Feb
15
Week Ahead 2-15-2010
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There was big news in the Eurozone over the weekend. This will dramatically influence the US markets tomorrow. Markets on Monday seem to be taking the news in stride, but the US market will try to absorb the negative fallout. Germany has rejected a bailout fund for troubled countries in the Eurozone (mainly Greece.) This will cause a major ripple effect and may bring some of the fear back into the market. I was really hoping for some details on how this fund would play out, but it seems that devil was in the details last week when the announcement that France and Germany were going to help Greece out. If the European countries can not boost support for the “PIIGS” then the fear may be cause a bigger funding problem. Fear drives the yields on the sovereign and government debts and if the yields become too high then they will not be able to raise the necessary capital. This could be catastrophic to not only Greece but to other countries trying to raise capital. This was apparent in the Portugal issuance two weeks ago where they failed to raise the full $500m that they were looking for. This has gotten to the point where some are expecting complete failure. Sam Fleming and Tim Shipman state: “The European single currency is facing an ‘inevitable break-up‘ a leading French bank claimed yesterday. Strategists at Paris-based Société Générale said that any bailout of the Read more
