Home > Uncategorized > 2012/10/03: Quick Post: Weekly Perspective available… intense early month decision

2012/10/03: Quick Post: Weekly Perspective available… intense early month decision

© 2012 ROHR International, Inc. All International rights reserved.

Very short and sweet today, because all of the perspective is still much the same as our expectations last week that QE3 can give equities a boost, but is not actually very helpful for an ailing global economy. After equities spent all of last week in a more reactive mode on the downside, they are likely vulnerable unless the December S&P 500 future can push back above 1,450 area for the weekly Close.

Friday’s US Employment report will naturally be a major influence. Yet there have been quite a few interesting influences earlier this week, and others which remain prior to the US Jobs number on Friday. There was the surprise rate cut by the Reserve Bank of Australia yesterday morning. A link to their statement is available in the Weekly Report & Event Summary Perspective. It seems the last of the bullish central banks is finally acknowledging how weakness in Europe has fed greater than expected weakness in China and Asia in general.

Yet there is an even more telling influence in front of Friday’s US numbers…

 

 

…and that is of course tomorrow’s ECB meeting and press conference. While we do not believe much new will come out of that, you never know. The reason we are fairly confident the discussion with ECB president Draghi will be fairly subdued is the degree to which he has already laid out the requirements for ECB secondary bond market intervention on behalf of distressed sovereigns. His previous articulation of the political requirements for the ECB to act in the bond markets still awaits the completion of fraught intergovernmental negotiations.

As such, the ad hoc pronouncements out of Germany and Spain are unfortunately going to be the short-term market psychology drivers this side of any formal Spanish bailout request; which will be a constructive influence if and when it occurs. Yet there is a ‘perverse’ dynamic to the current phase of the European Sovereign Debt Crisis negotiations that is worth exploring. It seems that Spain benefiting from the reduced bond yields driven by conditional ECB commitments leaves it more contentious in its negotiations with its European counterparts. There was an excellent Financial Times analysis of that at the weekend, and there are also links to that in this week’s Summary Perspective.

The extended market analysis beyond consideration of whether the December S&P 500 future is going to push above 1,450 again is also available in this week’s edition. We hope you enjoy the read and find it useful insight.

Thanks for your interest.

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