Monday has gotten off to a fast start. The results of the election are in from Venezuela and Hugo Chavez has been declared the winner. The challenger, Capriles, has accepted the outcome. The result will not help free enterprise nor the people of South America long-term. Venezuela will continue to beset by poor economic policy, rampant inflation, food shortages, and set the example for misled governments such as Argentina where Christina Fernandez de Kirchner continues to misguide. As Venezuela and the likes of Argentina continue to drift towards mismanaged ruin others will likely find opportunities as a result including Chile, Uruguay, and Columbia reaping benefits as businesses seek less restrictive capital environments.
The Eurogroup meetings get underway today with Spain topping the agenda. The outcome is not exactly known, but it is likely we will hear talk about movement towards a reconciliation of E.U. economic austerity measures and Spain’s desire to keep as much autonomous decisions for itself. Today’s meetings and throughout the week will lead to what may prove to be a semi-climatic E.U. leaders summit on the 18 and 19th of October. Investors can bet on the E.U. and ECB trying to put their best foot forward as they attempt to play the latest round of the ‘confidence game’. The EUR has traded lower against the USD since Friday after reaching short-term highs.
This morning’s European Sentix Investor Confidence reading showed another ‘unexpected’ drop. The outcome was a negative -22.2 compared to the estimate of minus -20.6. The German Industrial Production numbers will be published shortly.
Gold as of this morning is around 1771.00 which mirrors the decline seen in the Single Currency. Both the precious metal and the EUR are likely to see rather choppy sessions as traders mull through the rumor mill which is likely to churn today and tomorrow via the ongoing meetings in Europe, including the likes of a meeting between Germany and Greece tomorrow. Notably, Crude Oil continues to see declines and WTI has been trading below 90.00 USD per barrel.
There is a banking holiday in the States today because of Columbus Day. Therefore the FX markets will not have full volume after the European sessions end this afternoon. However Wall Street and the Chicago futures and commodity exchanges will be open for business and Alcoa will kick off quarterly earnings tomorrow and investors who have shown cautious sentiment will begin to be tested in full.
Manufacturing Production numbers will come from the U.K. tomorrow and are expected to see a negative result. The economy in Britain continues to struggle and the Tories are facing a new wave of effort from Labour politicians who try to take advantage of the tough conditions. The GBP has traded lower against the USD the past couple of sessions.
Questions about the global economy are certainly not about to disappear. With the Eurogroup meetings starting today and various conferences certain to be prevalent leading up to late next week’s E.U. Summit traders can expect rather murky waters as various rumors swirl about disagreements and handshakes.