With markets trading at “elevated” levels, things could turn around quickly and surprise many investors.
The inverted vol panic has made people very confident of this market not moving anywhere. The set up is showing similarities with the action we saw late last year. Back then we had the VIX sold down aggressively, markets tried pushing resistance levels, and out of nowhere, everything corrected very fast.Are we facing a similar set up here?
Some charts worth considering below.
Guest Post by John Redwood.
The more I read about the economic disaster in Greece, the more I wish they would let them out of the currency straight jacket that is part of the problem.
Greece has five main economic troubles. Its government has borrowed too much in the past, and wishes to carry on borrowing too much. The economy is declining year after year, as austerity bites with no currency depreciation or easier money to offer some relief. The balance of payments remain out of balance and difficult to finance, as Greece is not competitive with the more successful north of the Euro zone. Greece is mired in high unemployment, increasing its deficit and depressing its tax revenues. The banking system is weak. People afraid of the future are taking money out of Greece to put it into safer havens, doing more damage to activity in Greece.
This week will be extremely important for the future of Greece. The World is awaiting the deal, whatever it proves to be. Meanwhile the country is falling further into poverty as the economy continues sliding into the abyss. Let’s decide something on Greece, so we can move on to Portugal. From Ekathimerini;
Greek Prime Minister Lucas Papademos plans on Tuesday to discuss with the nation’s political leaders the implementation of additional fiscal measures needed to secure a second European Union-led bailout.
While Papademos and the party chiefs already agreed to make further cuts this year equal to 1.5 percent of gross domestic product, they have yet to close gaps over measures demanded by creditors. European leaders raised pressure on meeting the conditions of the 130 billion-euro ($171 billion) rescue, with German Chancellor Angela Merkel saying “time is running out.”
European officials are insisting any new Greek bail-out programme specifically earmark funds to pay off remaining holders of Greek debt, giving lenders the freedom to withhold aid to Athens without risking a messy default that could reignite panic in financial markets, http://ftalphaville.ft.com/thecut/2012/02/07/870661/greece-bail-out-funds-could-be-split/
Investigators in a world-wide probe of how interbank lending rates are set are focusing on a small number of traders suspected of trying to influence other bank employees to manipulate the rates, says the WSJ, http://ftalphaville.ft.com/thecut/2012/02/07/870971/interbank-rate-investigation-narrows/
Vacancy rates on the worst British high streets could hit 50 per cent within three years, as half of all high street leases are due to expire by 2015, says the FT. Research by Jones Lang LaSalle, the property consultancy, http://ftalphaville.ft.com/thecut/2012/02/07/870981/high-street-vacancy-rates-could-hit-50/