LTROs, SMPs,OMTs and prior rate cuts have failed to revive the struggling Eurozone economy. This one won’t do the trick either, but the rumors have already had an effect on European markets. Traders are frontrunning the ECB and loading up on assets in anticipation of further gains when the rate cut is announced next week.
Interest rates will remain high in the periphery despite the ECB’s anticipated action. The Eurozone has effectively split into several regions with the German area being the most creditworthy and with Cyprus being the least with every other country somewhere in the middle.
People are attempting to spin Goldman’s gold market performance into a conspiracy theory. My theory is that the firm just got lucky. That can happen, right?
I wonder if the hackers meant to cause a market disruption to profit from or was that an unintended consequence of their actions. The machines rule the stock market nowadays, and the herd effect is multiplied by removing humans from the equation. The next time there is a serious panic, the market will behave in unexpected ways.
Money talks, and you know what walks. The Germans are just following the golden rule: He who has the gold makes the rules. Since all of the proposals require German money, they are the ones making all the calls. I think this is a mistake, because Europe works best when all of the countries, including France, bring something to the table.
Yesterday, the word was that Matteo Renzi would be picked to form a government after Berlusconi’s coalition said that they would not object to his appointment by President Napolitano. Something changed overnight, because he wound up selecting Enrico Letta to attempt to form a government. Letta said that the other forces will have to make concessions if they want him to lead, but it is unclear why either coalition would do that. If there was an election today, Berlusconi would win with the 5 Star Party picking up seats, too. I still believe that there will be a second round of elections this summer, but Italy always manages to surprise.
The housing recovery theoretically increases economic output as new households buy durable goods like washers, televisions and garage door openers. For some reason, this is not happening. Maybe durable goods orders are down because there really isn’t a housing recovery, just a lot of hype.