IIFT Daily Note with Peter Brown

Euro problems are back with a bang

Posted by:  |  Time: 7:29 am  |  Topic:  |  Comments: 1
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I thought we would hod in ranges for some time, indeed we looked like we would break to the upside untill late afternoon. But Eurozone worries came flooding back to haunt the market. Basically the figures in Spain are disastrous. Putting questions over the bailout, political futures and funding. The macro outlook globally for growth is very poor and this is weighing on the likes of Portugal, Ireland and Spain. Not to mention Greece.

The QE3 feel good factor has gone, we are back to reality.

We broke some important levels yesterday.  1.2890 on the Euro and 1445 on the S&P

The market is unlikely to free fall there is support on Euro at 1.2850  1.2750

The market should try to rally but continue down later.

One Comment

Peter Pipesmoker

September 26, 2012

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There is a key fact that is obvious but rarely commented on in relation to the issue of Economic Growth worldwide . If there is GDP Growth in an Economy, for any reason, a condition or a By Product is always growth in Oil Consumption measured in Barrels . So if you think you are finding GDP Growth underway in your Economy then look at the oil figures and Barrel or Barrel Equivalent is growing . I believe that at a certain level the converse is true . If Oil Consumption is not growing or more importantly able to grow because of Supply restriction from Middle East Troubles or nowadays more likely for reaching Peak Oil then its just not possible to get GDP growth up as Scacity of oil the key driver of Growth under existing Economic Theories or Beliefs is simply not physically available to do it . Some Day when the Hedge Funds realise all the Government Bonds/Debt they are buying at Government issuing prices of 5/6% Premium cannot be paid because the Economic GDP growth won’t be there or Governments can only pay it by destroying living standards through taxes there won’t be much interest in buying any more Debt . We may be getting closer to that day now at some level which is a day the fireworks will begin . Yours Sincerely, Peter Pipesmoker .