“Mother, may I have another”, should be the official motto of Greece at this juncture. E.U. finance ministers have agreed in principle to give the nation an additional 2 years to tidy up their debt ceiling – from 2020 to 2022 – to a mere 120% of GDP. Investors are likely to assume that these mandates will change once again in a number of ways and it should be noted that the IMF is not pleased with this newest attempt to kick the can down the block yet again.
The EUR has continued to trade lower and is approaching summer time values. Rest assured that the ECB will join this party and start to make pronouncements about their resolute ambition to keep the Single Currency a viable international unit. The ZEW German Economic Sentiment reading will be released shortly. Yesterday the broad markets in Europe languished as did their brethren internationally as bourses once again declined. However, it should be noted that volumes were extremely low from the States because of the Veterans Day observance in which banking institutions are shut. And because the American bond market was closed, Wall Street saw relatively light trading. Thus today in many respects will be the first day of the week in which traders may be able to gauge sentiment accurately and it should be noted that optimism was in short supply last week.
From the States today the Federal Budget Balance will be published and this will continue to fuel the talking mode per the ‘fiscal cliff’. While some point to this as a day of future cataclysm it should be noted that as long as politicians are in charge it is likely that some form of give and take will be reached in order to assure the sun comes out the next day. Retail Sales will be reported tomorrow and this should prove interesting considering that consumer sentiment readings have been the rallying call per economists who claim that the American landscape is beginning to see a renewal of hope among those holding the purse strings.
Gold continues to trade in a high consolidated mode. As of this writing the precious metal is around 1724.00 USD and taking into consideration the weakness of the EUR and the strength of the Greenback it would seem something has to give. Inflation data was just released from the U.K. and it came in slightly higher than anticipated, but the inflation data from Europe, China, and the States remains rather tranquil and this may give pause to Gold bulls. While long-term there appears to be a thousand and one reasons for holding Gold it remains a speculative play at this time.
Thursday will be an important day of data as Germany and France release GDP data and the U.S. will release the Empire State Manufacturing Index results. Last weeks trading was not exactly promising for equity traders and Wall Street will be watched carefully today to see how a long weekend has effected sentiment. The re-election of President Obama is one week old now and investors do know what they will be getting in terms of rhetoric from the States – and Europe. The problem is that many investors have become weary of the same song and dance routine. The fly in the ointment for public officials is that doubts about policies from central banks regarding monetary policy and austerity mandates from government institutions are growing from a variety of pulpits and a happy middle ground will be hard to find.