cds

Jim Reid: Volatile Volatility

Jim Reid: Volatile Volatility

What makes this move shocking is that just last month the SNB committed themselves to preventing their currency appreciating beyond 1.20 to the Euro and vowed they would enforce the policy with "the utmost determination". The risk for the global financial system is that if the SNB can make such a dramatic u-turn could other central banks follow at some point. We're not so concerned here as their situation is arguably a lot different to the ECB. The ECB might actually look at the wider market moves yesterday and be scared to disappoint.

1-7 January: Oil & Euro Lowest Since Lehman As Grexit Fears Loom, EU In Deflation

1-7 January: Oil & Euro Lowest Since Lehman As Grexit Fears Loom, EU In Deflation

What a way to start 2015. The first deflation in the EU since 2009, record low yields on German sovereign debt, global energy prices keep tanking, US equities down for 5 consecutive days, and the news (or not) keeps flowing. For the record, major equity indices have started 2015 with the worst performance since the financial crisis of 2008. Whatever remnant of the 2014 "Santa Rally" turned out to be a ghost in a shell, and has now spooked global market participants.

The past week has been all about ratcheting up the "Grexit" rhetoric across the markets. Readers should be no stranger to the situation in Greece and the entire periphery of the Euro Union, which we touched upon in our last update preceding the New Year. The risk has indeed never been greater as it seems Germany has openly voiced that it won't be blackmailed by a Greek plunger. Remember, Greece is bounded by €240bn to the Troika under the various bailout packages extended to her.

29-30 December: Greek Parliment Fire; AirAsia Shares Plunge As Flight Vanishes

29-30 December: Greek Parliment Fire; AirAsia Shares Plunge As Flight Vanishes

In what has to be the most heart wrenching year in modern civil aviation history, another civilian airplane has vanished without a trace over an area spanning between Indonesia and Borneo.

Earlier this year in March, Malaysian Airlines Flight MH370 flying from Kuala Lumpur, Malaysia to Beijing, China lost radio contact with Malaysian ATC while flying over the South China Sea towards Vietnam. Almost 9 months after its mysterious disappearance, the Boeing 777-200ER airplane that serviced MH370 is still not found, nor have parts that belonged to the aircraft been found despite extensive international search efforts across millions of square miles over the Indian Ocean. The conclusion of MH370 is still open ended, but consensus is that it has crashed in open waters West of Australia. MH370 was carrying 239 passengers in total, the world has never heard from them since.

The flight in question is QZ8501 operated by an affiliate of AirAsia, AirAsia Indonesia whose parent company is PT Fersindo Nusaperkasa. The firm was founded in December 2004 under the brand "Awair". As we go to print, the airplane is still missing after 48 hours since it broke contact with Jakarta ATC. No distress signal was given.

10 December 2014: China Rubs Salt Into Weak Oil Wound

10 December 2014: China Rubs Salt Into Weak Oil Wound

China's Securities Depository Corporation announced (CSDC) Tuesday that they would no longer accept non AAA-rated corporate debt securities as collateral in repurchase transactions, essentially raising the cost of short term collateralized borrowing in the private sector. AAA-rated corporate debt securities to be pledged as collateral must also originate from AA-rated issuers.

China has hinted rather overtly it wants to drastically reduce leverage in its stock and bond markets, and is partially working on this goal by tightening monetary policy through indirect tools; fixing Yuan higher and raising collateral standards and reducing availability.