“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.

LTG GoldRock RBA Monthly update

The minutes from the RBA monthly March meeting were released yesterday with the Central Bank of Australia not discounting another rate cut choosing to conclude their statement with the following comments. “In considering whether or not to reduce the cash rate further at this meeting, members saw benefit in allowing some time for the structure of interest rates and the economy to adjust to the earlier change. They also saw advantages in receiving more data to indicate whether or not the economy was on the previously forecast path. Further, they noted the greater degree of uncertainty about the behaviour of borrowers and savers in a world of very low interest rates.

Taking account of all these factors, members judged it appropriate to hold the cash rate steady for the time being, while recognising that further easing over the period ahead may be appropriate to foster sustainable growth in demand while maintaining inflation consistent with the target.”

LTG GoldRock last night held Part 2 of their special Free Forex Coaching Sessions. You can review the recording here.

US Fed Chair Yellen dovish on a rate rise.

US Federal Reserve Chair Janet Yellen testified before Congress on Tuesday and said it would be several months before the US Fed raised the official cash rate from 0.25%. This was a change from her January comments which suggested a potential second quarter rate rise and goes to show that the US Fed is taking a very slow and steady approach to its first interest rate rise.

Art Cashin noted in commentary on CNBC that Yellen gave herself a lot of wiggle room in relationship to the style of her comments on when the US Fed may tighten but based on her comments today it is clear the market should not expect the US Fed to tighten interest rates before June at the earliest.

The Fed Chair said the Central Bank would not raise rates until it found “confidence in the economy” with concerns still being around jobs growth, inflation and energy prices. I just wonder how good the US Fed really wants to get it as the USA has an unemployment rate that is the envy of the developed world right now, inflation that is under control and oil prices at levels we haven’t seen in years.

Full story in Today's GoldRock Insider Report: www.LTGGoldRock.com

The ECB meets on Greece today.

The ECB is set to meet today to discuss the ongoing Greece debt saga. Bloomberg is reporting this morning that Greece is potentially going to accept a 6 month extension to its bail out program and thus avoiding what would be financial disaster. This deal would go some way to explaining why European and US stock indexes finished higher along with the Euro.

European leaders seem to be united in their call for Greece to stay within its austerity program and to accept a 6 month extension. There appears to be no European support for the Greek Finance Minister and his Prime Minister. Greece has two options. Either dig their heels in and ultimately commit financial suicide or accept the offer that is on the table and eat some humble Greek pie in front of their own electorate and admit the mandate they campaigned on failed when they won office and tried to have austerity immediately changed.

The newly elected Greek Prime Minister ran a very strong election campaign promising to get Greece’s austerity program immediately changed but in reality he only said it to get elected. 

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China’s weak inflation stokes thoughts of stimulus.

China’s inflation slowed in January to 0.8%, which was below the 1% economists expected and well below last January’s 1.5% figure. The Aussie Dollar initially started to fall on the news until traders figured out that such a sharp year on year fall in inflation will likely see the People’s Bank of China inject fresh stimulus and also lower the amount of cash banks in China need to keep on deposit. This sent the Aussie Dollar higher on PBOC stimulus hopes.

So if you are wondering why the Aussie Dollar rose after a very poor inflation figure out of China it is because whenever China’s economy has weakened the Chinese Government has stepped in and added stimulus which gives hope to mining companies. China might buy more of our Ore and Coal, which in turn helps the Aussie economy.

Each week Andrew Barnett, Senior Trader at LTG GoldRock runs a live Trading Room Session Monday at 8pm AEDST.

US Fed remains on track to lift US interest rates.

The US Fed dropped its pledge to keep interest rates on hold for a considerable time when it released its monthly statement on Wednesday. Fed Chair Janet Yellen said the US Fed would remain patient on when it raised interest rates but acknowledged that the US economy was expanding at a solid pace and Labour market conditions have improved further, with strong job gains and a lower unemployment rate. The US Fed’s inflation target is 2% and whilst it acknowledged that inflation would remain low for some time before moving higher, lower oil prices were having a positive affect on the economy.

In a first since June last year Bloomberg reports that the statement today was unanimously backed by all committee members. The US Dollar has naturally rallied on the news as upward pressure continues to build, as the Fed gets closer to its first interest rate hike since the GFC. It was only a number of years ago the US economy was a basket case. 

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