The Exchange: Analysis of financial markets of the day November 3, 2011
Article by Gag
The Greek crisis focuses the attention of the international financial markets and any news in one direction or another makes the roller coaster of equities tipping in one direction or another.
While the Asian financial markets closed with losses, European financial markets opened with small gains, that as you go through the day with the news grow broadcast by the BBC that Papandreou has lost the absolute majority needed to win the vote of censorship of tomorrow. According to the BBC, Greek Prime Minister Papandreou would be willing to form a government of national salvation Lucas Papademos juanto former governor of Central Bank of Greece.
On the other hand, the opposition calls for early elections and the creation of an interim government until the elections.
From my point of view, the Greek problem has ceased to be such a problem, now looks more like a complex situation to be solved in the short term and prevent a recurrence.
Asian financial marketsAsian financial markets closed with an average loss of -1.5%. The Nikkei has left a -2.2% while the Chinese financial market, unlike the rest of the places have closed up 0.5%.
This closing of the Asian financial markets have been completely different if they had known the weakness of the Greek Prime Minister Papandreou and the possible change of direction of the current Greek politics against the European Union.
If the replacement of Prime Minister Papandreou becomes a reality in the short term, we will see strong gains in Asian financial markets two to celebrate this change of course.In any case maintain that this increase will be intense but short and can lead to heavy losses for some investors who rely on the change of address of the debt crisi European sovereign.
Do not forget that while there has been agreement on measures to combat the crisis of European sovereign debt, although not known to be implemented, or how long will it take to start working.
As China has said should be the Europeans who settled the problem of sovereign debt.
European financial marketsAt present European financial markets go up an average of 2% and seem confident that with the disappearance of everything will Papandreou place and may apply the measures approved last week.
Although uncomfortable and perhaps a minority view, I think this will not be as easy as they seem to believe the markets. First, the fault of the Greek revolt has not only the Greek Prime Minister Papandreou, it is a shared responsibility with other members of the European Union today that have not implemented any of the measures approved and speak not just the last week, but from July.
Second, that as I said at the beginning of this article, the Greek problem has ceased to be such and has become the situation in Greece. Papandreou I think without being conscious, and that all he wanted was to save him, has made the future of Greece.
At the moment there do not care referendum or not, Greece is a burden too heavy for the European Union. Greece accounts for only 2% of EU GDP, while its debt has a weight of 4%. With these data and looking for the survival of the European Union is the only way that Greece leave the euro.
Based on that I say that Greece should leave the Euro, simply no longer can rely on Greek politicians. Any agreement is achieved with Greece will always be on the line and will depend on the particular interests of Greek politicians of the time.
As seen above, Greece is a bottomless pit and measures have to take the European Union go to prepare a default computer, plus a range of measures to prevent the spread of other economies in the Eurozone.
These measures go through double the EFSF liquidity to enable them to address both the liquidity needs of European banks could be around € 6000.000M as the support of countries affected by the Greek default.
Enable a monitoring and correction formula on countries that violate their commitments to control public debt. And precisely in this section is where the biggest problem today in the European Union and that problem is called to a lesser extent Italy and Spain.
Italy as Greece has decided to adopt measures that do not put in place after the Italian government and attempts to defuse the political desgate measures.
Therefore, it should take coercive measures against rebel governments try to avoid the application of the measures agreed at meetings of the European Commission.
But along with Greece, because there will be time to talk about Italy. The EU should allocate € 40,000 to organize the departure from Greece and the country would be made redundant, in addition to negotiating a debt reduction of 80% of the country’s debt and pay abroad, leaving only Greece did against the domestic debt and external debt that is generated after his departure from the European Union.
These measures and others, such as Eurobonds and the Lisbon Treaty changes, etc, would clarify the current situation of the European Union and also creating a link between European Union leaders to focus on what is truly important, saving the Eurozone .
There will be very attentive to news about Greece and the development of the political crisis in that country and in addition to the conclusions of the G20 meeting. In the final statement could meet the guidelines set out the way for the resolution of the European debt crisis and the return to global economic growth.
U.S. financial marketUnlike the Asian plazas, U.S. financial markets closed in positive and in the day today before the turn of events in Greece Chicago futures at the start of trading in Europe is around -1% drop in these times are on the rise. The Down to +139 pts, S & P 10.75 pts and 14.50 pts Nasdaq rise.
In yesterday met the findings of the FMOC which predicts a weak labor market conditions and slower growth in the U.S. economy. This lower growth is reflected in lowering 2012 forecasts going from 1.9% to 2.5%, 3.7% 2013 3.3%.
These negative forecasts due to the moderation of inflationary pressures has led Bernanke to testify on one hand to keep interest rates at 0.25% at least until the second quarter of 2012, continue the operation and Twist Finally and most importantly, be prepared to take further action when necessary.
It seems clear that the Fed reserve your best cartridge, the few that remain, the QE3 at least until the crisis of European sovereign debt find the way to resolve. If I started the QE3 before this happened, possibly their effects would be limited and too short in time.
As said before is not expected that the QE3 appear until at least July and provided that the sovereign debt crisis walk in the paths of their solution.
On the positive side, the ADP survey data surprised with better than expected 110K new jobs, compared to market consensus expected 100K.
The VIX closed at 3.74, a decrease of 5.84%. Today I hope that the volatility is the true queen of the financial market.
At the conference today, the macroeconomic data to pass background and the attention fixed on one point, Greece and the reactions of the various European Union leaders and world leaders.
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I am moved by the passion for financial markets and everything around them.Fundamental analysis Basic Writing.
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