Transcript July 2015- Greece, China, Commodities

Greece, China and Commodities
Daryl Montgomery
July 21, 2015
Copyright 2015, All Rights Reserved
The contents of this presentation
are not intended as a
recommendation to buy or sell
any security and are for
educational purposes only
The New York Investing meetup is not affiliated
with the New York Life Insurance Co.
3rd Bailout Already Helping Greece
Chinese Bubble Bursting
Dow Industrials: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
Nasdaq: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
US Dollar DXY: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
10-Year Treasury Yield: 3-Years Weekly
10, 40, 65 - Weekly Moving Averages, RSI, DMI, MACD
Greece 1
• Problem came to EU attention in fall 2009, when GREECE
revealed it had lied about its debt/GDP figures (Goldman
Sachs helped in the cover up)
• 1st bailout 2010. 2nd bailout 2012. 3rd bailout 2015.
• IMF/EU said 1st bailout would solve everything. I wrote in
April 2010, it would only lead to more bailouts and
economic decline.
• Since 1st bailout Greece GDP shrank 25%. Unemployment
is 26% (same as US during Depression).
• Approximately 90% of bailout money went to EU banks.
Was really a bank bailout. Greek economy was starved.
Greece 2
• Germans want Greece out of eurozone (now that their banks
have been mostly bailed out).
• Greece had a referendum on July 5th, rejecting harsh 3rd
bailout terms. Wound up getting worse terms.
• IMF broke with EU saying Greece needs massive debt relief
(anyone who can do 2nd grade arithmetic knows this).
• NOTHING is solved in Greece. 3rd bailout could fall apart
as early as this fall. IMF estimates Debt/GDP will go over
200% (then things will get better – LOL)
• Only viable solution is for Greece to leave euro.
• Greece is an example of what happens in socialism when
you run out of other people’s money.
Euro FXE: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
German DAX: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
France CAC40: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
China Stock Market Bubble
• We have pointed out many times China’s stock
market is in a bubble (so is real estate and debt).
• In 3 weeks after June 12th indices lost 32% to 40%.
• Things China has done to hold up stocks:
1. Lower interest rates/reserve requirement
2. Banned large holders from selling stock
3. Prevented new IPOs from coming to market
4. Allowed 1400 companies to halt trading
5. Allowed real estate as collateral for stock margin
6. Created $20 billion fund to buy stocks
7. Threatened to arrest short sellers
Historical PEs on Chinext
China Shanghai Composite: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
GSCI Commodity Index: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
Gold ETF GLD: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
Oil WTI: 3-Years Weekly
10, 40, 65-Week Moving Averages, RSI, DMI, MACD
The End