Weekly Importer / Exporter Analysis 6-29-15

Jumping Off Cliff

Greek government takes a leap into the unknown

Importers sweep the week, wiping out exporter’s gains from last week.  With the Greek debt crisis now real, there is a flight to safety in play which means the dollar is increasing in value.  This week will see some volatility as markets try to make sense of what is happening.  A pointless referendum on July 5th will make it clear if Greece wants to stay in the European Union, but it might not matter even if they vote yes.  The referendum is strictly a ploy for Alexis Tsipras to shift responsibility from himself to others and keep his power in the now bankrupt country.  If it we about “the people” he could have had this referendum earlier in the month and still had time to stave off default.  Greece is going to be hurting for years as the bank “holiday” becomes normal operating procedure and the EU gives them the boot.  Such a sad and needlessly wasteful exercise.

Other US economic data for this week is here.

Who won the battle last week, between the USD and five currencies?  The perspective is strictly from America, so if against the Aussie Dollar, United States importers won, that also means Australian exporters won as well.  I am changing the sign convention: negative percentage changes mean that exporters have the advantage while positive numbers show the advantage for importers.

Currency Week Ending 6-26-15 Weeks in a Row Weekly Change YTD Change
Australian Dollar (AUD) Importers Win! 0 0.7% 5.46%
Canadian Dollar (CAD) Importers Win! 0 0.9% 5.8%
Euro (EUR) Importers Win! 0 1.4% 7.32%
British Pound Sterling (GBP) Importers Win! 0 0.8% -1.08%
Japanese Yen (JPY) Importers Win! 0 0.5% 3.10%

Thanks,

Damon

PS- Photos from our friends at Lobster or Unsplash

JP Morgan Buys Greece Over Weekend

$2 Greece

In secret negotiations over the weekend, JP Morgan Chase purchased Greece for $2 per share.  On Sunday night, Jamie Dimon has a conference call with Eurozone finance ministers to alert them of the deal and allay concerns about doing business with Greece.

“JPMorgan Chase stands behind Greece,” Mr. Dimon said in a statement. “Greece’s clients and counterparties should feel secure that JPMorgan is guaranteeing Greece’s counterparty risk. We welcome their clients, counterparties and employees to our firm, and we are glad to be their partner.”

Greek citizens were rightfully concerned about the deal, and some openly stated that they would withhold their shares.  “I’ve got to think we can get more in a liquidation, I’m not selling my shares, this price is dramatically less than the book value Alexsis Tsipras  told us the country is worth,” said a midlevel Greek citizen. “The Parthenon is worth $8 a share.”

Though the selling of a country is rare, it is not unprecedented.  The United States was soon auctioned off to unnamed corporations and wealthy individuals for $576 million after the Citizens United case in 2010.

Thanks to Robin Sidel, Dennis K. Berman, and Kate Kelly of the WSJ and Andrew Sorkin of the NYT.

Weekly Importer / Exporter Analysis 6-22-15

Roman Temple Ruins of Córdoba Spain (1st Century AD)

Greek Bank Ruins – More to Come?

Exporters sweep for the second week in a row.  Markets reacted to the Federal Reserve delaying an interest rate hike.  This is a delay toward the inevitable march of rate increases, exporters should take measures to protect their margins, as the long term outlook is against them.

Is this the final countdown for Greece?  With officials openly wondering if Greek banks will be open on Tuesday, and German Prime Minister Angela Merkel stating that a deal will not be worked out at today’s emergency meeting, it appears that the end is nigh.  Or will there be an epic punt to the future?  Next meeting is scheduled for Thursday.

Other US economic data for this week is here.

Who won the battle last week, between the USD and five currencies?  The perspective is strictly from America, so if against the Aussie Dollar, United States importers won, that also means Australian exporters won as well.  I am changing the sign convention: negative percentage changes mean that exporters have the advantage while positive numbers show the advantage for importers.

Currency Week Ending 6-19-15 Weeks in a Row Weekly Change YTD Change
Australian Dollar (AUD) Exporters Win! 1 -0.5% 4.79%
Canadian Dollar (CAD) Exporters Win! 1 -0.5% 4.97%
Euro (EUR) Exporters Win! 2 -1.0% 5.92%
British Pound Sterling (GBP) Exporters Win! 1 -2.5% -1.93%
Japanese Yen (JPY) Exporters Win! 1 -0.4% 2.62%

Thanks,

Damon

PS- Photos from our friends at Lobster

Weekly Importer / Exporter Analysis 6-15-15

Hang on to your hat

Hold on to your hat…

Exporters sweep the week, but do not get too comfortable, the Greek debt crisis is heading for some kind of resolution on Thursday.  While everyone would like an “in or out” decision, the best odds are for some kind of delay.

The Federal Reserve has a meeting this week, with some expecting an announcement for a rate increase schedule for the end of the year.  With US economic data being mixed, it is hard to guess what they might say.  It would seem prudent to rebuild monetary policy defenses, but no one wants to put the breaks on the recovery.

Other US economic data for this week is here.

Who won the battle last week, between the USD and five currencies?  The perspective is strictly from America, so if against the Aussie Dollar, United States importers won, that also means Australian exporters won as well.  I am changing the sign convention: negative percentage changes mean that exporters have the advantage while positive numbers show the advantage for importers.

Currency Week Ending 6-12-15 Weeks in a Row Weekly Change YTD Change
Australian Dollar (AUD) Exporters Win! 0 -1.3% 5.28%
Canadian Dollar (CAD) Exporters Win! 0 -1.1% 5.49%
Euro (EUR) Exporters Win! 1 -1.1% 6.98%
British Pound Sterling (GBP) Exporters Win! 0 -1.5% 0.40%
Japanese Yen (JPY) Exporters Win! 0 -1.6% 3.09%

Thanks,

Damon

PS- Photos from our friends at Lobster

Weekly Importer / Exporter Analysis 6-8-15

A strong US jobs report should continue the trend for exchange rates to help US importers.  The logic is that strong job growth will allow the Federal Reserve to increase US interest rates.  As rates go up (or are expected to go up) dollars become more valuable versus other currencies, and the exchange rate helps importers.  The quantitative easing trend in Europe and Japan also means that those currencies will lose value over time, further helping importers.

Will Greece finally default?  My opinion is that they will, but that the final decision will be pushed to later this year.  It is clear that Greece cannot pay its creditors in June.  The terms of the bailout package have not really changed since February, and it is unlikely that they will change.  So why wait?  Nobody wants to be blamed for the uncertain fallout, and this will lead to some sort of interim deal giving the process “a few more months”.  How can this process finally end?  The IMF can decline to go along with an extension and force the Greek government to make a decision.  Markets can start inflicting pain by driving up the cost of borrowing for Euro zone countries.  This is what caused the first bailout.

Time for a vacation to Japan?  2002 levels for the yen means that US importers and Japanese exporters are celebrating.  This is part of Abenomics, but Japan also is a huge importer of energy, and increased costs are cramping domestic spending.  To combat this problem, Japan is likely to restart 16 nuclear reactors by the end of 2016, according to Bloomberg.

Other US economic data for this week is here.

Who won the battle last week, between the USD and five currencies?  The perspective is strictly from America, so if against the Aussie Dollar, United States importers won, that also means Australian exporters won as well.  I am changing the sign convention: negative percentage changes mean that exporters have the advantage while positive numbers show the advantage for importers.

Currency Week Ending 6-5-15 Weeks in a Row Weekly Change YTD Change
Australian Dollar (AUD) Importers Win! 2 0.4% 6.77%
Canadian Dollar (CAD) Importers Win! 2 0.1% 6.65%
Euro (EUR) Exporters Win! 0 -1.3% 8.06%
British Pound Sterling (GBP) Importers Win! 1 0.3% 1.94%
Japanese Yen (JPY) Importers Win! 2 1.3% 4.77%

Thanks,

Damon

Weekly Importer / Exporter Analysis 6-1-15

Importers win in a big way, with weekly moves of over 2% in some cases.  The long term trend of eventual higher US interest rates has won out (at least for last week) over the unexpected short term weakness of the US economy.  There also may be a “flight to quality” aspect due to the Greek crisis.

It looks like Greece and their creditors have already decided that there will be no agreement.  There is no reason to wait and both sides have too much to lose politically.  While the likely outcome is to kick the can down the road, Greece will not be able to pay the IMF in June.  A default here will not technically force defaults on other loans, but the reality is that it takes one group of nervous bond investors to call in their loans and cause a collapse.  Greece has done a great job trading their known debt-driven austerity for an unknown, depreciating currency based austerity.  Good thing they took a hard line on paying pensions, since the government will be paying them with worthless Drachmas.  The Greek people have been scraping by and generally not paying taxes to keep afloat.  Once everything becomes twice as expensive, there will be no escape from the reckoning.  How will Greece deal with that?  No tax revenue and hungry / jobless people makes for a bad situation.

In the US, the jobs report in on Friday.  Given the weaker than expected US data of late, any deviations will cause abnormal volatility.  Hold on to your hats!

Other US economic data for this week is here.

Who won the battle last week, between the USD and five currencies?  The perspective is strictly from America, so if against the Aussie Dollar, United States importers won, that also means Australian exporters won as well.  I am changing the sign convention: negative percentage changes mean that exporters have the advantage while positive numbers show the advantage for importers.

Currency Week Ending 5-29-15 Weeks in a Row Weekly Change YTD Change
Australian Dollar (AUD) Importers Win! 1 3.0% 6.36%
Canadian Dollar (CAD) Importers Win! 1 1.8% 6.53%
Euro (EUR) Importers Win! 1 1.3% 9.34%
British Pound Sterling (GBP) Importers Win! 0 2.1% 1.68%
Japanese Yen (JPY) Importers Win! 1 2.3% 3.30%

Thanks,

Damon