Kudrna's Stock Market Talk

Quote of the Day:

We’re not saying that saving solves all problems…

…[but], you can’t spend more than you take in. You can’t live your whole life this way. Everybody knows this…

Angela Merkel

Macro Overview

Europe Rotting At The Core?

• Only yesterday, in my article; Is Europe Rotting At The Core?,  I wrote:

• • France’s elections have thrown open the entire Eurozone debate with Far Right, Le Pen winning an astonishing 20% of the vote and whose views on Europe are blatantly anti-EU. It’ll be interesting to see how Sarkozy and Hollande dissect this popularity and implement the amendments into their campaign? Was their support entirely anti-immigration or was a large portion of it a middle finger at Merkel?

• Well it appears, already that this is being played out, without either candidate wasting much time over it.
• Sarkozy’s interpretation of Le Pen’s popularity is directed firmly at the Far Right’s attitude to immigration calling for a Europe which seeks to “defend its borders” and voicing respect for the Nationalist voters who are concerned over immigration – which seems to be directed largely at the Muslim community in the press, from what I can tell.
• By contrast, Hollande appears to be directing his rhetoric firmly at Le Pen’s stance on the European Union (i.e. against it). By reiterating his stance to re-jig (re-neg?) the “Merkozy” fiscal compact and making stronger noises about a “French Flake” on the austerity measures. This has not been missed by Europe’s Iron Lady, who has, begun her defense (of her European policy and perhaps of Sarkozy too?), ironically, before Hollande has even come close to getting his feet under the desk. One thing for sure, Hollande is already feeling the cold calculated strength of Merkel’s iron fist around his neck – hey, at least he knows what he’s letting himself in for, should he ever have to sit across the table from her. But, this is a pivotal point in gauging real French opinion on the cozy Merkozy relationship – opening up a new battle front against the mighty German could either work for Hollande or against him in a big way.
• I think this was in many ways an inevitable route for the candidates to take. Sarkozy daren’t even hint at betraying the German titan and it is hard to see a French socialist embracing anti-immigration issues. Needless to say, this divergence in the dissection of the Far Right vote will prove to be the decisive factor in the French elections of 2012.

Market Overview

Is Bank Of England The First To Get Truly Trapped?

• I’m not going to wait for Apple’s results to hit the tape before sending them out, but it may be the event of the day. As I write this AAPL stock is down over 2%.
• Moving on… YesterdayI wrote:

• Also, I find the trend of the British Pound interesting as it appears to be bucking its normal characteristic. Normally, Cable gets sold off as global economic conditions deteriorate. This time it appears to be trending up into the bad news. One British Pound now buys you 1.61 US Dollars and we are in danger of breaking a new high for the Pound.

• Currency traders are aware that there is nowhere for the BoE to go with even some of the most dovish of Monetary Policy Committee members refraining from voting for more QE “stimulus” as persistent inflation data puts a spanner in the works. Financial News writes in an article today:

The Monetary Policy Committee voted 8-1 this month against increasing purchases of those bonds, known as gilts. Adam Posen, who spent 12 months voting alone for more QE until the MPC swung to his view in October, rowed back from voting for an increase. Even for David Miles, who favoured a £25bn increase, the decision was finely balanced.

• The interest rate differential is a mouth-watering prospect for money traders in a seemingly zero-interest rate world. No noticeable recourse to mortgage rates in the UK… … yet… …
• Tomorrow is a crucial day for the British economy, GDP was down last quarter and is forecast to be a frighteningly low +0.1%. Miss that and confidence will plummet and Cameron will feel the heat of the opposing Labour Party Leader, Ed Miliband … as well as the rating agencies.
• No prizes for guessing Chart of the Day – Cable (Dollar-Sterling) year-to-date.

Chart of the Day

Events

Macro Events:

Update:

• Nothing Significant

Alerts:

• UK GDP

Corporate Events:

Results:

• Boeing [BA], Canon [7751], Caterpillar [CAT], China Life [2628 HK], China Unicom [762 HK], Credit Suisse [CSGN VX], Eli Lilly [LLY], Ericsson [ERICB SS], Fiat [FI IM], GlaxoSmithKline [GSK LN], KDDI [9433 JT], Las Vegas Sands [LVS], Rolls Royce [RR/ LN],SAP [SAP GR], Siemens [SIE GR],

Dividends:

• Hong Kong Exchanges [388 HK], Procter & Gamble [PG], Tesco [TSCO LN], Tyco [TYC],

Reading, Links:

Nothing Significant

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Tags: Boe, British Pound, Economy, EU, Europe, Eurozone, France, Francois Hollande, Germany, Macroeconomic News, Merkel, Politics, QE, Sarkozy, TIPSTER

This entry was posted on Tuesday, April 24th, 2012 at 11:20 PM and is filed under Economy/Macro/Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.