Higher, but not a blow out take up of ECB’s LTRO

Very short note today, as I have just got back to London and need to get back into the swing of things. Will start writing my daily notes from next Monday.

Over 800 banks (523 previously) subscribed for E529.5bn of the ECB’s LTRO funding – slightly above expectations of around E500bn, but, in my humble opinion, not enough to sustain the current market rally. With Germany unwilling to increase the size of the EFSF/ESM at this weeks Euro Zone summit, Ireland having to seek a referendum to agree to the austerity plan, likely continued problems re Greece etc, etc, I really cant see many reasons to be long the (European, in particular) markets. Chinese inflation data may come in below 4.0% (positive), but like India, I believe inflation remains a problem, in particular given the current oil price. Indeed, inflation may become a problem generally, if the current oil price persists.

Risk off in my humble opinion.

I’ve had a great ride on my financials and cant see enough upside remaining – dumped them post the ECB LTRO announcement. In addition, I cant see the recent Euro rally continuing either.

Will be looking to increase/add new shorts.

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