We need not say how pleased we are to hear Biggs going bullish on Italian lenders. With the short selling ban about to expire tomorrow, and Italian banks falling hard in today’s session, Biggs is facing a rogue ride. Biggs is 75% long on a global portfolio basis. From Bloomberg;
Biggs said today that he bought a basket of Italian stocks three or four weeks ago weighted “heavily” toward banks. Intesa Sanpaolo SpA (ISP) and Unicredit SpA (UCG), the two biggest Italian banks by market value, have fallen to price-earnings ratios of 7.3 and 6, respectively, compared with the valuation of 14.3 for the MSCI World Index.
“The more we studied Italy, the more we felt that not only were Italian companies cheap, but the new government actually had a chance of making some real progress,” Biggs said today during an interview on Bloomberg Television’s “In the Loop” with Betty Liu today. “Something gets that cheap, we’re willing to take a shot at it.”
As our readers know, The Trader is getting increasingly bearish on the Spanish situation (and the market). The Spanish economy is facing multiple problems going forward. The hang over from glory days is about to accelerate. While investors still seem to be focusing on the Greek “deal(s)”, we suggest shifting focus to Spain. Those dirt cheap houses will become cheaper….
The economy is not feeling well, the unemployment is still rising, and people are getting poorer by the day. According to latest stats, only Latvia and Romania are behind Spain, when it comes to disparities in the Euro area. From EurActiv;
El Mundo says today ‘More than 11 million people under poverty risk in Spain’ while ABC is saying ‘Poverty, more intense than ever, has left 30,000 roofless so far’.
The report ‘Exclusion and Social Development 2012’ was launched yesterday by Caritas Spain and the ‘Foundation of Social Studies and Applied Sociology’ (FOESSA) in Caritas Spain´s headquarters.
The charity says 22% of Spanish homes are living under the poverty line. And 30% are facing serious difficulties in surviving to the end of the month and consume less meat or use less heating than bearable.
One of the hot words last year we learnt of was Contagion. Many have used it to describe the possible spill over effects from the Greek mess, but few have actually studied the “real” implications and effects on stock and bond prices. Time for some empirical research, by Mink and Haan;
Using an event study approach, we examine the impact of news about Greece and news about a Greek bailout on bank stock prices in 2010 using data for48 European banks. We ﬁrst identify the twenty days with extreme returnson Greek sovereign bonds and categorize the news events during those daysinto news about Greece and news about the prospects of a Greek bailout. Our ﬁndings suggest that only news about the Greek bailout has a significant eﬀect on bank stock prices, even on stock prices of banks withoutany exposure to Greece or other highly indebted euro area countries. News about the economic situation in Greece does not lead to abnormal returns in bank stock prices.
It has been a great start for the longs this year. All markets are up, but the volume is continuing to drift lower. The GS Hedge Fund monitor this week showed that hedge funds are hitting new lows when it comes to turnover. Guest post by D Short;
The S&P 500 closed yesterday at a new year-to-date high, up 8.32% in the first 44 days of trading versus 5.59% over the same timeframe in 2011, which was also an excellent start to the year (one that finished flat).
According to the data I downloaded from myStockcharts.com subscription, the cumulative volume so far this year is 102.6 Billion versus 122.6 Billion in the first 34 days of 2011. That is a -16.3% decline.