The Banking and Strategy Initiative

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US Economy: Global growth slowdown gets S&P, Brazil, Greece and the GOP candidates (Global Pre-markets Round up)

Super Tuesday was a much sombre affair though it seemed to be in different circles than the S&P worst one day crash that hit Tuesday early. With barely 200 delegates, 400 including non binding totals, Romney’s far away and his competition , not the Goliath Santorum, but even the pressy Newt who didn’t even try Super Tuesday with 23.5% of the vote compared to Romney’s 42% has less than half the delegates, the convention needing to get the winner more than 1100 delegates.


Brazil (Photo credit: babasteve)

Brazil on the other hand was such a contradiction even as its investment banks beat Goldman Sachs and JP morgan in their own back yard, with a $15 bln IPO. Brazil GDP grew to 2.7%, more like the Russians  with 3.9% growth and even the Aussies with 2.7% Y/Y growth than like slow China with 9% growth and a new 7.5% target and a 6.9% Indian ticker with a 7%+ 2012.  Resource based Economies keep paying for the manufacturing slowdown as the global recovery halted mid tracks, made none too easy by a weak Euro collateral bankrupting

CARROLLTON, OH - MARCH 06:  A voter (R) prepar...

Image by Getty Images via @daylife

the ECB’s borrowers. Brazil however beat UK to the no. 6 position worldwide as Japan last year slipped to no. 3 behind the Yuan magnet, China Bank rates in Brazil are already down to 10% and we daresay, China is waiting on purchases , causing troubles in Russia, Aussie and Brazil as the commodity cycle does not look like recovering very soon as US stays subdued in recovery in production, just jobs and services.

ECB starts demanding deficits in margin from borrowers setting European finances for a contraction even before the LTRO funds could cycle even once, feeding the Bundesbank frenzy that weak collateral could make the Euro look like a lab experiment to be shut down. The Target 2 system in the meantime, looked fairly healthy and earlier in the week, fulfilled its role of scare mongering, I thought, giving a hint as how 17 central banks subsitute the QE effect of monetisation with a single currency that doesn’t get monetised. it so happens that Greeks just show up a paper deficit to the Germans in the intra Eurozone trading payments system i.e. the Target 2 or Target 3 to be, as also the other mediterranean nations and Germans love that hidden deficit ads the currency coasts without becoming a Yen up the nose and the unpaid target balances easing up the pain for Greek banks.

BOSTON, MA - MARCH 06:  Supporters of Republic...

Image by Getty Images via @daylife

But the problem is with pacts defining the icing on the cake, or the haircuts on large EUR 300 bln of Euro debt, with Greek PSI bondholders showing up interested in a big messy default and Athens not interesting in paying up if the Swap does not happen, which is no longer improbable as not one other bondholder outside the 50% has said I do before tomorrow’s deadline.

Meanwhile, stripped of investments, the Yuan has run out of steam as even Middle East borrowers take to borrowing in Yuan, Emirates landing a below 5% rate overnight and the Yuan starting to drop from 6.3 levels instead of appreciating further, breaking a three year run.

Korea got back to a surplus, no small thanks to the $4.5 bln Hyundai and Kia exports along with $3 bln in Steel Exports, ( looks like US is a bigger trade partner yet) Exports in February scoring $47 bln against the 23% increased import bill of crude, gas and coal. US and Chinese data on Exports and Imports follows later in the week. And yes, looks like there is no war and you can still afford the oil Mr Boone.




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