Roubini: A haircut of 60% is not a credit event

By admin | Published: October 25, 2011
A haircut 60% on Greek bonds is not a credit event for CDS even if rating agencies downgrade for a short period of Greece to “Selective Default” (selective default), notes on behalf of the isotope social networking twitter, the Economist Nouriel Roubini. States, however, that the CDS will be activated if it met those who refuse to accept a haircut (‘blackmail’ bond holdings). He even argues that even the activation of the CDS does not pose systemic risks, as the gross exposure of CDS on Greek debt is only $ 5 billion, while net exposure is even lower. Greece should be committed to not pay those who refuse to undergo the shearing value of Greek bonds in their possession (holding racket) to force them to accept a haircut 60% even though this “credit event” enabled CDS .
 
Finally, the Nobel laureate economist, notes that a haircut 60% will be accepted:  a) if made ​​use of the terms that would force small bondholders agree to the restructuring, b) if the ECB does not accept the Greek bonds as guarantees, c) if not paid who do not accept the haircut (‘blackmail’ holdings of Greek government bonds). Moreover, in a speech at a conference in Perth, Australia by Roubini reiterated that the chances for new recession in major world economies, including Britain, U.S. and Europe is greater than 50%. Moreover, an earlier report by Morgan Stanley analyzed the scenarios and conditions that trigger the CDS on the Forex market, but the processes required for the payment of risk premiums.
 
The scenario under which a Member goes into moratorium or amend certain requirements to be imposed “restructuring” is clearly leads to activation of CDS, said House. However, the scenarios include “exchanges”, the activation of CDS depends largely on the precise way which made ​​the exchange, raising concerns for buyers of risk premiums, noted that Morgan Stanley. Even if the process of “exchange” has a similar economic impact of restructuring, whether to activate the CDS essentially depends on how you evaluate each case the Committee Determinations Committee of independent authority ISDA. In the majority of exchange “problem” bonds, particularly large economies echoyn pursue non-payment coupons or bankruptcies. The adoption of “collective action clauses” (CAC) should not trigger the CDS, notes Morgan Stanley. The only event that can cause credit event is when these clauses are used to “pass” the result of the restructuring as binding for all bondholders. Nevertheless, the agency points out that even if the restructuring does not activate the CDS, forex spreads are likely to remain high because of the risk of a credit event in the future. But who will decide the … fate of the CDS;
 
The fifteen Committee Determinations Committee decides on the matter under the rules laid down by the ISDA. If the committee fails to pull out a decision by the required majority, then entrusted to an external team to help solve the problem. What if activation of CDS Once activated the CDS, a settlement procedure messo auction determines what will be paid a credit event. At the end of the auction payment of all CDS down to the final price “recovery” of the auction. It is also possible, in effect to determine the price in the auction process.
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BOE to banks: Boost your balance sheets

By admin | Published: September 28, 2011
The UK banks will have to take every available opportunity to strengthen their balance sheets, as the concerns about the debt crisis in the eurozone continues to plague financial markets and cause volatility to forex market, announced the Bank of England (BOE). The financial policy committee of the BOE, said that the concerns of investors about the indebted countries of the eurozone and the vulnerability of banks in the European Union have increased significantly since the last meeting in June. The committee announced that banks will should take every opportunity they have to strengthen their capital and liquidity positions to be in a better position to cope with potential shocks from the financial system. And we must do this without reducing the debt to the British economy, as announced the committee, increasing long-term funding wherever possible and reducing the salaries of staff and shareholders, the profits have fallen. The committee was created as part of a restructuring of the British financial framework of the coalition government in Britain, and the task is to understand and address major risks to the financial system. The committee announced that it will fulfill its obligations and will have power to the balance sheets of financial institutions on market structures and trading conditions in financial markets. The committee asked the British Treasury to ensure that EU legislation aimed at ensuring stability across the EU will not stop at doing its job, which is to ensure financial stability in Britain.
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Barclays Capital: Euro will decline further

By admin | Published: September 21, 2011
Barclays Capital downgraded its forecasts for the euro against the U.S. dollar noting that the common currency will fall to 1.33 dollars next month. In previous forecasts, the Barclays Capital spoke about raising the money in the levels of 1.42 . ‘The problems in the euro zone have deteriorated significantly and is likely to deteriorate further before stabilizing, “noted analysts at the bank a note. The risks from the crisis of sovereign debt, the more pessimistic attitude of the European Central Bank and Decision of the Central Bank of Switzerland to set a minimum level in relation to the euro currency incurred in the short term, say analysts at Barclays Capital. Trade forex in your language now, Forex Malaysia.
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Pressures on euro – declined to $1.44 at forex market

By admin | Published: August 30, 2011

Significant pressures applied on the euro in European trading on Tuesday, as the news of the Eurozone is negative – the auction of bonds in Italy or on the difficulties facing the German chancellor in the German parliament. “Largely, we have a negative climate for the euro in forex market for several reasons, “said Peter Kinsella, currency analyst at Commerzbank in London. Also, the letter of the IASB that European banks are not recorded as many reductions in quarterly results should affect the climate, while the macro Eurozone was disappointing. In all this adds to the declaration of the parliamentary representative of Slovakia, Greece should go bankrupt and not to take further assistance, while adding that he will do everything to block the adoption of the second package for the Greece in the House. The euro traded at $ 1.4411, posting losses of 0.71% against the dollar, having fallen earlier and less than $ 1.44. Significant losses recorded in euro at the Japanese currency, moving to 110.640 yen, dropping 0.82%, while against the pound moves in stabilizing 0.8830 pounds falling 0.11%. In contrast, the euro strengthened 0.14% compared to the Swiss franc at 1.1861 francs. The dollar is moving towards stabilizing the yen at 76.79 gne and reinforced at a rate of 0.92% against the Swiss franc in 0.8232 francs.

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Gold at $1870 – Oil below $80

By admin | Published: August 19, 2011

The price of gold climbed to new highs as uncertainty in markets worldwide for the evolution of sovereign debt crisis and the possibility of a renewed recession ‘shields’ in the status of the investment “refuge” for the metal . In spot market gold trading at $ 1,868.01 an ounce, while the forward contract in the metal delivery in December is $ 1,865.20, with an increase of $ 43.2, having earlier been up to and including $ 1,866.90. Gold so goes for the seventh consecutive week gains, while the beginning of their earnings now exceed 30%. At the same time the dollar moves up against the euro by 0.39% at 1.4276 dollars / euro, while against the Swiss franc falls 0.54% to 0.7901 francs / dollar.

At the same time, this is the fourth consecutive week of losses for crude, which lost the $80 per barrel and the Oil prices continue to fall. The climate shaping the increasingly worrying new global recession, resulting in reduced demand for goods. The contract price for September delivery later in electronic trading of the stock of goods in New York NYMEX, continues to fall, losing 1.42 dollars or 1.7% at $ 80.96 a barrel earlier today and came to fall 3.7% to $ 79.26. “It is clear that the slowdown seems to be gaining momentum and now spreading across Europe and the U.S., “analysts of MF Global. “However we feel that we can avoid a new recession in the U.S.. The decline in energy prices, the more confident we become, as oil trading has more than any other commodity, the ability to trigger development, “he adds. The spot price for Brent crude oil goes down 0.23% to $ 106.345 barrel. Today’s fall extends yesterday’s “collapse” when oil fell $ 5.20, or 5.9% in New York. “It shows the weakness of the eurozone process the probability of a new recession is now visible,” says Ben Westmore, minerals and energy analyst at the National Australia Bank in Melbourne, which stipulates that oil futures will move an average of 93 dollars per barrel in the third quarter.

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Capital One: Acquired the activities of HSBC in USA

By admin | Published: August 10, 2011

The Capital One Financial Corp., The institution which acquired the ING Direct USA in June, agreed to acquire the business of credit cards of HSBC Holdings in the U.S., compared with 2.6 billion dollars. These activities will contribute to the profit of the Capital One at 2013, as announced by the bank, while the agreement is expected to generate after-tax profit of 2.4 billion dollars for the largest bank in Europe. The acquisition by HSBC and the acquisition of online banking activities of ING in the U.S., will allow Capital One, which derives half its revenue from credit cards, plans to expand its business despite the slowdown in U.S. growth affects the demand for loans. Trade Forex and other products with the leading trading platform MT4.

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Euro remained above 1.44

By admin | Published: July 1, 2011

The euro moved stabilizing today on the forex market after the rally this week and heads into the first week of gains against the U.S. dollar as ECB President, Trichet reiterated yesterday that officials are strong vigilance against inflation and the Greek parliament voted to impose measures offered by European creditors. Plus, the Greek state on the sidelines, traders will focus on upcoming economic data. In Asian trade, the reaction of the yen was limited after the worst elements of the estimates for manufacturing Tankan (-9 from -7), while the Australian dollar fell after the worst estimates data for the manufacturing PMI in China. Other highlights today on unemployment in the eurozone manufacturing PMI in the UK, the manufacturing PMI’s ISM and consumer confidence in the U.S..

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CEBR: Eurozone will Split

By admin | Published: June 20, 2011

The eurozone is on track of splitting, something tha is expected to occur over the next five years, according to forecasts of the UK Centre for Economic and Business Research (CEBR). As stated in foreign media, the findings suggest that Eurozone will not divided, the countries of Eastern Europe will record growth less than 1.5% for each year until 2015.

Forecasts for average growth in Italy are for 1.2%, while they place the development of Spain to 1.0%, Portugal to 0.6%, while the development in Greece is expected to shrink by 0.5%. This distinguishes Ireland, as the Irish economy is expected to grow at an average rate of 3.2% by the year 2015, though this will have small effect on Irish consumers, according to the CEBR.

“Germany has no choice but to compromise at this stage of negotiations on the Greek bailout.The benefits of a stable euro offset the cost of additional loans from Germany, even if they are not repaid in full. So the currency is not expected to collapse in short term”, those are the estimations of CERB economists. As many Forex Brokers stated this is causing high volatility in the forex market as EURO is moving over 200 pips per day the last 10 days.

However, sooner or later both the Greek people and the international creditors will get tire of fighting a losing battle, leading to the disruption of the monetary union as Greece will not be a member anymore and probably other countries will follow. The analysts of CEBR estimate that the final breakdown of the euro may undermine the credibility of several European banks, particularly in France.

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UBS: The price of Gold will reach a $1.600 in three months

By admin | Published: June 10, 2011

USB analysts believe that the price of gold in three months horizon will reach the $1,600. As foreign news agencies broadcast, UBS raised its estimations to 1,600 dollars an ounce from 1,400 dollars by relying on the prevailing doubts about the prospects of world economy and to investors who expect to move in the precious metals markets at lower prices .

“The weak global economic data support the cause of optimism for gold in the second quarter and any downward movement should be limited, given concerns about the economic outlook,” said the analyst at UBS, Edel Tully. Trade Forex Online, Gold and other Commodities at the most popular online forex platform – the MT4. “While investors are hesitant to buy gold this year and traded near a record high of U.S. $ 1.577 an ounce, there is definitely money ready to flow to investors in case of falling below the 1,500 dollars Gold may also find support if debt crisis continued without a solid solution and the central banks continue to increase their reserves, “added the Tully. Finally, note that physical demand can be accelerated ahead of the traditional season as if the gold price has fallen below the 1,500 dollars.

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Germany: Unexpected drop in industrial production in April

By admin | Published: June 8, 2011

An unexpected drop in industrial production made in Germany in April. Specifically, the output of the country fell 0.6% on a monthly basis and compared with the corresponding months of 2010 increased 9.6%. Economists polled by Dow Jones Newswires had expected to keep production at the same level as in March.

Also a decline of 5.5% was recorded in exports in April. after two consecutive months of growth, leading to higher estimates of the decline of trade surplus in Europe’s largest economy, as shown by the figures released today by the Federal Statistical Office Destatis. German exports fell 5.5% on a monthly basis to 85.9 billion in April to calendar adjusted basis, after adjustment for seasonal factors. The fall in exports was larger than the decrease of 2.5% on the month of imports at 73.9 billion euros.

The adjusted trade surplus stood at 12 billion as announced by Destati. In unadjusted basis of the data showed that the trade surplus shrank to 10.9 billion in April from 18.8 billion in March. The surplus of current account deficit shrank to 8.8 billion in April from 19.6 billion in March. The average estimates of analysts polled by Dow Jones Newswires placed the unadjusted trade surplus at 14.4 billion euro surplus on current account 12.0 billion. Open a forex trading account and check instantly the currency rates

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