Monday, 19 December 2011

Bank of America breaks the 5$ Maginot line

There was a wide debate going on whether the Bank of America stock price will drop below the 5$ psychological support level. It was deemed as protected by a vast amount of bids and though as the point of no return signalling a market correction. Now it happened folks: BA dropped to 4.95 and it is currently holding that level, which means we are in store for a correction in the US equities, a correction most probably caused and led by the financial sector. This could actually be the market sell-off that Bernanke is waiting for to allow him to announce QE3 in January.

North Korean dictator Kim Jong-il dies

It has not been a very good year for dictators. In 2011 we saw the fall of the Libian dictator Muammar Gaddafi, the so-called President of Tunisia Zine El Abidine Ben Ali and  Egiptian president Mubarak. Now the time has come for the 70 year old North-Korean supreme leader Kim Jong-il to clear "the throne". The official Korean Central News Agency stated that Kim Jong II passed away due to "great mental and physical strain" after a 17 year state tenure.
Lee Myung-bak, the South-Korean president canceled all appointments and convened an emergency security session. As a result all police officers in South-Korea were called to work for emergency duty and the military is discussing whether to raise its "watchcon" and "defcon" levels.

Thursday, 15 December 2011

Bullish economic data, just in time to save equity markets

Just after a major sell-off in precious metals (during which I was stop-loss-ed) and a slump in the S&P and the Dow, "good news" about the health of the economy surfaced: the initial and and continuous unemployment claims printed lower than expected, the the Producer's Price Index (PPI) signaled a mildly increasing inflation, an increase in manufacturing orders from -2.07 to 5.10 and a lower overall current account deficit. This coupled with FED chairman Bernanke's faith in the strength of the US economy suggests that the economic outlook has to get a lot worse before he will pull out more monetary firepower.

Monday, 12 December 2011

Risk off as EU summit talks dissapoint

The risk markets sold off today as a reaction to the news that UK rejected the European fiscal and budgetary constraints, followed by Intel's 1 billion revenue slash. Ratings agencies Moody's, Standard and Poor's and Fitch were again late at the party in expressing their worries about the long term sustainability of the rescue plan. Fitch declared that last week's summit did little to address the regions sovereign debt crisis and predicted a "significant economic downturn" across the region. Standard and Poor's added that European officials might need another financial shock to get it moving. Gold sold off today as well, in what is a more and more obvious correlation with equity markets. The precious metal is losing its safe haven status.

Friday, 9 December 2011

Europe divided (again)

David Cameron, the Prime Minister of UK managed to stir the markets up a bit yesterday by vetoing the new EU treaty. The accord was meant to turn the European Union into a fiscal union which, in turn, would strengthen the common currency. After 10 hours of negotiation in Brussels, all other 26 member countries agreed to sign the new treaty, but as treaty rules say, in order to amend or change any parts a consensus must be reached.

Tuesday, 6 December 2011

My 2 Cents about the future of EU

Nowadays news are full of reports on the financial difficulties that European countries are facing: rising interest rates, high rates of unemployment, political turmoil, economic malaise, but once you look for the real source of these systemic risks, you realise that this is window-dressing for something bigger. The fact that the European Union is under a process of fiscal and budgetary unification followed by the political unification and it is using the financial and economic news-bombs as excuses for the loss of sovereignty of some less fortunate EU members.

Friday, 2 December 2011

What about the $ US public debt ?

It has been less than a month since the US public exceeded $15 trillion (a scale pretty hard to imagine without the help of an explanatory diagram). In only 2 short weeks, the figure has been boosted with an additional 100 billion and is not hovering around $15.18 trillion. This amounts to almost 99.5% of the 2010 US Gross Domestic Product and I`m expecting it to reach triple digits by the end of the year. What do you expect: the difference is a measly $70 billion.