It will be disorderly and will force the ECB to, at the very least;
Its hard to disagree with what I’m hearing over the last few weeks….there is are no trends, no volume, correlation strategies have all broken down, its an environment that nobody want to buy anything and until Greece gets sorted out I’m sitting on the sidelines….
Bankia appealing for a €19bn bailout from the Spanish government is much larger that the amount that the Finance Minister suggested that the entire Spanish banking industry might need as recently as two weeks ago.
Oil is down 13% from its highs , there is massive risk off over the last few weeks..3 weeks ago GSK & DGE raised 5 year money at 1.5% & 10 yr money at 2.8% and last week Bhp Billiton raised 6 year money at 2.1% and 10 yr money at at 3% a pe of 33x on the debt and just 8x on the equity…these guys have started the asset allocation
Check out the following charts on Bloomberg
US Homebuilders (S5HOME Index +42% ytd)
SHPROP Index, Shanghai Stock Exchange Property Index +25% YTD
Over the weekend five Greek opinion polls show New Democracy in the lead, with margins ranging from 0.5% to almost 6%
William Porter says it’s a fantasy to assume an orderly Greek exit and its overwhelmingly likely you get common ground between Greece and Core so its all eyes on Germany, the more accommodative the German’s become the lower the risk of a Greek exit, and the greater the likelihood of a sharp unwinding of recent market moves.
CHINA – Important change of view from Dong Tao, our Chief NJA Economist. Dong and Trina Chen (materials analyst) have been more accurate in predicting China’s growth and policy path in recent quarters than most internally, and central to their thinking has been the view that expectations of pre-emptive stimulus measures being put in place would be sorely disappointed. That view is changing. Dong notes a significant shift in the program approval process at the NDRC, which stemmed from a State Council meeting on May 23rd, in which the Premier stated the need for a “greater emphasis on growth”. In short, he thinks the government has started a new round of fiscal stimulus, as local governments were asked to bring forward pending infrastructure projects last week. How big could it be? Clearly significantly smaller than in 2009, when the initial investment campaign was RMB 4 trillion; our initial projection is that it could be between RMB 1 trillion – RMB 2 trillion. This could rightly be viewed as a regressive step, as it is clearly at odds with the idea of rebalancing growth from investment to consumption. Nonetheless it would appear to be a decisive reaction to a deteriorating external growth environment, and may be accompanied by a 25bp cut in the policy lending rate in the coming months, as well as RRR cuts of 50bps per quarter for the rest of the year. The question one has to ask oneself is how many times in the last 10 years it has paid to bet against China’s ability to manage itself out of trouble. It may be the case that with one more roll of the policy dice, they can prevent 2012 being the year in which the China story finally unravels.