Posts Tagged Euro
Monthly Strategy – July 2010
Posted by Belisarius in Monthly Strategy on July 3, 2010
Almost unchanged from June.
Equities
Only extremely favorable economic data could change the negative trend established. This is highly unlikely. So I would say we will soon see S&P 500 at 875.
On a macro level, the stimulus is wearing off, politicians and central bankers are not ready to continue with loose fiscal an monetary policies, just the opposite, austerity is the game. For now.
Private demand is weak. Private investments also show no strength. Real-estate is burdened with unsustainable debt levels, still to high prices and weak demand. Without real-estate investment recovery, we cannot talk on sustainable and historically high economic growth rates.
ECB’s 7-Day Liquidity Tender Erases Yesterday’s Optimism On European Banking Sector Liquidity
Posted by Belisarius in Markets on July 1, 2010
From yesterday’s post:
The ECB biggest ever liquidity facility – EUR 442 billion one year maturity is coming due tomorrow. To reduce the strain on the banks, ECB introduced 3 month LRTO (Long-Term Refinancing Operation) which banks could use to refinance the maturing facility.
The market estimate for the LTRO size was EUR 220 billion – EUR 250 billion.
The ECB just announced the results of the operation. Apparently the banks rolled-over (only) EUR 131.9 billion.
Whether this points to improving liquidity in European banking sector or the “good” banks just used cheaper market financing and the “bad” ones borrowed from the ECB remains to be seen. I would go for latter.
Friday Reading
Posted by Belisarius in China, Markets on June 25, 2010
I already posted links on stories covering same themes, but since I believe they are important, I will do it again.
FT Alphaville: The other liquidity strain — in China.
FT.com Blogs / Money Supply: ECB and the €442bn question.
Spain Following Greece Footsteps?
Posted by Belisarius in Markets on June 16, 2010
Todays Financial Times front page: Spanish banks break ECB loan record.
Spanish banks borrowed €85.6bn ($105.7bn) from the ECB last month. This was double the amount lent to them before the collapse of Lehman Brothers in September 2008 and 16.5 per cent of net eurozone loans offered by the central bank.
Financial Times article: Turmoil in Spain sparks fear of crisis spreading.
This week the Spanish government and BBVA, Spain’s second biggest bank, admitted what investors have known for weeks: the country’s banks are on the brink of a funding crisis because their access to international markets is virtually closed.
Monthly Strategy – June 2010
Posted by Belisarius in Monthly Strategy on June 9, 2010
Little late…but better late then never…
Equities
Only extremely favorable economic data could change the negative trend established. This is highly unlikely. So I would say we will soon see S&P 500 at 900.
On a macro level, the stimulus is wearing off, politicians and central bankers are not ready to continue with loose fiscal an monetary policies, just the opposite, austerity is the game. For now.
Private demand is weak. Private investments also show no strength. Real-estate is burdened with unsustainable debt levels, still to high prices and weak demand. Without real-estate investment recovery, we cannot talk on sustainable and historically high economic growth rates.
When I Was Away…
Posted by Belisarius in Markets on June 8, 2010
Belisarius was mentally away from the market as he was taking an industry exam… He is sorry for wasting half a year on that, but that’s a thing of a past now…
Thanks to my much relaxed time schedule, the TaintedAlpha.com Blog will have receive some new and improved content and features in following weeks.
Returning to the markets. Things don’t look good. The flood of bad news comes from various parts of the world, but important from Europe, for the time being at least. Equity and commodities got softer and quality (or perceived quality) fixed income got stronger.
The main factor moving the markets was weakening Euro. As I wrote earlier, USD/EUR parity is probable quite probable.
Euro Intervention?
Posted by Belisarius in Markets on May 21, 2010
They should know that the effects don’t last more than a few hours….
Chart 1. EUR/USD Exchange rate & S&P 500
Source: Bloomberg
Is This The Big One?
Posted by Belisarius in Markets on May 20, 2010
Is this the big one? Although your favorite author was skeptical on the recent bull run, he definitely didn’t things will unwind so fast.
Where to now? It feels further south. The main issue is that a EU “nuclear” option, did not reassure the markets. And there is no other better fixes…
Only possible good thing would be nervous Chinese starting to buy Euros (Euro denominated debt securities) to keep the exchange rate stable and keep its exports competitive. And that’s a long shot.
ECB currency intervention? I don’t fell it would be welcomed by the markets.
Goldman Sachs Chief Global Economist Jim O’Neill On Euro
Posted by Belisarius in Markets on May 17, 2010
I have to say I usually don’t agree with the guy, but I have to say that now he is probably on the mark:
“The simple misconception is people trying to equate pure economic logic with social political reality,” O’Neill said in an interview from his office in London today. “The Germans and French are passionately committed to it whether the rest of us think it’s crazy or not.”
…
“This is 60 years of history in the making, so the idea that the euro simply falls apart at first test of its credibility, I think it highly unlikely.”
Parity At Sight
Posted by Belisarius in Markets on May 14, 2010
Lowest USD/EUR exchange rate in almost 4 years. Parity is at sight.
Chart 1. Euro Index Daily
Source: StockCharts.com
Chart 2. Euro Index Monthly
Source: StockCharts.com