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This
free investment newsletter is published by Richard Koza,
portolio manager and head trader ATWEL investment advisory You can view latest issue also online Issue 03/2012 2012-01-30 Content:
Useful
links:
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Stock markets are quite strong all around the world They are in 4 week rising trend. It calls for pullback at least. I see two issues as reasons for such move. There are plenty of funds underinvested since end of last year. Second point is short covering by a lot of portfolio managers shorting stocks at the end of the year. |
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I do not see significant changes in macro situation in last weeks. There is a lot of talk about Greece again. Greece needs to make default. They cannot pay their debt in full. They are now in negotiations with private bondholders about "voluntary" reduction of debt. They talk about 70% reduction. But even this it is not enough. The biggest holders of Greek debt are ECB and IMF. They are not part of negotiations and they expect to have their bonds to be repaid in full. But Greece is not able to do it. So sooner or later also these big institutions will need to accept reduction or make total write off of whole amount of Greek debt. And Greece also will be followed by Portugal and Ireland. But these write-offs can solve only actual situation. They do not solve more important problem. It is bad competitiveness of Greece and other southern countries of EU. Nothing happened in last two years in this area. Every politician in southern Europe has talked a lot about this but nothing happened. As you can see on this chart, there is almost 30% gap between Germany (cheaper) and Greece. And Greece is not improving.  The only country that improved is Ireland. And problem of Ireland is banking debt. As they will default with this debt, Ireland will be on the path of recovery. But the same cannot be said about Greece, Spain but also about Italy and France. And it means that problems in Europe are far from to be solved. The only opposite power that holds EUR so strong is almost unite effort of Bank of England and FED to weaken their currencies as much as possible. The FED is strange case as they decided to hold zero interest rates till 2014. They tell it in situation when US economy is improving and inflation is going down. They try to punish savers more and generate inflation. What they are going to achieve is big increase in commodity prices that will decrease spending power of US consumers. And this is main power that creates US GDP. FED is also theme for US presidential elections and we could see big changes in FED after new president will be elected. . Trade smart, Richard Koza portfolio manager ATWEL investment advisory |
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ETF and stock chart analysis & ETF Trading tip & Stock picks commentary BMRN is in pullback after strong breakout. There is good change for new uptrend move again.  |