Seeking Alpha

Ralph Shell's  Instablog

Ralph Shell
Send Message
Ralph Shell began his career as a grain trader for a large international grain trading firm. This involved negotiation of export contracts and moving grain and soy beans from the US to the export markets of the world. For a period, he also handled the companies hedging and trading activity in... More
My company:
Project Triumph LTD
My blog:
Forex Brokers
  • Euro Slide Ends With Feeble Rally 0 comments
    Mar 8, 2010 2:23 PM | about stocks: FXB, FXC, FXE, FXF, FXY, UDN
    Greek Prime Minister George Papandreau's travel agent has been busy.  After meeting with leaders in Germany and France, he is giving a speech in Washington today at the Brookings Institution and has a meeting scheduled with President Obama tomorrow.  Since he claims he is not begging for money to subsidize the generous compensation for the Greek bureaucrats, one might ask, what then is the purpose of the meetings.  There now appears to be European solidarity supporting the Prime Minister's reform efforts, though it is not known what will happen in the Greek's need more than moral support. 

    Perhaps Papandreau has this extensive travel schedule because his austerity plans are not popular back home.  Thursday is the day for seemingly, a bi-weekly general strike, called in Athens, by those who will lose benefits and no longer receive their fourteen months of yearly pay.  Today optimism reigns, but the refinancing of €20B in maturing debt by the end of May remains a problem, and a general strike this week may change the mood of the market.

    Quite possibly the Euro central bankers are learning from the Greek experience.  Market Watch reports:

    "The Financial Times on Monday said senior German and French officials are planning to launch a European Monetary Fund that would have the authority and capabilities necessary to prevent a repeat of Greece's de-stabilizing debt woes. "

    Last week the Greek government sold €5B 10 year notes yielding about 6.3%.  This week, the US Treasury is auctioning $21B of 10 year notes, in addition to $40B of three year notes and $13B of 30 year bonds.  The current yield of the 10 year note is 3.70%, firming up in front of the auction.  With the tremendous need to borrow by governments in most of the developed world, this poses a threat to the fragile global recovery.  The public sector's financing needs may make it more difficult for the private sector to borrow and expand business activity.  Should higher rates evolve, it would be the death knell for any hopes of a real estate recovery. 

    It looks like the euro is trying to forge a bottom, moving sideways for over a month in a narrow band.  When we did print a new low on the first of the month there was no follow through.  The COT report shows the big specs remain a massive short in the euro but small spec is only minimally net short.  When the uptrend line was broken on Dec 04, the market then trended down 1500 pips.  The downtrend line now comes in at about 1.3740.  Trend lines are made to be broken, but for now this pair looks like it wants to continue in a 1.35/1.37 range.  We find no reason to expect a breakout from this range, but there may be more 1.29 bears than there are bulls voting for a 1.42/44 recovery.  We chose the sidelines in this pair awaiting events and developments.

    Disclosure: bo equity positions
    Stocks: FXB, FXC, FXE, FXF, FXY, UDN
Back To Ralph Shell's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.