Timeo Danaos et dona ferentes...

"I fear the Greeks, even - or especially - if they drop by to offer presents". Charity is one of the most noble ideas of mankind, but it seldom rhymes with financial markets. And this time is no different.

The last couple of weeks, we have witnessed some strange form of "charity" initiatives, this in the framework of improving political ties or even coming to the rescue. The latest initiatives include China willing to give a helping hand to Portuguese and Spanish distressed debt. And now the Japanese offered to help, this by the commitment to snap up 20% of euro-bonds to be launched later this month under the European Financial Stability Scheme. It is not quite clear whether Japan will use euro-reserves. After all, the country disposes of a total of $ 1000 bio of currency reserves but they do not disclose the currency composition. Most likely, the vast majority is in $ and only a small part in euro. As a result, the euro immediately gained on the major crosses, ie 107.5 against the JPY (up from 106.8) and crawled back against the USD. JPY lost ground against the greenback as well.

In the run-up to the G20 meeting late last year, China was feeling the heat, accused of currency manipulation. They found a beautiful solution : If we have to gradually appreciate our currency against the USD, why not hitting one of our major trade partners as well ? So the Chinese sold USD and bought JPY and a hefty batch of Japanese government bonds, a "present" and synonime for "portfolio diversification". The cross USD/JPY immediately went through the 80 barrier, infuriating the Japanese. The fact that this was retaliation for the fishing boat accident was the icing on the cake of course. And so the Japanese announced a big round of quantitative easing of their own. If the Americans are allowed to do it and the Chinese are making life difficult, so can we.

And so the merry goes round and we will probably witness more of these "charity" initiatives in the future. The Swiss have stopped after an intervention initiative last summer cost tons of money to the Swiss National Bank : too small to fight Mr Market. But those who have ammunition - like the Chinese and the Japanese - or those who debase their currency by means of quantitative easing will continue for as long as it takes : When the global growth engine sputters, the easiest way out is to export your problem. And if it becomes global tactical warfare, protectionism is knocking at the door.

So whenever for exemple in the case of JPY the crosses come close to critical barriers (105 against the EUR and 80 against the USD), be prepared for more "charity" in the pipeline. I am still hoping however for the mother of all "charities" : the UK coming to the rescue of the Euro-zone, wouldn't that be nice !!