Cliff Wachtel submits:
It was an impressive piece of political compromise, with something critical for everyone.
Markets got a bit more details, enough to calm a bit and let the euro pull out of its dive, as the solution addressed not just Greece but any EU member in trouble.
Ralph Shell submits:
Now that there has been some sort of agreement among the Eurozone bankers, the Greek government is going to test the market and peddle some 7 year notes. To cover the debt rollover and the deficit, it is estimated that the Greek government will have to raise €53B this year. Compared to the US Treasuries bi-weekly needs of $100B or more this Greek tender is chump change, but Greek bonds are a bit dicey. Currently the German 7 year paper is trading at 2.65, and a 300 point premium for the Greek auction seems expected. US 7 year paper is currently trading at 3.32%.
The USD weakness versus the euro is credited, in the financial press, for the crude oil rally, currently up 2.49, and commodity strength in general. With the euro rally currently a mere 200 pips above Friday’s low, this assessment of the today’s market is feeble. Recently Bill Gross, the President of Pimco, the largest bond fund, said the best days for Treasuries is over, and he would prefer to have money in stocks or high yielding bonds. Liquidity, injected into the economy during the past year, has pumped up equity prices and portfolio size. Astute investors, frightened that bond prices go down when yields go up, are now searching for investments other than US sovereign debt.
Energy Stocks Rise, Banks Fall Energy stocks led the market higher as oil prices surged, but the gains in major indexes were modest as financial shares struggled. Energy Shares Move Out of Slump Vote: Will the Dow hit 11000 this week?
Edward Harrison submits:
China is in the midst of an asset bubble. The evidence is clear that China’s aggressive fiscal and monetary policy is causing the Chinese economy to overheat, with some predicting 12% growth for the Q1 2010. According to Marshall Auerback, researchers at Lombard Street think GDP growth hit an annualized 25% in the second half of 2009 (20% real and 5% inflation) but that the year-on-year data obscured this. Chinese policy makers are looking to rein all of this in for fear of a hard landing.
Analysts like Edward Chancellor of Grantham, Mayo, Van Otterloo & Co. LLC have written well-constructed arguments why we should be cautious, pointing to the age-old signs of a financial bubble. Nevertheless, others are making excuses.
What Friday’s EURUSD rally was able to do was pull the pair back above critical support (red line); it’s currently hovering there, little changed to start the week. The fact that the late-week reversal wasn’t able to allow the pair to close higher on the week could indicate that the…
Something of a conflict to start the week as European government bonds rally sending yields lower while U.S. yields continue their steady ascent. Last week’s “canary in a coalmine” comments from former Fed Governor Alan Greenspan indicate that he sees recent bond price declines as marking the advent of an…
The dollar has been pushed back across the board into this morning’s US session, first on Friday as the EU summit outcome finally gave the Euro some relief across the board, but also in today’s Asian and European sessions, when not only the Euro, but most of the rest of…
Personal consumer expenditure (PCE) rose 0.3% in February following January’s downwardly revised 0.4% gain (initially reported as 0.5%). The rise in spending in the month equalled market expectations going into today’s report. February’s rise in spending was in spite of unchanged personal income, although this followed gains of 0.3% (revised…
By Value in Stock Market:
Earlier, I wrote that Facebook’s (FB) IPO is becoming a sucker’s bet. On its IPO debut, Facebook started at $42, hit a high of $45 for a brief moment, and then [...]
By Steven Vincent:
Let me start by clarifying something. I am not saying that the market could crash spectacularly in the next few days and that in that event the Facebook (FB) IPO would be a [...]
By Chuck Carnevale:
There is a confluence of factors that are painting a very odd picture of current investor behavior. Common sense and a careful analysis of the market dynamics between equities and bonds today would [...]
By Sami J. Karam:
Expectations of a robust housing recovery are not well supported by US demographics.
From Bloomberg News (February 8, 2012): Chief Executive Officer Jamie Dimon told investors and analysts in a [...]