As expected, equity and fixed income markets took their cues from the ebb and flow of news out of Europe this week. The appetite for risk was initially quite weak following Moody’s credit downgrade of two French banks and news that another rogue trader (this time, one at UBS) had lost as much as U$2 billion due to unauthorized trading. Makes you wonder what would have happened had he earned rather than lost the $2 billion? Investor sentiment shifted in decided fashion on reports that China was now in talks with Italy and looking to invest in Italian bonds and other strategic assets.
In card playing parlance, drawing an 'ace' is usually a favorable turn of events and many stock market investors were hoping Mr. Bernanke would play an ace or two to address the weakening economic environment and as a result, the poor stock market performance this month. Instead, Mr. Bernanke’s much anticipated Jackson Hole speech was devoid of anything new as he reiterated what the Fed had announced as part of the FOMC statement from August 9th.
The word 'albatross' is sometimes used metaphorically to mean a psychological burden that feels like a curse. Investors reacted as if cursed by the proposed European financial transaction tax tabled at a meeting between the French President and German Chancellor this week.
The weather around here has been pretty hot lately but it’s been even hotter in Washington, D.C., where Democrats and Republicans have been locked in a pitched battle over the debt ceiling, the credit cap that Congress puts on the national debt. In what is normally a mundane legislative process worthy of C-Span television coverage, […]
We are less than a week away from the self-imposed August 2nd deadline for the United States to increase its debt ceiling from the current $14.3 trillion. The United States has imposed a debt ceiling limit since 1917 as one of several ‘checks & balances’ for its political system.
Political posturing continued this week as U.S. President Barack Obama embraced a $3.7 trillion debt cutting plan from a bipartisan group of senators known as the 'Gang of Six'. The administration signaled it may accept a shortterm increase in the debt ceiling if it is combined with a major agreement to cut the deficit.
By all conventional measures Greece as a sovereign nation is insolvent and all efforts to prolong an inevitable default is in essence just kicking the can down the road. Equity and commodity investors breathed a huge sigh of relief this week as the Greek parliament voted on and passed contentious austerity legislation. The new rules cut wages, raise taxes, and privatize Greek institutions there by enabling the indebted nation to receive its next tranche of a EU and IMF orchestrated bailout.