2. Weekly Markets
Perspectives
August 27, 2012
.
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3. Greece – Anything else Sir?
-Samaras met Juncker, Merkel and Hollande. All the Leaders said that a decision about a delay to implement
the austerity measures in Greece will be taken only after Troika’s visit to the country in September. They all
said that if Greece wants to remain in the Eurozone, must accomplish the program designed.
-But, as usual, there is already opposition from some European Leaders about giving more time to Greece.
More recently, both the Finance and Economic Ministers of Germany said that they were against this
decision as it would harm creditors and it isn’t a sustainable solution for the country.
Greece: Government Deficit as % of GDP
15,60%
9,80% 10,30%
9,10%
6,50%
5,20% 5,70%
2005 2006 2007 2008 2009 2010 2011
Last year Greece had a deficit of 9,1% of your GDP, so until when will this unsustainable situation last?
4. We are still waiting Spain: A bailout is closer and
for you: ECB closer…
-There is a lots of talk in the markets saying that the
ECB will define a limit to the Yields of each country, -They issued €4,5MM in 12 and 18 months treasury
and if that value is exceed they will intervene buying bills. There is still the rumor that Spain is close to
Sovereign Bonds. ask for a bailout as its financing costs are still at
unsustainable levels.
-The Central Bank of Germany opposed immediately
to this, and even Pimco’s El-Erian said this was a bad Spain: 10Y Government Bond Yield
idea. 8
7,5
7
6,5 6,421
6
5,5
5
4,868
4,5
4
1-2-12 2-2-12 3-2-12 4-2-12 5-2-12 6-2-12 7-2-12 8-2-12
Until when are they going to resist?
5. Rest of Europe
-France issued again treasury bonds with negative Yields.
-And Germany issued 2 Year government bonds with an Yield of 0%.
Germany: 2Y Government Bond
Yield
0,4
0,3
0,2
0,1
-0,012
0
-0,1
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12
6. Rest of Europe
-Manufacturing data shows that the region continues slowing down.
PMI Manufacturing
65
60
55
Germany
50 France
Eurozone
45
40
7. A QE3? Does even the FED knows what should be their
next step?
-Positive FOMC Minutes: if the economy continues providing signs of contracting, new stimulus should be
added.
-And a study from FED revealed that the natural rate for US’ unemployment is 6%, showing that there is still
space to implement new stimulus in the economy as unemployment is currently near 8%.
-But the President of the FED of St. Louis said that he is against a QE3, as the recent economic data in the
country have been providing signs that the growth of the country is gaining pace again. Bullard is hak and a
no voter FED member
-All attentions are now centered on Jackson Hole Speech next Friday, where Bernanke should give more
clues about FED policy.
8. Economic data
-This week the focus was on Real-Estate.
New Home Sales Existing Home Sales
430 5
410 4,8
4,6 4,47
390
372 4,4
370 4,2
350 4
330 3,8
3,6
310
3,4
290 3,39
3,2
270 3
9. Do you think Michael Phelps is fast? You didn’t met my
friend Apple.
Apple
700 662,63
600
500
400
300
200
192,05
100
10. Rest of the World
Japan: Trade Balance (Billion Yens)
293,899
-“Buy on the rumor and sell on the fact”, but as 60,341
25,41
for China it has been all just rumors. Are Central
Bank providing more stimulus? -87,099
-205,57
-281,814
-Japan trade balance still negative. -523,924 -517,382
-690,422
-779,569
-917,212
-1481,467
11. Weekly Preview
Europe The focus will continue to be Spain and Greece. We should follow closely the visit of Juncker and
Hollande to Madrid.
US Everybody is waiting by the Jackson Hole speech. Last year, Bernanke announced Operation
Twist. This year? Hmm… lets wait and see.
Rest of China, all politicians said that they are going ton intervene in the economy. We and the markets
the are backing up. Tensions in Syria, Iran and between China and it’s neighbors are rising up.
World
12. Weekly Preview
Market Indicators
We remain positive for the markets, but there are several risks that can prompt them to fall.
Vicious Cycle of Europe. We are currently on level 2. EURUSD
1,28
1,27
1,26 1,2554
1,25
1,24
1,23
1,22
1,21
1,2 1,2053
1,19
Option Skew Monitor. As it is positive indicates us
that it is higher the probability of big appreciations
on its value.
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