Monday, February 29, 2016


Elliott Management and the Argentines announced that they had reached an agreement in principal to settle the 15 year old dispute over Argentina's restructured debt plan to which Elliott did not agree.  This could mark the end to one of the longest international financial disputes (there were a few wars) that I can remember and marks--perhaps--a return to sanity on the part of Argentina and a true statesman-like approach by its newly elected President.  How much time, effort and treasure was wasted on behalf of the Argentine people by the fools who ran that country for years will never be known, but it had to be immense.  One should also give a bow to the courts of the United States for upholding principals of law that have been with us since we were Englishmen.  We'll continue to follow this but I do wish everyone well and a speedy final conclusion to this sad chapter.  There are many issues that will arise which are certain to affect international and especially sovereign risk transactions in the future which should be explored and we shall attempt to do so in the course of time.


Well, the boys and girls got together in Shanghai this weekend and for the life of me I can't figure out what was accomplished except for the addition of more confusion piled atop of that pile of mass confusion known as the international economic outlook.  China did absolutely no one any good by announcing a reduction of 0.5% in the amount of banking reserves required at the Bank of China which would seem to indicate a loosing of monetary controls which would result in the fall of the Yuan (which did happen), but no, said the Chinese, their intention was to continue to support the currency...which they didn't do today.  So you tell me.  There was at least some good-natured bantering about the degree to which one could rely on the economic figures released by the government( one cannot to any degree) and what the REAL growth rate might be; 4% you say?  HA, HA, HA!  If correct it may be no laughing matter; that would be one hell of a slow-down, a level for which most every other country in the world would kill but not every other country has half a billion people marginally employed.  Coupled with slow to marginal growth in the rest of Asia, the numbers out of Europe (what numbers?) and the mess of Latin America,  that leaves the U.S. as One Great Hope for the world economy in the near term.

Problem is--not that anyone cares--I'm more confused than ever.  Last week we had a revision in the fourth quarter GDP from 0.7% to 1.0% and everyone went nuts.  OK, sez I, OK, but it's not gangbusters.  Inflation was reported to be heading for the 2.0% range which the Fed has been targeting since...hell, for so long I've forgotten...and wages were looking better.  The weekend was looking up.  Then comes today and the Chicago purchasing numbers were released and they absolutely stank which is where I start getting confused.  The global picture is poor to bad and the data Over Here is so contradictory, I keep telling myself that something has to be off.  Finally, equities sold off today across the board but WTI was UP over 3.0% as was Brent...a one-day-at-least de-linkage...but in the face of continued reports that the world is running out of places to store all the crude that is being pumped that no one wants.  We have more data than we have ever had but can we believe any of it or has the world just gone weird.  It's February 29 today so that's weird in itself but things are beginning to get out of hand.  I guess we just keep watch and see when and if all this matches up and look forward to more madness in March.  At least that kind of madness is fun.

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