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Posts Tagged ‘Dexia’

2011/10/05: QuickPost: The Fed, Jobs, Housing and Europe

October 5, 2011 Leave a comment

Much remains the same as yesterday in terms of the negative influences. And in our view those emanating from the US will count for even more of the future weakness in the intermediate term than the obvious headline focus on Europe.

Which is a bit of a radical view in light of the increasing social unrest response to draconian austerity measures in Greece. There are also the problems at the banks that have been highlighted by the problems at Dexia, leading to an admission by the European powers-that-be that just possibly banks which hold a significant amount of underwater sovereign debt are indeed going to need recapitalization; which is to say further significant support from the state.

Even in light of that admission being welcomed by the markets in the form of yesterday’s US equities late session sharp recovery from new lows, so far this is just so much talk. That said, getting back to sharply higher on the day from much lower did establish important technical bottoms for US equities (more on that below.)

However, all that still leaves the question that we have asked many times before: does crisis mitigation necessarily amount to a restoration of global growth that will be truly positive for economies and equity markets? And commensurately burdensome for government bond markets and the US dollar?

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