Market Talk
As you would expect ahead of July 4th weekend, volumes were a fraction of their norm – as if they were not poor enough! Asian equities were the early talk today and the possible investigation into the recent wild volatility of the Shanghai (SHCOMP) equity market – today closing down almost 6%. An interesting point of fact is that the past three weeks decline in shares is valued at roughly $2.9tln roughly the size of the UK economy. However, YTD (year to date) the market is still up an impressive 14%.
European bond markets saw reasonable gains all around with a combination of poor PMI’s (Purchasing Managers Index) and the uncertainty of Sunday’s Greek vote. I am to wonder if PM Tsipras has taken the heuristic approach to problem solving whilst also playing a safe option and declaring that the only way for Greek debt to become sustainable is with a 30% haircut and the offer of a 20 year grace period! It certainly put a bid under European bond markets ahead of the weekend recouping much of yesterdays losses. Rumours also around today that the ECB expanded its pool of assets to now include quasi-government bonds. Italian utilities Enel SpA, Snam SpA and Terna SpA – Rete Elettrica Nazionale are some of the borrowers that may now be purchased, which is one of the reasons I was told aided todays performance of BTP’s (Italian Gov’t Bonds); which tightened 4bp against Germany.Currencies were reasonably well behaved with Sterling a little weaker -0.3% last, the Euro holding-in but saw the A$ lower by 1.4%.
Oil suffered today Brent at 60.55 lower by 2.45% last trade I saw and WTI (West Texas Intermediate) at 55.52 (-2.48%).
What Goes Around Does Not Always Come Around – Merkel’s Amnesia
Merkel is obsessed with the German hyperinflation (which leads to demands for austerity) and assumes that her personal promise that Greece would be made to pay back for any bailout shows that she places her personal career above the variability of Europe and her own nation. Her stubbornness concerning Greece is placing the entire world at risk for her hard-line attitude is not one that will survive against an economic downtrend.
Merkel has serious amnesia for she overlooks or totally disregards the history of Germany. It was the oppression of reparation payments (austerity) that opened the door to Hitler. This is clearly what she is doing to Greece. Then in 1953, the West learned its lesson with World War I and this time 20 nations forgave the German debts and that is what enabled Germany to become the leading economy in Europe.
In Merkel’s narrow personal view, she has adopted the end-game of World War I in dealing with Greece for the problem is not Greece’s alone. It was the faulty design of the Euro to start with so we will see this contagion erupt after 2015.75. The ONLY way the Euro would have survived was to consolidate the debts at inception. Greece is being punished for joining the Euro under false pretenses.
What goes around does not come around in Merkel’s view. She is only concerned about her personal career, not the welfare of Europe.
No comments:
Post a Comment