Week June 15 2012 – Weekly Recap & The Week Ahead
“There is only one side of the market and it not the Bull side nor the Bear side, but the Right side” — Jesse Livermore
1. EU Rescues Spanish Banks with €100B fund — EU agreed to provide Spain with €100B to rescue its banking system.
2. Spanish, Italian yields At Record High — Yields on 10-year Spanish and Italian bonds have continued to climb, which came after the euphoria over Spain’s bank bailout dissipated. Spain was +15 bps to 6.65% and Italy +10 bps to 6.13%.
3. Greek banks see outflows pickup as election nears — according to Reuter, combined daily deposit outflows from the major Greek banks have reached 500-800 million euros over the past few days, with the pace picking up as the election draws closer and rising noticeably on Tuesday, two bankers said. Deposit outflows at smaller and medium sized banks were running at 10-30 million euros. One banker noted “This includes cash withdrawals, wire transfers and investments into money market funds, German Bunds, U.S. Treasuries and EIB bonds,”
3. Spain enters danger zone as yields near 7% — The yield on Spain’s 10-year government bond rose as high as 6.96%, a new euro-era record and dangerously close to levels considered as unsustainable. Moody’s Investors Service downgraded three-notch left Spain’s rating just one level above junk.
4. Greece’s “Pro-bailout” parties win enough seats for majority — Greece’s New Democracy party is attempting to form a coalition after winning 129 seats in the 300-seat parliament, although the socialist Pasok group hasn’t decided whether to join the government or just offer parliamentary support.
5. French Elections Go to Hollande’s Socialists — per Reuter, French President Francois Hollande’s Socialists won an absolute parliamentary majority on Sunday, strengthening his hand as he presses Germany to support debt-laden euro zone states hit by austerity cuts and ailing banks.
Annual Notable “All-Star Team” Discussion — June 9 issue of Barron’s annual All-Stars (Mark Faber, Brian Rogers, Abby J. Cohen, etc…)Roundtable discussion worth reading. Three major themes:
1.Europe’s sovereign debt crisis continues to be the single biggest threat to both the global economy and the capital markets.
2.China’s slowdown is also a major concern.
3.The United States — while healthy by comparison — faces the “fiscal cliff” of tax hikes and spending cuts next year barring a deal between the White House and Congress.
The week ahead — Economic data from Econoday.com:
