information - finance.yahoo.com, www.exchange-rates.org, www.fxstreet.com.

Sunday, May 22, 2011

Today's M^3 - Silver Futures down 24% over last 30 days

Today's Major Market Move involves, a commodity that's been prominently featured over the last couple weeks: Silver. Silver futures front month contract is down 24% over the last 30 days.

But even with that drop, silver is still the best performing commodity since the beginning of the year.

There's been a lot of talk on the interwebs regarding the various exchanges raising margin requirements for silver and some of the other commodities. The implication is that these margin changes have perpetuated the drops but as Karl Denninger has astutely pointed out, it all depends on which side has more leverage.

Saturday, May 21, 2011

M^3 (Major Market Move) - Venezuelan Stock Market

Today's M^3 (Major Market Move) featured item is the Venezuelan Stock Market index which is up 20% since the end of January.

I don't have a break down of individual Venezuelan equities so I can't say definitively which industries are driving this move higher, but the most likely culprit is the rise in the price of oil. Incidentally, the Venezuelan market is the best performer over that time frame (end of Jan until now).

Friday, May 20, 2011

Major Market Move 5/20/2011

Today's Major Market Move (MMM) features The Gap Inc (GPS). GPS is down over 15% on the day.

According to this analysis, it's partly the result of higher cotton prices, which if true would make this a great buying opportunity considering what cotton has done over the last 2 months.