US Fed Minutes show signs of caution.

The release of the US Fed’s latest policy minutes showed that most committee members remained cautious about a rate hike in coming months with concerns about how the Greek financial crisis will impact global financial markets and how China’s recent share market plunge will also impact the US economy. 

Keep in mind that these minutes were from a meeting prior to the current Greek crisis and were well before the daily stock market plunges of the past few days in China. Many traders are now pushing back their estimates from September to December for when the US Fed will raise its official cash rate and the US Dollar did experience some selling pressure on the back of the minutes.

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“Still an enormous amount of work to do on Greece.” IMF Chief Christine Lagarde

European Finance Ministers met in Brussels on Monday to discuss new reform proposals Greece put forward on Sunday however the meeting broke up with International Monetary Fund Chief Christine Lagarde saying “there is still an enormous amount of work to do on Greece.”

Since 2011 Austerity programs put in place by the Greek Government has meant 30% of government workers have lost their jobs. If the IMF and EU Ministers allow Greece to fail and leave the Euro Zone it simply answers the question that many have been asking. Has the introduction of the common currency been a success? I believe the answer based on economic performance has to be no. Ireland, Portugal, Greece and Cyprus have officially gone belly up and if Greece continues to cause stress amongst European nations then I hardly think anyone could argue the Euro has been a success. It may have been a good thing for Germany and some however overall I think if you asked the original crop of nations that started in the common currency if they’d prefer their old currencies the answer would be yes. 

Greece shows that you can be a failed economy, snub your nose at the rest of Europe who has propped you up and still remain in the Euro. Sadly the Euro has been a failure and the continued challenges that it faces seemingly every few months are proof of that. 19 Nations with their own self-interests, 19 Nations with independent economies with their own challenges, cultures, governments and central banks to deal with and 19 Nations with political figures at the top, middle and bottom that will continue to act with complete self interest.

Chancellor Angela Merkel holds more power in this negotiation than virtually anyone else with Germany being the largest financial contributor outside of the IMF and ECB and whilst many investors believe Europe will be a better place without Greece in the Euro Merkel doesn’t want to be the Chancellor who sinks Greece’s economy into the depths of despair. The amount of money that it will take to keep Greece afloat is likely peanuts compared to the challenges that could lie ahead for Europe if Greece turns to Russia for assistance or worse still it falls into a fail state.

20% of all funds on deposit in Greek banks have now been removed and I can only imagine if Greece defaults and the IMF and ECB walk away from the negotiation table how many Greek citizens will want to leave Greece only adding more weight to the rest of Europe’s bulging immigration concerns.


LTG GoldRock Members received the full report this morning in their Goldrock Insider Report.

What will the RBA minutes tell us today?

The June monthly minutes from the RBA will be released at 11.30am AEST today and after the RBA lowered the official cash rate to 2% on the first Tuesday of the month traders will be eager to see beyond the final comments made in the statement which read. “At today's meeting, the Board judged that the inflation outlook provided the opportunity for monetary policy to be eased further, so as to reinforce recent encouraging trends in household demand.”

These final comments gave us an insight into what the RBA was thinking and that was rates may go even lower if the economic data supports it. The minutes released today will simply give us a better look at what was specifically discussed at the RBA meeting earlier this month and if there is any indication on when the next rate cut may be.


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What I discovered in China - Andrew Barnett, LTG GoldRock

You can physically feel the need for speed. Impatience is everywhere and there is an insatiable appetite to get ahead amongst the 1.375 Billion people who live in what will shortly be the biggest economy in the world. China has opened up to the world on a massive scale over the past 20 years and after a week listening and watching I concluded that the business opportunities to explore this fascinating and diverse country have really only just begun.

Those were my overall findings from spending last week in Shanghai. I left with the distinct feeling China is the new frontier and whilst it technically remains a communist country being such has strangely meant its financial firepower is arguably stronger than developed democratic countries who are mostly struggling under the weight of massive debt, low interest rates, low growth and low inflation and they seem to be reliant in China in some way or another. Australia for commodities, the US for selling their bonds and products are just two examples. China is the elephant in the room.

LTG GoldRock Members can read the full report in today's GoldRock Insider Report for Monday the 15th of June, 2015.

RBNZ to release its inflation expectation today.

ANZ Bank recently came out and said that it thought the RBNZ would be forced to put the official cash rate down twice starting with a rate drop in June and another in July. This saw the Kiwi Dollar fall off its recent highs 0.7560 and this morning weaker than expected Producer Prices data helped push the Kiwi Dollar to 0.7370 at 8.45am AEST. 

But it’s 1.00pm AEST I am waiting for today as the RBNZ will release its latest inflation expectation for the New Zealand economy and with recent economic data softening it won’t surprise me to see traders price in a dovish RBNZ inflation statement and the Kiwi Dollar fall even further. 

Members of LTG GoldRock can access the full report in Today's GoldRock Insider Report.