That post was less than a month (and 10%) ago (July 20th), when I warned that earnings were NOT looking good when measured in constant currency and that the Greek crisis was spreading like a cancer and it was ridiculous to pretend that it could be "fixed" with the BS solutions that were being proposed at the time.
Yesterday we all waited anxiously for Merkozy to come up with their proposal and the disappointment was palpable from the markets as soon as they came out (we picked up some nice short trades in Member Chat!). There was no expected increase in the size of the Euro-Zone Fund, which is looking inadequate now that Italy has been thrown into the bailout mix. That sent Gold back to $1,800 and TBills back to the lows.
"We can’t solve problems in a big bang," Ms. Merkel told reporters after a meeting with Mr. Sarkozy. "What we are proposing will allow us to regain confidence step by step." Fortunately God did not feel that way when he created the universe or we’d still be waiting for him to finish the first 100 Million Galaxies. "A fundamental discrepancy remains between what markets need and what politicians can offer," said Jacques Cailloux, chief European economist at Royal Bank of Scotland, predicting more tensions in markets.
- Elect a euro-zone president with a 2½-year mandate
- Enshrine fiscal discipline in the constitutions of the 17 euro-zone countries
- Introduce a tax on financial transactions within euro zone
- Align French and German corporate-tax rates
- Prepare French and German future annual budgets on the basis of shared macroeconomic analysis
Wow! It took them all day to come up with that? So after waiting over a week for this historic meeting we get NOTHING at all to fix anything NOW. At least the US Congress tells you they can’t agree on anything – so you KNOW you are screwed. These guys do nothing and pretend they accomplished something. They did accomplish freaking out the Financials by proposing a tax that would impact High-Frequency Trading, which is estimated to be about 70% of all market activity. While that may be bad for a few IBanks (which makes it very unlikely it will actually pass), it’s great for the non-robotic market…
