EUR 9.24 For Business Accounts Only

The Morning Track almost-3

- The Morning Track – Almost by Bob Savage
http://track.com/articles/the-morning-track-almost-3/

The focus isn’t on the USD or bonds anymore but the equity market and its ability to ignore anything but the path forward. Today is going to be another day of DJIA20K talk. The high yesterday was 19,987.63 – almost – but we all know that almost doesn’t count expect in horseshoes and hand grenades. This is a market bent on getting Santa Claus to deliver his rally to stock investors and to punish those non-believers with no chance for a pullback. The world isn’t convinced yet with equities soggy globally and with focus overnight on the European Banking System:
• The Monti dei Paschi share price is down 18% on the day as the private solution to a capital short-fall is looking increasingly unlikely and the firm said that it had only 4 months of liquidity, not the previous 11 month estimate.
• Spanish banks surprisingly lost a ECJ ruling regarding re-payment of mortgage interest to customers and costing an additional E4bln. Spanish bank shares are down nearly 2% today.
Worth pointing out that the weaker shares in Europe aren’t really much of a story – because the real movement this morning was in SEK which rallied after the Swedish Riksbank left rate policy at -0.50% and then added to its QE by SEK30bn a month – all was expected. In fact, the rally back in the currency is at odds with the central bank goals of inspiring even more inflation to get to its 2% target – but markets have a funny way of figuring that they are “almost” done in their easing cycle. The fact that negative rates don’t work in Sweden or Switzerland to drive down FX gains should be focus but its not. Instead we are locked into the risk-on and risk-off world and why its broken in the US. EUR/USD is the barometer to watch with oil up and fear about banks returning and the ECB going on holiday – EUR going to 1.0480 rather than 1.0350 maybe the real confusion, almost worth trading on.