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Sunday, October 27

27th Oct - Random Charts

Some random charts and comments.

Previously on MoreLiver’s:

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The above three charts show which emerging markets were hit last summer. Markets were scared of the Federal Reserve's promise to start tapering its monthly asset purchases (decrease monthly quantitative easing). The countries with the worst current account deficits, high interest rates etc (the ones that seemed to offer a good yield) were hit most. This as a reminder now that we are back to chasing yield. The thing is - in a bull market even crap sells well. But during a correction, or (for God's sake) a bear market, bad fundamentals are bad fundamentals. Right now is a good time so again start paying attention to fundamentals. 
Before everyone else will.

These two charts show the US and European stock markets (both priced in US-dollars). Note that the US has outperformed recently. Time to return to the mean and close the gap? But which way, by US selling off, or Europe rallying even more than US?

An ultra-long EURUSD view from someone else (quite bearish one), and a shorter chart with the most important events of the 2013 marked. My guess? We will soon start hearing comments from many, including Draghi, that EUR is "dangerously strong". Perhaps after the European banks have finished with their book cleaning ahead of the Asset Quality Review-snapshot of 31-Dec-2013? That could mean we get the comments the first thing in January, or maybe even earlier if the banks are already done.

 European inflation - or lack of it - is a dangerous problem. Remember - this figure is with Germany and all the tax hikes included. The "true" base inflation, probably best represented by the GDP deflator, is actually showing signs of price deflation right now. Very, Very Bad.

 One reason why EUR is so strong is the ECB, which is not printing - but decreasing the size of its balance sheet. This is the opposite of what the Fed and BoJ are doing.
Another reason: banks are cleaning their books - or selling off assets in order to look well-capitalized by the end of 2013. As most European banks are shedding their assets, the buyers obviously come from outside the euro area. Those transactions leave the European banks with USD cashmoney, bank stocks or whatever they receive in payment. These transactions thus push up the price of the EUR.

 The Swedes do not like the European Union.
The Swedes like the euro even less.