Varför är marknaden så stark när…

utdrag från Zulauf

Zulauf: Europe is going to be key this year for the markets and the economy. China is slowing; the emerging world is slowing, and the U.S. is barely above water, constrained by its structural problems. I have called the euro a misconstruction since its birth. The problem is a difference in competitiveness among European countries, and you can’t solve it by lending money to the less competitive countries. You have to deflate wages and prices in the south, and inflate the north. But given Germany’s history, it will never inflate.

The members of the euro zone agreed in December that each country could have a structural deficit of no more than half a percent of GDP. If a deficit goes above 3% of GDP, the country will be sanctioned. This agreement now has to be ratified in all countries. But when you agree to such a prescription and you are uncompetitive, your currency is overvalued by 30%, you can’t devalue, and your nominal interest rates are too high, that is a recipe for a depression. It is a death sentence. Several countries won’t ratify the contract, and the next day their markets will be repriced accordingly. They will exit the euro, and the turmoil will go to the next level. Greece is bust in either case. If you can devalue your currency by 40% or 50% in that situation, at least you will have the chance to see the sun again and recover.

Zulauf: The banking system goes bust. Assume Greece won’t repay anything, or at most 10% of its total debt. It is not just the government but the private sector that is bust. That means banks in other countries will be in trouble, which means they will be nationalized. Governments won’t have the money to pay for this, so they will assume even more debt. That is the chain of events I expect in 2012, and if you believe it won’t affect the U.S. you are dreaming. The estimated notional value of the over-the-counter fixed-income-derivatives market in Europe is estimated to be about 60 trillion euros. There are many links to the U.S. banking system, although we don’t yet know who is positioned how. If one country exits the euro, all hell will break loose.

komm, tyvärr är det så illa som han säger, men marknaden verkar inte bry sig, ännu! Eller har jag missat något?

I veckan är det full fokus på Europas bondauctions, i spåren av kreditnedgraderingarna. Idag har vi Frankrike, imorgin Spanien, Grekland och EFSF. På onsdag Tyskland och Portugal. På fredags träffas Sarkozy….

Imorgon kommer data från Kina. IP, BNP och Retail sales.

Från USA kommer Empire State imorgon. PPI, CUR och IP på onsdag. CPI, Housing starts, Building permits, IJC samt Philly Fed på torsdag.

Stay tuned

ps. räntemarknaden har varit bra mycket smartare än aktiemarknaden de senaste åren. Tittar man ex på US 10 åringen så noterade den en låg punkt i december för att sen stiga, varpå aktier följde med, MEN sedan en tid har den fallit tillbaks och är snart nere på samma låga nivåer. Aktier däremot, ligger kvar på en hög nivå? Hur länge? ds.

Om GaStan

Ga Stan bloggar här under rubriken "Kortsikt's blogg". GaStan är en medelålders gift man bosatt i Stockholm och verksam i finansbranschen.
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