Fear! Dow “Smart Money” Index Drops To Lowest Level Since April 2009

The Dow “Smart Money” Flow index has dropped to its lowest level since April 2009.

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The Smart Money Flow Index is calculated by taking the action of the Dow in two time periods: the  first 30 minutes and the close. The first 30 minutes represent emotional buying, driven by greed and fear of the crowd based on good and bad news. 

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That’s Amore! Italy’s Yield Spread Over Germany Hits Highest Level Since 2013

When a moon  the yield hits their eye like a big pizza pie
That’s amore
When the the government spends like they’ve had too much wine
That’s amore
(Alarm) Bells will ring ting-a-ling-a-ling, ting-a-ling-a-ling
And you’ll sing “Vita bella” “We’re screwed!”

(Bloomberg) — A key barometer of risk aversion for Italy flared to the highest level in more than five years as the nation battles the European Union over its budget and faces the prospect of rating downgrades next week.

The extra yield that investors demand on Italy’s 10-year bonds over comparable notes in Germany rose to 324 basis points, the highest level since April 2013. Italy is due to widen its deficit to 2.4 percent next year, putting it in conflict with EU fiscal rules, while S&P Global Ratings and Moody’s Investors Service are due to review the sovereign rating by the end of this month. The nation is currently rated two notches above junk by both.

Italy’s 10-year yield rose 12 basis points to 3.67 percent as of 4:04 p.m. in London, while those on their German peers dropped two basis points to 0.44 percent. Italy’s Treasury conducted a 3.8 billion euro ($4.4 billion) buyback of inflation-linked bonds, selling five nominal notes in return, earlier Thursday.

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Of course, the same countries that overspent before, Italy, Greece, Portugal and Spain all saw the most rapid rise today in 10-year sovereign yields.

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And Germany’s 10-year yield is the second lowest in Europe.

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Greece and Italy lead Europe in Debt-to-GDP followed closely by Portugal.

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Dean Martin is the classic version of That’s Amore. The worst?

Fear! Hungarian National Bank Increased Their Gold Reserves By Ten Times!

Yes, Central Banks are growing more fearful of how their policies may have created staggering asset bubbles that could burst. Though Hungary is a small player, it says something about what is happening around the globe.

Budapest, October 16, 2018 – In view of the long-term national and economic strategygoals, the Monetary Council of the National Bank of Hungary has decided to increase the gold reserves of the country. As a result, in October 2018 the precious metal stock ranges from the previous 3.1 to 31.5 tons increased tenfold. Since 1986, the Hungarian National Bank has been buying gold for the first time since 1986. After the substantial increase in the stock of gold reserves in physical form, its repatriation has already taken place.

The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary. In keeping with the historical role of gold, it remains one of the safest instruments in the world, which, even under normal market conditions, exposes its stability and confidence-building function. With a current stock of about $ 1.24 billion in gold reserves of 31.5 tonnes, it reached the historical level that was available to our country at the time of the “golden train”. Within the international reserve, the share of gold reserves rose to 4.4 per cent, which corresponds to the average of non-euro area Central and Eastern European countries.

The role of gold reserves in the nation and economy strategy is becoming more and more appreciated while both the possession and the increase of the precious metals nationwide appear to be a decisive international trend. In this process, according to the strategic decision of the Hungarian National Bank, the domestic gold reserves rose to 31.5 tons. The raising of the gold reserve and the returning of it in physical form took place in the first half of October 2018.

Increasing and repatriating gold reserves can be considered a significant step in economic history. Since the founding of the Hungarian National Bank in 1924, gold reserves have been maintained, but the stock of the population has fluctuated considerably over the decades, depending on the purpose of keeping. The amount of gold reserve is in the II. World War II, and at the end of the day, he pulled out some 30 tons of gold balloons and gold coins on the MNB’s legendary “gold train” in the Spital am Pyhrn in Austria. This amount was fully returned to the country after the war, while providing cover for the introduction of the new currency of the country, the forint, thus supporting financial consolidation and the stabilization of the post-war Hungarian economy. At the end of the eighties, Hungary’s gold reserves, driven by short-term investment objectives, fluctuated between 40 and 50 tons and then, at the time of the change of regime (between 1989 and 1992), the ruling central bank executives decided to reduce to a minimum level of about 3.1 tons by the end of September 2018. level. With the decision of the MNB today, the stock of 31.5 tonnes of gold reserves reached the level of the stabilization period of 1946 by October 2018.

Gold reserves are held for short-term investment and / or long-term stability purposes by country central banks. The current decision of the Hungarian National Bank was led by the stability goals, and there are no investment concerns behind the holding of gold reserves. Gold also has a confidence-building effect in the normal period, that is, it can play a role in stabilizing and defending it not only in the extreme market environment, structural changes in the international financial system or in deeper geopolitical crises. Gold is still considered to be one of the safest assets that can be attributed to unique properties such as the finite supply of precious metal, which is not linked to credit and counterparty risk, since gold is not a claim against a specific partner or country.

Over the past few years, more and more countries have decided to continue to play a decisive role in the use of precious metals, which serve as traditional reserve assets, and raise their gold reserves. This was followed by Poland, in spite of the fact that it had one of the highest gold reserves in the region. When raising domestic gold reserves to 31.5 tons, the MNB also paid attention to the international and regional role played by precious metals in central bank reserves. As a result, the Hungarian gold reserve increased to 4.4 percent in the Central Eastern European region averaging the entire international reserve ratio. This move from the end of the international rankings to the middle of the way has progressed, both in terms of size and proportion of gold reserves.

On the occasion of the announcement, the National Bank of Hungary also published a “golden book”, which gives an insight into decisive periods such as centuries of golden coins, the rescue of our national treasures by gold trains, or the recent homecoming of the country’s gold reserves.

The National Bank of Hungary must have seen this film clip of fear being wrestled to the ground. By buying gold.

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How Bad Is Europe Doing? 18 EMEA Nations Now Have Negative 2-year Sovereign Yields (Is Italy The Next Greece?)

Europe is facing Brexit (Germany), populist uprisings (Italy), perpetual gloom (Greece) and bad cars (France). So much so that the European Central Bank has their monetary stimulus at record levels.

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It used to be only 16, but Europe, the Middle East and Africa now has 18 nations with negative 2 year sovereign yields. That is, 18 nations that require additional monetary stimulus.

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Italy used to be a  member of the sub-zero EMEA club, but recent election and budgetary woes have sent Greek 2 year sovereign yields above zero.

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Italy’s 10-year sovereign yield is also rising, second place behind Greece. But not as bad as Turkey, Nigeria, Lebanon and Russia.

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Of course, Greece and Italy will need constant bailing-out of their fiscal woes. Along with other EMEA nations.

Here is a photo of a legendary French automobile, the Citroën 2CV.

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The Borgias? Italian Assets Suffer Fresh Blow as Borghi Evokes ‘Own Currency’ (Italian Bond Prices Nosedive)

I have never been one to think that regional or global currencies are a good idea. And in 1999 I predicted that Italy would be the first country to bail on the Euro and reintroduce their own currency.

(Bloomberg) — Italian assets were roiled yet again after a prominent euroskeptic said that the nation could resolve its debt problems with its “own currency.”

The yield on the nation’s 10-year bonds touched the highest level in more than four years after Claudio Borghi, head of the lower house budget committee, said the euro was “not sufficient” to solve Italy’s fiscal issues. Though he played down his comments subsequently, the euro declined.

Borghi’s comments come at a time of intense vulnerability for Italian assets, which have been battered amid investor concern over the country’s proposed budget deficit of 2.4 percent for 2019. Plans by the populist coalition to boost spending to fulfill campaign pledges are fueling speculation over the sustainability of the nation’s debt load.

The Italian 10-year sovereign yield is climing as their bond prices nosedive.

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The Euro is taking a hit as well.

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But Credit Default Swaps are stable, indicating that this is not a credible threat … for the moment.

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Lucrezia could have skipped the poison and just used Modern Monetary Theory.

Is Claudio Borghi actually one of the Borgias? 

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