The stocks rose and the euro gained on Friday as Greece
inched closer towards the bailout package. Greece must get the financial aid by
the second week of May to avoid defaulting on the loans.
Investors temporarily shifted their focus towards the U.S as
the Wall Street gained momentum as the major U.S. companies posted positive
Investors are awaiting an announcement on the financial
package for Greece on Monday and the reaction of the unions in Athens. The
unions are protesting against the strong austerity measures that Greece intends
The original rescue plan was in the range of 30 billion
euro. However, Germany has said that the actual bailout package could be two to
three times more than the actual package i.e., 100-120 billion euro spread over
2 ? 3 years.
On late Thursday in New York trading the euro was $1.3242
and this rose in the early Asian trading on Friday to $1.3260.
Investors are also worried about the other European Union
countries like Portugal and Spain who have huge debts. The S&P credit
rating downgraded Spain?s credit rating to AA from AA+, recently.
The economists are of the opinion that the EU members could
face a bill of $650 billion to save several EU countries if it fails to come up
with a feasible solution to the Greece?s economic woes.
The Euro is going down because the rescue plan for Greece have left more doubts than solutions, so the investors are not ready to give the Euro another chance. You can see the deadly questions that are killing the euro at http://www.fx-megaforex.com/pips911.htm .
The pivot is at 1.3130 an as you can see in the graphic it break below the pivot and touch the first support at 1.2995, but then it rebound but still below the pivot. So the trend is still bearish. If the pair break above the pivot it could reach the first resistance at 1.3175 & 1.3210 in extension. The RSi is mixed with a bearish trend. The stoch is reaching the daily higher point.
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As noted last night, yd's equity rally was a bit suspect and for all the
wrong reasons. The weakness overnight put the stock mkt back on the lower
low models that suggest that by Wed May 5 of Friday May 7 the stock mkt
flushes to 1150-ish.
Event-Driven Research for Risk Managers
Author of Riding the Storm Out
Registered Commodity Trading Advisor Director of Financial and Equity Research
Structural Logic, Inc.
As a member of GAFNN, I would like to share a free copy of my monthly newsletter. This month you will get an update on the Fund of Funds Portfolio that provides trend following using various asset classes with ETFs. Also, you will find covered call, calendar spreads and the Iron Condor of the month. You can access the report in PDF here.
You can subscribe to the Free Get Rich Newsletter here.
I am looking forward to participating in the GAFNN.
Money Maze by Matien Khalid
Will history repeat itself with Greece? I hope so.
Sovereign wealth crises wipe out a generation of speculators but produce compelling opportunities for nimble scavengers with real time intelligence/ insights into the politics, financing and timing of any potential bailout. I believe that just like my column in December argued the case for a 100 per cent return in the Nakheel sukuk, the financial crisis in Greece enables me to add another potential “three X” or triple bagger trade for my fellow investors/readers who share my macro call on Greece.
I bought 300 NBG call options contracts with a strike price of 2.50 that expire in November 2010. Each contract cost 1.20 or an investment of $36,000.
Greece successfully sealed the deal with the European Union
and the International Monetary Fund on Sunday for a 120 billion euro financial
The financial aid is a rescue package of 120 billion dollars
over a period of three years. The Prime
Minister George Papandreou said that the country needs huge sacrifices from its
The Government has implemented severe austerity measures and
has announced a budget cut of 30 billion euro over the next here years. Greece
plans to bring down its deficit by 2014 as against the earlier promised 2012.
Angry citizens marched in protest of the austerity measures
on May Day shouting slogans that the measures would affect the poor and further
drive the country towards a deeper financial crisis.
The Prime Minister in a cabinet meeting said that the aid
was an unprecedented package for an unprecedented effort from the Greek people.
The Finance Minister gave the outline of the deal and said
that the size of the deal would be unveiled at Brussels in a meeting with the
EU members later on Sunday.
The aid is expected to be made available in the week
beginning May 10. Greece has to repay a debt of 8.5 billion euro by May 19.
Investors have shunned the Greek bonds over fears of a
default by Greece. Germany has to pass the law in lower house of the Parliament
in order to contribute the 8.4 billion euro in the first year.
A China raises reserves:
China has raised the proportion of deposits that has to be
kept by the lenders as reserve in the central bank. This is one the many
measures taken by the Chinese Government to clean the excess cash in the
The reserve requirement ratio was raised by 50 basis points
that comes into effect from May 10. This requirement will wipe out 300 billion
Yuan from the bank. This move by the bank has fuelled speculations about the
possibility of allowing the Yuan to appreciate. The Yuan?s appreciation was
held up since July 2008.
This is the third raise in this year but the earlier two
raises didn?t have speculations about the Yuan appreciation.
Soon after the announcement, China?s Finance Minister Xie
Xuren told that China was committed to the appropriately monetary policy that
it implemented in late 2008 during the deep economic crisis.
China injected huge amount of cash into the economy last
year to help the country tide over the economic slump and ever since it has
gradually eased its economic policies.
The deputy central bank Governor Hu Xiaolian recently told
that the policy shift is more towards being appropriate rather than being easy.
China has reported an inflation of 2.4 percent in the first
quarter of 2010. The currency exchange rate was 6.824 Yuan to a dollar.
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