Two weeks into January
It’s pretty snowy and frosty in my part of the world. That said, we are two weeks into January and there have been some exceptionally profitable trading days so far this year, January 2nd being the first of them. It was almost so predictable, the USA did not fall off the fiscal cliff. No real surprise at all. The element of surprise was contained to the extent that the US politicians have been taking careful note, maybe even having private coaching from their European counterparts. Collectively, the US politicians managed to kick the can down the road. It worked in Europe in 2012, so...
Read MoreHappy New Year
As a trader taking a backwards look at 2012, I can only conclude that it has been a strange kind of year. In the UK, the stock market is already closed for 2012. Anyone who has read some of my previous posts will guess how I am going to summarise 2012 though. A year when much changed and little was achieved. After three years of crisis, Greece and the problems of the Euro are firmly on the back burner as the world watches the USA head ever closer to the so called fiscal cliff. Does that mean the problems of the Eurozone are over? Have they been miraculously fixed? The only judgement call I...
Read MoreKicking the can
When it comes to kicking the can down the road, European ministers have shown the world their expertise. Aligned with their ability to fudge issues, it gives markets and commentators plenty of material to write about. This weeks further instalment of the Greek bailout is a case in point. After months of negotiation and discussion, including an open spat with the IMF, European institutions handed over several billion more Euros to Greece as part of their international bailout. IMF participation at this time was deferred. Greece now has the liquidity to meet it’s immediate financial...
Read MoreSovereign debt
So Moody’s took the decision to downgrade the sovereign debt ratings for France last week. This is the second ratings agency to strip France of it’s AAA rating, following the decision by Standard & Poors in January. That just leaves Fitch of the major ratings agencies having France with a AAA rating. One of the reasons cited was the level of debt as a percentage of GDP (Gross Domestic Product), which for France, is estimated at 90%. France has made several budget moves in an effort to get current year borrowing down to 3% of GDP for 2013, in line with the requirements of the...
Read MoreIs inflation next?
Yesterday evening, Ben Bernanke announced the action the Fed will be taking to provide a boost to the US economy. QE3, or printing dollars at the rate of $40 billion a month will continue until the US economy has better growth and employment. These are commendable goals but we have to ask: is inflation next? However, with more dollars being produced month on month, it means the value of each dollar decreases. As the value of the dollar decreases, the value of other currencies relative to the dollar increase, hence the rise in the value of the Euro over the past week, in spite of the Euro...
Read MoreEuro and the ESM – a long way to go
Yesterday’s announcement of unlimited support for the Euro from the ECB was widely expected. Indeed, the leaks have been coming as often as the rain showers. The pre-conditions for the buying of government bonds was also widely trailed. So yesterday’s announcement by Mario Draghi was just the confirmation of what we already knew. The ECB would buy unlimited short dated bonds from governments in financial trouble, as long as those governments confessed and accepted the road of supervision from institutions such as the IMF. This announcement was aimed at preventing Spain and Italy...
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