Equity markets have been rather active over the past sessions. Further Eurozone troubles have absolutely crushed the Spanish and Italian markets. Both these markets are now at our projected short term target levels. Momentum is still weak, but we should be getting a slight bounce from these levels. Note how close the IBEX is to the 2009 “bottom” levels. We are not turning bullish, but see a possible short term bounce as these indices have reached support levels around here.
Both the Dax and the Eurostoxx are also reaching some short term support levels, while some risk off ratios are at extreme levels. Charts below.
As investors finally seem to be realizing the reality, let’s review the bull argument. The Trader has been arguing that the perceived bull is larger than the actual bull. By that we mean, majority of indices have not performed as well as one might read in the main stream media. In Europe the DAX has performed relatively well this year, but there are many other indices actually trading in negative territory. But not the broader indices, or?
No the Eurostoxx 50 is still up on the year, but diminishing. The point is, if you didn’t catch the first couple of weeks in Januaey, you are down on many indices, especially the Spanish Ibex, but also the Eurostoxx 50 and the Italian MIB. Once again, the real bull is not as strong as one might believe.
Quick chart update. The Trader has been rather bearish on the Spanish and the Italian markets over the past weeks. Both indices have reached some short term suppot levels though. The long term picture is still ugly, but selling into these support levels is probably not wise.
The Eurostoxx 50 is not trading well, but has also reached some short term support levels.
Essential European charts below.
Quick chart update below. We clearly see how several European indices all show the same pattern. The Bernanke rally has faded, and we marked a short term top. What is interesting, is the fact that we never even tried pushing the previous highs. This is the same psychology when we topped out over the previous tops. Did Bernanke fool the last momos covering their shorts, and more new “smart” longs entered the fake move?
One thing is sure, Spain’s Ibex is trading very badly, and we strongly believe Spain will become the next major point of focus.
The European Central Bank is falling behind on a €40bn asset purchase programme launched at the height of eurozone crisis, in a sign it could be dropped as a first step towards unwinding huge emergency support for the region’s financial system. Purchases of “covered bonds” – debt backed by pools of assets favoured by some institutional investors – have so far totalled less than €9bn. The scheme started last November and was originally intended to run until October at the latest. http://www.ft.com/intl/cms/s/0/bdb2c1ec-7367-11e1-9014-00144feab49a.html#axzz1pj9puJ70
WestLB held out little hope of finding buyers for most of its businesses as a deadline approaches for the bank to be wound down, raising the potential cost for German taxpayers of dealing with unwanted assets. The imminent break-up of the German public-sector bank will end a troubled chapter in the country’s banking history after WestLB needed frequent bailouts and sparked arguments with European competition authorities. http://www.ft.com/intl/cms/s/0/f822c96e-734c-11e1-9014-00144feab49a.html#axzz1pj9puJ70
Asian stock markets were mixed Thursday as key manufacturing data out of China confirmed a slowdown in the world’s second-largest economy, triggering a selloff in risk-sensitive currencies such as the Australian and Singapore dollars. Japan’s Nikkei Stock Average slipped 0.1%, Australia’s S&P/ASX 200 added 0.5%, South Korea’s Kospi Composite dropped 0.3%, Hong Kong’s Hang Seng Index was flat, China’s Shanghai Composite Index fell 0.4%, and India’s Sensex dropped 0.1%. ow Jones Industrial Average futures were down 19 points in screen trade. Copper and oil prices also dropped after data showed the preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nation-wide manufacturing activity, fell to 48.1 in March compared with a final reading of 49.6 in February. The March reading marks the fifth-straight month the index has been in contractionary territory, signaling extended difficulties for the nation’s manufacturers. http://online.wsj.com/article/SB10001424052702304724404577296290472282610.html?mod=WSJEUROPE_hpp_LEFTTopWhatNews
All news below.
So, let’s go back revisiting that great bull of 2012. Investors are once again massively bullish, and the latest to add to the uber bullish argument is Mr Biggs. As we mentioned yesterday, this is probably a big warning signal for the market. Many talk passionately about the bull, but prices have actually not been that bullish at all. Looking over the past 30 days of action, many indices are flat or even minus in Europe (that’s where the problems still are). The uber bull we saw in January and February is clearly fading, at least when looking at some of the European indices. Is it worth the risk putting the money to work for the past 30 days with many indices at flat or minus, you decide.
Saudi Arabia’s powerful oil minister, Ali Naimi, made a rare intervention into overheating oil markets on Tuesday, declaring that high oil prices were “unjustified” and vowing that the kingdom would boost its output by as much as 25 per cent if necessary. As the west’s nuclear stand-off with Iran escalates, oil prices have rallied this month to a post-2008 peak of $128 a barrel with markets bracing for European Union sanctions on Iranian crude that could knock out a chunk of global supply. http://www.ft.com/intl/cms/s/0/f9f8eb00-729e-11e1-9be9-00144feab49a.html#axzz1pj9puJ70
European banks are preparing a new type of securitised vehicle bundling together loans to commodity trading houses to try to resolve the credit crunch in the commodities industry. The banks, including BNP Paribas and Société Générale, are testing the appetite from European pension funds and insurance companies for the instruments and hope to launch the products before the end of the year, executives said. The move comes after French banks, the main financiers of trading houses, reined in their lending due to a shortage of US dollar liquidity. BNP Paribas and a handful of other European banks provide most of the credit lines that underpin the business of the Swiss-based traders that dominate global raw materials markets. Commodities bankers and industry executives said the securitisation would allow the industry to access fresh credit. http://www.ft.com/intl/cms/s/0/f8f4c83c-72b2-11e1-ae73-00144feab49a.html#axzz1pj9puJ70
All news below.