A logical solution to what seems an obvious problem, a haphazardly thrown together union of disparate nations all clambering for what little positive cash flow there is to cover an overwhelming amount of individual debt.
It’s always been thought that if you’re pulling together all these wallets, some fat, most thin, that there should be one grand pooba in charge of the purse strings, coming and going.
And this is what team uber tops Merkel/Sarkozy (and there are so many great acronyms yet to come) has so bravely proclaimed to have produced after a lovely afternoon of fresh roasted French blend coffee and deep rich Black Forest Torte.
Their version however, reads a bit more George Orwell, “1984” than it does Lewis Carroll “Alice in Wonderland”...
In a nutshell and one sound bite/headline at a time here’s how it reads,
• Electing a President every 2.5 years
• Accumulating all fiscal responsibility into one big pool and administering it accordingly (centrally)
• Bank taxes and other creative ways of finding extra cash where none existed (blood from a stone style)
Translation a couple of deep (ish)pockets paying the bill for 17 different diners who are just as likely to partake in a classic dine and dash as they are to bend to the will of those extending the dinner invitation, and stick to just the salad starter instead of the full 12 course degustation menu.
Initial market reaction as I watched all the pretty little numbers dance in colour was a topside cleanout of EURUSD stops above 1.4430, extreme spike high hitting at 1.4471.
While Cable (reaction high 1.6470) followed the EURUSD, other USD pairs were somewhat muted with the CHF crosses taking some of the shine. Gold held well and US equities got a small boost, while the European indices just tracked the EURUSD move.
This however all lasted only mere minutes as punters got a chance to digest and wait for the next bloke to pull the trigger, invariably quickly reversing most of the above, after which we then settled in to what turned out again to be another fairly quiet night.
Walking in this morning all the excitement centres around the Swiss National Bank and that ridiculous “peg” (leg). Having met for their weekly meeting they have dodged the peg bullet and instead have extended sight deposits and increased the swap lines from 120bn to an effective 200bn, thus diluting the market. Nervousness still runs through the market as there is no clear idea about whether there will be further announcements etc: Needless to say the EURCHF has been thrown around like the proverbial rag doll and will continue likewise for the bulk of the day.
The EURUSD has moved in union with the EURCHF and was down 80 pips, to then recover at least 70 and now continues to bob around.
The day ahead holds UK unemployment, MPC minutes and US PPI. The last of which will be perhaps of most interest to the market.
On the equity front (S&P500), I look for a reversal today as yesterday proved to be the culmination of what I had been waiting for, an inside day (by my measure) and thus we look to reverse recent gains, with 1170 the first downside target, with a break likely and sights sets on 1130. It might take a day or two, but this is my call and I’m sticking to my guns.
On the majors, I stay away from EURUSD but maintain my bearish stance.
In the Cable I fade this strength and look for rallies into last night’s reaction high as selling opportunities could emerge, with stops probably needing to go in above 1.6530/40, looking for an initial move into 1.6330.
The AUDUSD can also be faded cautiously, but I wouldn’t rush out of the starting blocks in this one.
Of more interest to me right now is the EURJPY which could be considered a sell into 110.70, with stops above 111.30 and looking for 109.50 and then 108.80.
Watch for me on Twitter (@KenVeksler), put your helmets on and good luck.
No comments:
Post a Comment