Seeking Alpha

European markets rocket out of the gate as investors cheer progress on a tighter union and bank...

European markets rocket out of the gate as investors cheer progress on a tighter union and bank recapitalization. London +1.7%. Paris +3.0%. Frankfurt +2.4%. Madrid +4%. Euro +1.2% to $1.2592. Sterling +1% to $1.5664.
Comments (19)
  • Hoooray ! Everything is now fixed. We can all sleep easy now.
    29 Jun 2012, 04:12 AM Reply Like
  • If cascading lies and compounding deceits could create real economic value and genuine prosperity then Venezuela, Cuba and North Korea in addition of course to Greece and Spain should be the most successful economies in the world and places such as Switzerland, Norway and Singapore the most impoverished
    29 Jun 2012, 05:37 AM Reply Like
  • Nice relief rally but this too shall pass...
    29 Jun 2012, 06:28 AM Reply Like
  • Fully agree. Time to prepare for a significant downtrend....
    29 Jun 2012, 08:38 AM Reply Like
  • Print on, baby! (in a Raj Ratnam voice)
    29 Jun 2012, 07:24 AM Reply Like
  • please.. this is ben making sure his buddies have their end of the qtr bonuses.. wait. Window dressing illegal? oh i forgot this is the wall street ponzi game. No look at the Emini fat finger last night..that was ben. nobody has the firepower to do what happened yesterday in the last hour. they dont even hide it anymore. why anyone tries to apply fundamentals anymore is beyond me.
    29 Jun 2012, 07:54 AM Reply Like
  • Amen squared.
    29 Jun 2012, 08:01 AM Reply Like
  • the fact that one single person can make a complete mockery of the global equity markets is beyond my comprehension. This is not even a "marktet" anymore but a donkey kong game with the end being price propaganda..
    29 Jun 2012, 08:06 AM Reply Like
  • No, it is just a bunch of wall street computers (>50% volume) trading with each other. Skynet has become self aware.
    29 Jun 2012, 08:43 AM Reply Like
  • and dont forget. Ben has basically put a defacto short ban on all equities. lets call a spade a spade.. I just with they would send the press release out. Either stay out of this abortion or sell what you have.
    29 Jun 2012, 08:52 AM Reply Like
  • News makes the market go round or retrograde. We know it is a band aid and pray it ain't cancer.
    29 Jun 2012, 09:03 AM Reply Like
  • Love how all the comments here are bearish - very insightful
    29 Jun 2012, 09:09 AM Reply Like
  • if you dont understand whats really driving this "market" id suggest keeping your day job..here ya go.
    http://bit.ly/MEdskB
    29 Jun 2012, 09:14 AM Reply Like
  • How is that end of the world doing for ya? LMAO at zerohedge, LMAO!!!!!

     

    Europe just approved a $120B stimulus program, the recession that was picking up speed has just been stopped. Does it hurts, doomers? Does it hurts to see that a big recession was forming and now we would see a huge recovery....

     

    I love it....
    29 Jun 2012, 09:29 AM Reply Like
  • "the recession that was picking up speed has just been stopped"

     

    Scratching my head, thinking, how exactly is $120B in stimulus going to help? This is just another kick of the can down the road. IMHO
    29 Jun 2012, 01:15 PM Reply Like
  • What it will do is transfer wealth from the general populace to the special interest groups that receive the stimulus.

     

    For instance. Let's say we measure your personal financial position based on what you spend every year. That is your personal GDP. Now of course you have a full set of financials, and the critical component is your equity.

     

    There are two ways you personal GDP can go up. You can suddenly create lots of new income, which is of course hard to do, but the best way to created sustained expenses (GDP), or your income can stay the same and you can increase your expenses by burning down your equity (spend your savings).

     

    If you only measure your expenses (GDP), then more income for more expenses and equity erosion both increase (GDP). The problem with the second method is that your personal balance sheet is shrinking or rather it is receding, and when you stop spending you find your balance sheet in recession.

     

    So now, let's ask ourselves, "Where is the gov getting the $120 billion in stimulus to add to the economy?". Did they add new income? Well to do that they need to add new technology. If they could just conjure up new technology whenever they wanted, then you would just do that all time and eventually no one would ever have to work again.

     

    So clearly they aren't creating new income via new technology they are magically adding to the economy. All they are doing is compelling the consumption of capital. Now there is the chance that that capital consumption could lead to a return, which would result in more capital creation, but investing is hard enough as it is. It relies on price sensitivity.

     

    Gov has guns. So gov investing is price blind investing. The chances of getting a return that is better than price sensitive investing would be just dumb luck. Thus the odds of the stimulus (forced capital) erosion, will juice GDP (expenses) all the while it erodes capital.

     

    The end result of this will be to debit capital and credit assets. In other words the balance sheet will shrink or rather recede. It will be yet another stimulus bubble.

     

    Equities will rally, sovereign yields will tick up, and when the stimulus is over, equities will retreat and yields on safe haven assets will retreat.
    29 Jun 2012, 01:36 PM Reply Like
  • JH - you lost him when your sentences begin to exceed 8 words and the words had more than 5 characters. He was unable to keep up.
    29 Jun 2012, 02:28 PM Reply Like
  • Massive Equities rally. Cha-Ching, glorious day. Profiting from doomers is too easy.

     

    The DOW up 270 pts......

     

    And much more to come...
    29 Jun 2012, 04:36 PM Reply Like
  • Once the Eurozone is working efficiently the global markets will respond favorably. With TPP in place it'll be a bull market if the banks stay solvent. Maybe this time the lesson has been learned and trade and jobs will grow again. Co-operation and parity solves the problems.
    29 Jun 2012, 01:48 PM Reply Like
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