Equities: Stocks finished the day marginally higher, nothing too exciting to talk about. Rumors of a Greek bailout in the works are helping to support equities and helping them to rally. Stocks are now in positive territory for 2010. Should see some more volatility as the Non farm payrolls data approaches, until then have to wait this out:
Currencies: Dollar rallied in the morning but later pared gains and eventually lost modest ground to the Euro. Again, continued speculation on a bailout for Greece helped to support the Euro. The Pound continued to fall, this time more moderately, against the Dollar. There is talk of a dramatic fall looming for the Pound on the back of poor public finances and the possibility of a hung parliament.
Commodities: Crude oil rose on the back of rising equities and a falling Dollar. Optimism on the recovery helped to rally crude prices march towards the $80/barrel figure. Currently have an April put on crude, I am thinking it may not be a long enough time for oil to move down as I have forecasted it to do based on the fundamentals. I'm expecting heavy losses due to time decay if oil continues to remain in the 78-80 range as it has the past week. Gold rose by $16 today, again on EURUSD stregth and rising equities and commodities.
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What is interesting is whilst we have seen lots of bad data and bad macro fundamentals coming out in the past few weeks; the stock market is still rising (or is flat). We should have expected stock market to fall amist bad data etc but I suspect this is something to do with the idea that states can not allow things to fail. For example on the back of the Greece crisis, we should have expected some major downgrades but I think the market is confident that Greece will not be allowed to fail (rescued by the EU and the likes) therefore markets/investors not see to be worried.
ReplyDeleteMore worrying for us is the idea that this decade will be known as the 'bail-out years' since post-Lehmans, government are too scared to let any big entity to fail because of the fear of the repercussions that follow.... the sad fact is that whilst governments are in a tough position in deciding whether to 'bail-out or not', individuals will have to live with these decisions for years to come....