Bailouts and central market planning galore.
That's the macro morning update today.
On Friday, Italy's oldest bank, Monte dei Paschi, announced it had found a "definitive solution" for solving its legacy of bad loans, which would raise €5 billion from private investors and sell €9.2 billion of bad debts. Shortly thereafter it was announced that Italy's third largest bank had failed EU stress tests. If the global economy and financial markets came under pressure, Monte dei Paschi's financial position would be wiped out.
European markets did not respond kindly to the news, with equity markets down between -0.4% and -1.2% today.
Italy
Germany
Meanwhile, in Asia...
Central-market planning isn't working out so well. Nevertheless, the begging for bailouts continues. Despite rumors that the BOJ could ultimately end up pursuing helicopter money, the Nikkei is up a whopping 0.4% overnight, bringing its year-to-date performance to -12.6%.
Over in China
The politburo is trying to manufacture a soft landing for its slowing economy but hasn't been able to prevent carnage in the Chinese stock market. The crash continues...
Commodities?
Oil is down -16% in the past month, as reflation continues to deflate.
Bull Markets?
Gold, on the other hand, continues its rally as blind faith in central bankers continues to wane. That's long been our case for holding gold and it is gaining increasing credence among investors as money managers like DoubleLine Capital CEO Jeffrey Gundlach say "sell everything," buy gold.
The other bull market worth watching, which has also been our favorite Macro position for some time now, is Long Bonds (TLT). On that front, the year-to-date scorecard is as follows:
-
TLT: +16%
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S&P 500: +6%
Bottom Line...
Central market planners have been doing their damndest to mask their country's underlying economic issues but when reality sets in the resulting carnage is often sharp and painful.
