Markets  |  October 24, 2012 12:39:51

Heavy gloom over eurozone turbom

Yesterday we saw the market rather natty general decline in the market, but the grounds were looking hard. Months is talked about so that it will not rescue Spain also simple dochádzajú government rescue funds to regions and have been challenged Spanish banks' stress tests, but no bargain EURO've seen it (yesterday -0.56%) and Spanish yields no increase was not very dramatic (2 still-consuming around 3% vs. Several recent monthly bottoms at 2.7%).

Rise in oil prices has been swift in deed, WTI fell by 2.32%, -1.09% Brent. Rise in oil prices to expect and gave him even we expected.The difference between the movements of Brent and WTI is due to higher U.S. stocks. With a somewhat better data from China Brent declined even new bottom. Yet. Similar overflow of oil, however, we have in recent days have seen so včerajšok was not in this special. Precious metals also made a new bottom, but we have also seen it sell-out - rather gradual decline.

That's what is more interesting is that it has declined in basically everything and obvious cause panic there was not. On Graph EUR, AUD, S & P500, Gold and WTI (all assets denominated in USD), we see that over the past year is behind managed to make profits flax S & P500 (a white), other strategies are all in, at most EUR (-7%), which yesterday ran an American oil. In recent days, all turned down. Large funds zatvárajú position?

Even more interesting is the fact that it was not only about the joint movement of stocks, currencies against the USD and commodities down. Yet behold the zomkli U.S. stocks into the fold. On the chart below, we see the implied correlation of the individual components of the S & P500. After Slovak: the higher the ratio, the more the components are moving in the same direction and the same speed (500 companies, different sizes and targeting). Yesterday we saw the growth of this pointer, and since last Wednesday or Thursday rose by 25%, the most in the last five years. Last peaks were reached in October 2011 and May 2012 were coincidentally it bottoms on the S & P500. Not for nothing is said on the top and the bottom is a process that is an event. Thus, it appears that the process we ended up slowly and going to an event.

Overnight data from pacifickej Asia went well, but the eurozone has again added weight to the side Medveďová. The reason you can select. Weak German data , rising debt , credit rating agencies skepticism into a cocktail can also add recent problems of Spain. Greece very likely get more concessions, but it does not address the situation. It only buys time and that you are not just conscious but also the rating agency business. For example, those German.

Germany is all the time considered turbo eurozone. Although mala circumference and has a problem, France is building its socialist paradise States and other statist operate rather as the disparity between the two camps (except possibly being finite) Germany has always been the pride of the euro area, retail industry, export and strong word. however, if it is already starting to behold German companies worry about the growth of the economy , it is probably a good reason to have to beware. 3Q should produce its positive results, but the company also Bundesbank expect very weak 4Q. It does not exclude even the negative growth. Literally said that the German economy over the heavy clouds withdrew.

It may be expected that, if Germany will have a problem at home, his rhetoric will begin to change.And probably not just for the benefit concessions periphery, but mainly through pressure on the appropriate action (which will of course trade something for something). And this pressure, especially through fiscal union still can be dangerous for other State. The last thing the economy needs at the time decline is because more pressure from the state, more rules, higher taxes and more bureaucracy. Germany at home doing interesting actions (reduction of taxes), the question is what do they increase their competitiveness in the euro area, which Brussels (but lately even Germany) continuously omieľa.

Today we expect the main data from the U.S. market and realitného FOMC meeting. The market is waiting for some positive momentum that could skorigovať recent loss. If you will not come (from the FOMC is not expected nothing, nor backgrounder) and add additional leg downward.Today will also discuss ECB governor Draghi and German Finance Minister, their statements will relate the euro area and of course they could affect the action on the market.

Author: Thomas Swimmer | TRIM Broker, as | Trading on exchanges TRIM Broker

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