Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
WESTERN DIGITAL WDC Stock Trend Analysis - CHIA! - Risk 1 - 23rd Jun 21
AMC Is the Best-Performing Stock in America: Don’t Buy It - 23rd Jun 21
Stock Market Calling the Fed‘s Bluff - 23rd Jun 21
Could Bitcoin Price CRASH Target A Bottom Below $7500? - 23rd Jun 21
Bitcoin and cryptos: Your 'long-term investment'? - 23rd Jun 21
Unlocking The Next Stage Of The Hydrogen Boom - 23rd Jun 21
USDT Ponzi Scheme FINAL WARNING To EXIT Before Tether Collapses Crypto Exchange Markets - 22nd Jun 21
Stock Market Correction Starting - 22nd Jun 21
This Green SuperFuel Could Change Everything For the $14 Trillion Shipping Industry - 22nd Jun 21
Virgin Media Fibre Broadband Installation - What to Expect, Quality of Wiring, Service etc. - 21st Jun 21
Feel the Inflationary Heartbeat - 21st Jun 21
The Green Superfuel That Could Disrupt Global Energy Markers - 21st Jun 21
How Binance SCAMs Crypto Traders with UP DOWN Coins, Futures, Options and Leverage - Don't Get Bogdanoffed! - 20th Jun 21
Smart Money Accumulating Physical Silver Ahead Of New Basel III Regulations And Price Explosion To $44 - 20th Jun 21
Rambling Fed Triggers Gold/Silver Correction: Are Investors Being Duped? - 20th Jun 21
Gold: The Fed Wreaked Havoc on the Precious Metals - 20th Jun 21
Investing in the Tulip Crypto Mania 2021 - 19th Jun 21
Here’s Why Historic US Housing Market Boom Can Continue - 19th Jun 21
Cryptos: What the "Bizarre" World of Non-Fungible Tokens May Be Signaling - 19th Jun 21
Hyperinflationary Expectations: Reflections on Cryptocurrency and the Markets - 19th Jun 21
Gold Prices Investors beat Central Banks and Jewelry, as having the most Impact - 18th Jun 21
Has the Dust Settled After Fed Day? Not Just Yet - 18th Jun 21
Gold Asks: Will the Economic Boom Continue? - 18th Jun 21
STABLE COINS PONZI Crypto SCAM WARNING! Iron Titan CRASH to ZERO! Exit USDT While You Can! - 18th Jun 21
FOMC Surprise Takeaways - 18th Jun 21
Youtube Upload Stuck at 0% QUICK FIXES Solutions Tutorial - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations Video - 18th Jun 21
AI Stock Buying Levels, Ratings, Valuations and Trend Analysis into Market Correction - 17th Jun 21
Stocks, Gold, Silver Markets Inflation Tipping Point - 17th Jun 21
Letting Yourself Relax with Activities That You Might Not Have Considered - 17th Jun 21
RAMPANT MONEY PRINTING INFLATION BIG PICTURE! - 16th Jun 21
The Federal Reserve and Inflation - 16th Jun 21
Inflation Soars 5%! Will Gold Skyrocket? - 16th Jun 21
Stock Market Sentiment Speaks: Inflation Is For Fools - 16th Jun 21
Four News Events That Could Drive Gold Bullion Demand - 16th Jun 21
5 ways that crypto is changing the face of online casinos - 16th Jun 21
Transitory Inflation Debate - 15th Jun 21
USDX: The Cleanest Shirt Among the Dirty Laundry - 15th Jun 21
Inflation and Stock Market SPX Record Highs. PPI, FOMC Meeting in Focus - 15th Jun 21
Stock Market SPX 4310 Right Around the Corner! - 15th Jun 21
AI Stocks Strength vs Weakness - Why Selling Google or Facebook is a Big Mistake! - 14th Jun 21
The Bitcoin Crime Wave Hits - 14th Jun 21
Gold Time for Consolidation and Lower Volatility - 14th Jun 21
More Banks & Investors Are NOT Believing Fed Propaganda - 14th Jun 21
Market Inflation Bets – Squaring or Not - 14th Jun 21
Is Gold Really an Inflation Hedge? - 14th Jun 21
The FED Holds the Market. How Long Will It Last? - 14th Jun 21
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

To ECB or Not to ECB?

Stock-Markets / Financial Markets 2011 Dec 08, 2011 - 09:54 AM GMT

By: PhilStockWorld

Stock-Markets

Best Financial Markets Analysis ArticleTo bail, or not to bail--that is the question:
Whether ’tis nobler in the EU to suffer
The slings and arrows of outrageous swap rates 
Or to print money against a sea of debt
And by printing, inflate them. To loan, to bail-- No more
And by a loan to say we end the illiquidity,
and the thousand natural shocks
That economies are heir to.

The ECB may dig deeper Into its crisis toolbox to stimulate bank lending and fight off a recession as Europe’s leaders gather to lay the foundations for a fiscal union.  

ECB policy makers meeting in Frankfurt are expected to cut the benchmark interest rate by a quarter percentage point to a record-low 1%. They may ALSO loosen collateral criteria to give banks greater access to cheap cash and offer longer-term loans, said three euro-area officials with knowledge of the deliberations speaking to Bloomberg.

Hours later, Europe’s leaders will convene in Brussels for talks to frame the FIFTH “comprehensive solution" in 19 months to a debt crisis that’s left Germany and France facing the threat of losing their AAA rating from Standard & Poor’s. The ECB says that governments must address the cause of the turmoil as it focuses on getting banks lending again rather than increasing purchases of indebted nations’ bonds.

“It’s yet another date with destiny in the euro area,” said Julian Callow, chief European economist at Barclays Capital in London. “It’s clear there won’t be the ultimate resolution, but the proposals are going in the right direction. The markets seem to have finally understood that in the ECB’s eyes it’s up to governments to solve it, and it’s worth noting that it’s doing a lot on the banking side.”

Fitch says last weekend’s austerity plan put together by Italy’s new government eases near-term pressure on the country’s credit A+ rating, but the outlook still remains negative. Budget savings were made, says the agency, but the question remains on whether this paves the way for economic growth to return.

European options traders, meanwhile are pushing bullish bets on Europe to the highest level since March 2010 as governments work to forge a solution to the two-year-old sovereign debt crisis. The ratio of outstanding calls to buy the Euro Stoxx 50 Index versus puts to sell has climbed to a 20-month high of .92-to-1, according to data compiled by Bloomberg. The open interest for Euro Stoxx call options has risen 6.1% in the last two weeks to 22.3 million contracts, faster than the increase for puts, which rose 3.5% to 24.3 million.

Optimistic investors may be punished as the cuts European economic growth and corporate profits, according to Gergor Smith, a London-based fund manager at Daiwa Asset Management, which oversees $111.3 billion. "It’s a very dangerous position to have.  The outlook into 2012, at least for the first half of the year, looks pretty poor." Even with those risks, investors are more concerned about trailing the market should equities climb, according to Lothar Mentel, who manages $3.9 billion as chief investment officer for Octopus Investments Ltd. in London.

According to the WSJ: "A majority of people in embattled euro-zone countries remain confident that the euro will remain their currency a decade from now", and most say that sticking with the euro is the right path, according to the latest results of the GfK Investment Barometer survey.  The survey also found that in all seven euro-zone countries polled, affluent individuals were more optimistic about the euro’s fate, and more likely to support its continued use, than less-affluent individuals.   

The survey also polled people in France, Germany and the Netherlands, three countries with triple-A debt ratings at the core of the euro zone. About two in three French and German respondents believe their countries will still have the euro in a decade, while four of five Dutch respondents said the euro would remain. On whether they should keep the euro, 57% of Germans said to keep it, with 43% preferring to drop it and switch back to the mark. In France, 58% said to keep the euro, and 42% said to dump it. In the Netherlands, 70% said to keep the euro, with 30% to exit.

Keep in mind that these are the FACTS versus the constant BS OPINIONS we get from the MSM.  Just like if you ask politicians in America for their opinion, it very much matters which one you ask.  We have speakers and whips and House majority leaders and Senate majority leaders and a Fed that says one thing when the President says another – JUST LIKE EUROPE.  So why is it you take Fox’s word for it when they interview one guy and tell you that the Euro is doomed?  

So – if the Euro is not doomed, why is it so cheap?  And, if the Euro is too cheap, then isn’t the Dollar too high?  And, if the Dollar is too high, then the markets are too low.  See – it always comes back to inflation!  That’s why, last year, we had our "Secret Santa Inflation Hedges for 2011" that I put out on Christmas Day last year.  Those are, of course, hugely successful and we’ll do another round for 2012 at the end of the month but, for now, we need some bullish positions to cover the upside of the market as a "solution" from the ECB to the crisis can send the markets flying.  

FAS is still my favorite upside play or the moment.  In Member chat yesterday, we added 10 FAS next week $66/67 bull call spreads for .60 ($600) in our White Christmas Portfolio to keep us balanced as we were tilting a bit too bearish after adding an aggressive TZA hedge.  We’re trying to stay even into the weekend as we could move violently in either direction in the short run but, long-term – we’re still pretty bullish, with inflation being our main reason for being so.  Short-term, it’s all up to the ECB and the EU.  We already know what the ECB will do this morning and we can fade any rally off that "news" – what the EU counsel does, however, is a mystery – but it better be BIG or we’re in even bigger trouble.  

Already this morning the market spiked up on the official news from the ECB but I warned Members not to chase it and already the whole move up has been erased.  Although we got the rate decrease and longer loan terms (triple!) to help kick the can down the road from the ECB, Draghi’s press conference indicated that there will not be a reserve ratio cut until Jan 18th (to 1%).  Too little, too late is the sentiment from the doom and gloomers so we’re back to seeing what sticks.  

Now the ball is back in the EU’s court and, should they not come up with something FANTASTIC tomorrow – it’s going to be a very scary weekend.

- Phil

Click here for a free trial to Stock World Weekly.

www.philstockworld.com

Philip R. Davis is a founder of Phil's Stock World (www.philstockworld.com), a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders. Mr. Davis is a serial entrepreneur, having founded software company Accu-Title, a real estate title insurance software solution, and is also the President of the Delphi Consulting Corp., an M&A consulting firm that helps large and small companies obtain funding and close deals. He was also the founder of Accu-Search, a property data corporation that was sold to DataTrace in 2004 and Personality Plus, a precursor to eHarmony.com. Phil was a former editor of a UMass/Amherst humor magazine and it shows in his writing -- which is filled with colorful commentary along with very specific ideas on stock option purchases (Phil rarely holds actual stocks). Visit: Phil's Stock World (www.philstockworld.com)

© 2011 Copyright  PhilStockWorld - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in