Preview from Europe: Auto Bailout Fails to Cheer

So the US auto industry is the latest in the seemingly endless stream of disasters that has resulted in a temporary TARP plaster being applied to a hemorrhaging wound. Indices failed to bounce on the bailout news as they have seen all of this before.

Today’s Market Moving Stories

• Overnight Asian news was again gloomy with news that Japanese exports tanked 26.6 in November as the global recession bites hard. Meanwhile even Toyota (TM) are skidding towards their first loss in 71 years on a slump in sales and the strong yen.
• As China heads for its very own recession, the WSJ is predicting social unrest. No wonder the authorities are up to their old tricks again and blocking various WebPages.
• It’s actually a real challenge not to become a total Grinch today. The white Times is predicting a post Xmas train wreck in the UK high street.
• Economist Gary Shilling is predicting that the S&P 500 will fall another 30+%. That would result in the S&P 500 at 500 and the Dow at 5,000.

Bailout For The Irish Banks
For Ireland, the hippo in the room remains the near farcical panto-style nationalization of Anglo Irish Bank and the half bailout of the big two, AIB and Bank of Ireland. The Irish banks are milking the gravy train with a very inexperienced Minister (currently taking an unearned 39 day holiday) who is clearly lacking in any market savvy or acumen.

Where does this leave the unfortunate EBS, the hapless Irish Life & Permanent and the real dog of a bad bunch, Irish Nationwide Building Society? The government should have forced through a series of mergers before they gave the original guarantee. They have shown themselves to be far too beholden to the banks.

Equities

• German bank Hypo Real Estate, who have a big operation in Dublin’s IFSC, announced a significant restructuring programme under which the bank will sell large parts of its non core business and make significant layoffs. Recall that they “merged” with Depfa bank. Maybe that should read submerged.
• Miners (Rio Tinto (RTP), BHP Billiton (BHP)) are on the drift this morning with the slump in commodities.
• Car makers (BMW, Renault) are struggling following the news above about Toyota.
• There is some cheer from chipmaker Infineon (IFX), who are rallying strongly this morning on a Deutsche bank upgrade.
• Closer to home, Elan’s (ELN) Budesonide deal is positive for EDT.
• Glanbia have reported that milk sales remain robust in the US.

Data Today
We’re data free today bar Belgian business confidence. The country has just lost their PM Leterme after allegations his government interfered in a high court ruling regarding the take-over of failed banking giant Fortis.

And Finally… Dennis “The Hedger” Explains Hedge Funds

A look inside hedge funds from Marketplace on Vimeo.

Disclosures: None