All About Europe
Research for Online Investors

by John Dalt

10/26/11

The market today is all about Europe.  This act has been going on so long, everyone just wants relief.  Just before the market opened this morning, the German parliament approved the enhanced EFSF “plan.”  Futures shot up.

The market opened at its high for the day then settled back and fell out of bed when a headline came out of Greece that an agreement with bondholders on the amount of a haircut they would take was elusive and any agreement would “come down to the wire.”

Italian Prime Minister Silvia Burlesconi was able to convince his junior coalition partners on a plan to increase retirement ages.  The Prime Minister sent a letter to the European Commission that they would be able raise the Italian retirement age to 67 from 60 for women and 65 for men by 2026.  They will all be retired and in a care home by then!

Then just after lunch a headline came out that a representative of the eurozone was on his way to China to secure a commitment to loan money against EFSF assets.

If you are not careful, you can lose money in a market like this.  Throw the fundamental analysis out the window, because “the data doesn’t matta.”

Almost every stock is trading in correlation with the latest headline or rumor.  Precious metals are continuing to march higher on more spending in the eurozone.  There have also been recent comments by Federal Reserve Governors that the Fed should look at more quantitative easing either in mortgage backed securities or in treasuries.

Democrats made a play for the headline wars for the “super committee” at work in Washington.  They proposed a $3 trillion dollar package of higher taxes and savings in Medicare benefit cuts, Medicare provider cuts and savings on interest expenses because interest expenses would not be less if they didn’t borrow so much.  Their plan also calls for $200 to $300 billion in additional spending in stimulus right now.

Amazing, but how many people will hear and believe six months from now that the democrats wanted to cut $3 billion and the republicans wanted to protects “special interests?”

President Barak Obama told attendees at a million dollar fundraiser yesterday in San Francisco that if they didn’t “work harder than we did in 2008, then we’re going to have a government that tells the American people, ‘you are on your own.’  If you’re sick, you’re on your own.  If you can’t afford college, you’re on your own…That’s not the America I believe in.  It’s not the America you believe in.”

Just ask me.

I wonder how many people at the “million dollar fundraiser” could afford it because they relied on the government to make money…excluding investors in Solendra.

Durable Goods orders were off slightly more than the market expected this morning.  Core Durable Goods (excluding aircraft) were up and stronger than expected.  New home sales showed some strength last month according to this morning’s report.  Sales were up to an annualized rate of 313 thousand over 296 thousand in August.

As we go to press, the market is rallying on hope.  Hope that the leaders of the European Union can agree on a “plan” to tamp down the eurozone credit crisis.  The meetings could go into the night.  If they don’t, we will wake up with a hangover tomorrow.  If they can kick the can down the road for another few months, then the market may be ready to rally until the next headline.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

MarketToday Archive

Back to Top