Time to buy VIX? (2)

Why is VIX perfect?

Because the index is traditionally moving in the opposite direction of the US indices. But, unlike them, its downward potential is limited to about 10, or just below that limit - about 20 percent of its current levels.
Unlike six months ago, however, when US indices suffered from total lack of volatility and traded only at new and new record values, the unthinkable happened and volatility erupted, bringing this index to levels over 30 for a moment.
After a long recovery of indices, the indicator returned again to its lowest values. But the danger of a new eruption is much greater than half a year ago.
Or, the index can easily and quickly double, and why not, even tripling its value, with limited potential for decline. Or a yield-risk ratio of 5 - 20% drop, versus 100% growth.

Time to buy VIX? (1)

What's happening on US stock markets can be described as extremely dynamic and dramatic. But, as they say, we've already seen something like that before. Two times. And just before a drastic drop in US indices by more than 40 percent. Yes, I recall 2000 and 2007.
And while it does not necessarily have to end the same way - with crisis and crash (although it is possible, given that it has already passed 10 years since the last crisis), at least we can enter the "bearish cycle" - that is, a decrease in indices of more than 20%.


How?

The scenarios of the events in above mentioned two years, and then witnessing a fall in the index of more than 40%, seemed this way:
Reporting a historical record => Correction between 8 and 13% for about four weeks => Upward test for the next three or four months => Unsuccessful breakthrough or minimal false break at the top => Direction down to test the lowest value of the correction => And finally break down when breakthrough at the stated lowest value. Does it seem familiar to you?
If you think that a similar scenario can be formed at the moment, you can trade it with the VIX.
And the moment of his purchase is "ripening" again. Because the volatility index is again starting to look like an "asymmetric investment" - one with a limited drop potential and unlimited growth.

Italy is diving in a deeper political crisis (2)

Overall, the bond market in the euro area has become chaotic after the published documents.
In fact, Italy's debt problem is becoming more and more obvious. The country's debt to GDP is at the expense of 132%. And by adding to this size the much larger size of Italy than Greece, what could be the consequences for the EU?
For comparison, the debt of Greece, which was saved by its European partners, amounts to 180.8%.
According to Italian publications, two of the top populist parties, following the inconclusive results of the March elections, intend to ask the ECB for a 250 billion-euro debt relief program.
According to the 39-page document, there is also a possibility to look for a way out of the eurozone. This is a proposal the two parties have made in the past.
Following the publication of the report, the two populist parties have said that this is an old version that has been seriously modified. Particular attention was paid to the part leaving the eurozone, saying that the single currency is not in doubt at the moment.

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Italy is diving in a deeper political crisis (1)

The inability to form a government in Italy after the leaders of the populist parties have withdrawn leads to the country's entry into a deepening political crisis.
The Five Star leader has said he is considering an impeachment proposal for President Sergio Matarela, while anti-immigrant party leader Mateo Salvini has hinted at a conspiracy and a call for new elections.
Meanwhile, the euro has depreciated against the dollar, in an environment of increasing political uncertainty in Europe.
More and more analysts are concerned that the next financial crisis in Europe may begin in Italy.
The two populist parties have already hinted that they would want to alleviate conditions from Europe, the country's overwhelming debt.
The latest attack on United Europe has become a reality in Italy. Huffington Post Italia prints a government offer in mid-May, according to which populist parties in the country are planning to ask the ECB for debt relief of 250 billion euros.
After the report, interest rates on 10-year Italian bonds reached their highest levels in two months. Interest on government bonds and other euro area countries rose, with Greek 10-year bonds rising by 25 basis points.

Citigroup: Interest rates of 4-4.5% on ten-year US bonds are possible

For global financial markets the situation sounds like a return to normal. The sale of US government bonds, which triggered an increase in interest rates to levels unseen in many years, points to "normalization" on the market, according to Citigroup.
The bearish breakthrough in the world's largest bond market is an underestimated risk, according to Mark Schofield and Ben Nabaro, from the US investment bank. A similar phenomenon in bond markets has not been since the financial crisis, experts recall.
Recent comments suggest that investors are more attached to the scenario where rising interest rates and a strong dollar hinder recovery and lead to a reduction in interest rates rather than a scenario in which interest returns at pre-crisis levels.
These comments come true in an environment of return to global debt markets, with interest rates on 10-year bonds rising above 3.05 percent, a very high level of resistance.
The bulls, with regard to US bond investors, point to the rise in oil prices and overestimated market expectations as the main reasons for interest rate rises above the psychological limit of 3%.
The positive performance of the US economy as well as inflation would justify a premium between long-term and short-term bonds, which means we can see an increase in interest rates on 10-year bonds to 4-4.5%, according to Citi.
Even if they do not reach such levels, raising interest rates on 10-year bonds can in itself create a self-stabilizing mechanism. It is for this reason that many traders believe that interest on this kind of US bonds will decrease rather than continue to rise.
Interest rates of 4.5% are not Citi's base scenario. This is a hypothetical scenario. However, this scenario should not be so overlooked by the market and seems to be underestimated, the bank said.

Long positions in the dollar are modern again

The bets on the dollar are again up-to-date after weakening the tension between the US and China and the postponement of the trade war.
In addition, the expectations are that the Fed will raise the interest rate at its next meeting in June, after failing to do so in May.
The dollar index added 2% since the beginning of the month to date, according to FactSet statistics.
The net long positions of speculators for the week until May 15 are again on a positive territory, for the first time since mid-March, just before the first quarter of Fed's interest rates hike for the year.
Better expectations are already evident in the spot market, where the dollar is booming, against the backdrop of the improvement in the interest rate differential, according to Jane Foley, Rabobank's chief currency strategist.
Investors are monitoring outgoing data for further evidence of the market sentiment and the future direction of green money.
In the first two weeks of May, leverage accounts held net long positions in dollars for the first time since January, according to Stephen Gallo, head of the Forex Trading Unit at IMO.
The US dollar is experiencing exceptionally strong growth, according to Mark Chandler, global strategist at Brown Brothers Harriman. This is a function of rising interest rates and the gradual rise in confidence that the Fed will raise interest rates three times this year, not twice as expected, the expert added.
The next Fed meeting on interest rates is on June 12-13. Futures indicate a 95% chance of raising interest rates by 25 basis points next month.

The bitcoin at $20,000 by the end of the year?

After the bed start for the bitcoin for the past week and falling momentarily below the 8,000-dollar psychological limit, the cryptocurrency started the new week with growth.
The bitcoin rose momentarily over $8,500 for a coin yesterday. After reaching the highest level of $8,575, the cryptocurrency went back below $8,400. Late last night the bitcoin was exchanged at $8,370.
However, according to many experts, not everything is lost to the bitcoin. Yes, it may not be able to overcome the $10,000 psychological limit and go back down, but we will hardly see $6,000 again, analysts say.
There are also some very optimistic experts about the future of the cryptocurrency.
For example, according to Rodrigo Marquez, CEO of Atlas Quantum, one of the Brazilian cryptocurrency trading platforms, a drop below $8,000 for the bitcoin can be identified as a finding of the bottom. He expects the bitcoin to go up and reach the psychological limit of $20,000 in six months. This is the highest value for the bitcoin in history reached in December of last year.
Apparently the expert expects a repeat of the scenario from last year and a strong rally in the last months of this year.

Jens Weidmann - the next President of the ECB?

Jens Weidmann reports that he is ready to succeed Mario Draghi as the next president of the ECB. The strongest trump to the head of the German central bank so far is that he wants the position. But if this is enough to get the role of the most important "central banker" in Europe, we are yet to see.
Weidmann believes that every member of the Governing Council of the ECB should have a willingness to contribute to monetary policy and under another role, the German said in a special weekend interview.
According to Weidmann, public discussions about who will inherit Draghi at the end of his mandate from the end of 2019 began "too early". The European authorities will hardly decide who will be Dragh's heir this year, Weidmann said.
Weidmann became head of the German central bank in 2011. So far, he refused to comment on his chances of being a heir to Draghi and a key candidate for the ECB's post.
Weidmann is considered to be one of the most aggressive Eurozone members of the Monetary Committee.
The expert, however, is expected to have a lot of competition for the post. So far, other representatives of the Monetary Policy Committee have expressed their wish for the position of Draggi. One of them was Erkki Liikanen, the head of Finnish central bank. On Saturday, he said he was open to considering the proposal for this post if invited.
Weidmann has not once and twice announced the recent ending of the ECB's incentives. The eurozone is doing well and its economy does not need such incentives, says the German candidate.
The next ECB interest rate meeting will be on June 14th. It is expected to give more clarity about the future of monetary policy.

A record number of billionaires and wealth around the world

There are more billionaires in the world right now than ever, according to a new study of the Wealth-X Billionaire Census.
The number of the richest people in the world has risen by a remarkable 15% compared to last year and by the end of 2017, it now amounts to 2 754. The peak of 2 473 from the 2015th year was overcome.
The synchronization of world economic growth and stock market stock prices was the main reason for the accelerated growth in the number of billionaires, says the report.
Asia's billionaires have grown the most, rising 29% in the past year, compared with 11% for North and South America and 9% for EMEA.
As a result, the number of billionaires in Asia exceeded that in North America for the first time in history. There are 784 billionaires in Asia, compared to 727 in North America.
The global fortune of world billionaires rose 24 percent, to a total of $8.2 trillion. Again, Asia's billionaire wealth has risen steadily, from 50% in the past year, compared with 22% in the Americas and 12% in the EMEA.
The growth of Asian billionaires comes mainly from China, Hong Kong and India.
In terms of cities, most billionaires live in New York, followed by Hong Kong, San Francisco, Moscow, London, Beijing, Singapore, Dubai, Mumbai and Shenzhen.
The universities that produce the most billionaire include Harvard, Stanford, University of Pennsylvania, Columbia, MIT, Cornell, Yale and others.
In terms of industries, finance, banking and investment intermediation, the biggest share in the creation of billionaires, followed by industrial conglomerates, real estate and industry and technologies.