Post Tagged with: "Europe"
If no trade reversal now, then when?
The best resolution, and the one Keynes urged without success on the US in the 1920s and 1930s, is that Germany take steps to reverse its trade surplus. It could boost disposable household income and household consumption by cutting income and consumption taxes. If Germany imposes austerity, unemployment will force the peripheral countries into the unenviable choice either of absorbing that surge in unemployment themselves, or of forcing the unemployment back onto the core countries by abandoning the currency that is at the heart of their lack of competitiveness
Euro Pops to Start Week
In a Tokyo-less Asian session the dollar had begun the week bid, but this quickly reversed in early Europe, which saw the euro rise more than a cent off the $1.2666 low. It was largely a short-covering bounce, but as North American players take their posts, it is running out of steam, unable to take out the $1.28 level and trigger another round of short covering. Sentiment toward the single currency is still overwhelmingly bearish, but seems to be a growing sense that it may have come too far too fast
The fireworks will start with Spain or Italy
Here’s what I had to say about Europe on Capital Account with Lauren Lyster on Thursday night. I’m not bullish on the real economy there (but I still expect relative share outperformance due to lower P/Es). The US is having a bit of a data surge to the upside: housing, employment, manufacturing, all of these numbers have been better of late
The expansionary fiscal contraction bust
If you argue that austerity works in cutting deficits over the longer-term but the short-term pain is worth it, that’s a different argument than the one Republicans are making – and one not likely to get one elected, which is why they’re not making it
European Bond Supply and Greece’s Trojan Horse
European sovereigns return to the capital markets more substantially next week as 2012 issuance gets under way. Between bills and bonds, around 35-40 bln euros will be sold. Maturing issues and coupon payments will cover about three-quarters of the bond issuance
Why Spain may be More Worrisome than Italy
At the end of last year, Italian 10-year yields were more than 200 bp on top of Spain. The spread has narrowed in recent days, but is still well beyond the euro era average of about 10 bp and the late 2008 extreme near 65 bp. There is more room for Italy to outperform Spain
Refunding Fears Take Toll on Europe
One of the key factors behind the poor sentiment toward the euro, which was pressed to new 13 month lows in Europe today, is the challenge posed by the sovereign and bank refunding needed this year, while rating downgrades loom around the corner. Euro zone sovereigns have an estimated 800 bln euros of debt servicing and spending to fund this year, while the banks have a little bit more
Byron Wien’s Ten Surprises for 2012
As always, I present you Byron Wien’s Ten Surprises for 2011. He is bullish yet again – on both the US and emerging markets
Dollar Comes Back Bid
The US dollar has come back bid today after yesterday’s rather shallow correction. Euro sellers re-emerged as the single currency approached its 20-day moving average for the first time in a couple of weeks. Although the PMIs are a bit better, it does not change the underlying economic picture. Nor does it impact the real concern about the sovereign and bank debt roll-over
The Rain In Spain Falls Mainly On The Journalists, It Seems
Nothing in Spain is exactly as it appears to be, and that few of the arguments politicians and so called “experts” advance are entirely innocent. Most “information” circulating in Spain is highly politicised. Really “independent” analysts are virtually unknown
Euro Slump Extended, Mediocre Italian Bond Auction, Poor Hungarian Debt Sale
The euro extended yesterday’s losses in Asia, falling to $1.2866, the lowest level since the start of the year. The euro’s losses against the yen were also extended with new 10-year lows recorded just above JPY100.30. Italy wrapped up a difficult year by selling about 7 bln euros of a 5-8 bln target range. Yields were around 50-120 bp lower than the last auctions with similar bid-cover. The results did not help the Italian bond market stabilize and the 10-year yield continues to flirt with 7%