Skip to main content

Europe and Banks: What a mess?

It's becoming too predictable - first 3 to 4 months of new year economy start looking up and along the way stock markets across the world go up. Then comes April and economic recovery starts faltering and investors start following "Sell in May and walk away" advise. Then comes "same old same old" stories from Europe. Somewhere in the middle some bank loses couple of billion dollars in few days. It happened in 2010 and 2011 and it's again happening in 2012. When are we going to get out of this pattern?
Last week was interesting week across multiple fronts. Let's look at them and see if we can predict how events would turn out next week:

  • French election results were predictable - so no real reaction
  • Election results from Greece were un-predictable. Could this be catalyst for finally Greece leaving Europe. If Greeks are hell-bent in electing radical left, they better start preparing life without Euro. Left leader Tsipras is playing dangerous game of calling European leaders bluff on not providing further bailout money. This could be very dangerous for Greece (who would be out of Euro), Europe as well as world. It has potential for President Obama losing his election bid just because there would be economic shock across the world if this really happened.
  • One of the best managed (supposedly) bank JP Morgan lost $2 Billion. Looks like banks have not learned anything from 2008 economic crisis and they are back at their old game. Just six months back, MF Global went bust in few days on out sized bets and lost confidence. Are there other skeletons in closets of other banks? Are regulators sleeping at the wheel again?
So what's in store for next week?
  • Facebook's most awaited IPO - stock should open above $40 and could close near $50. I I would stop there since there are so many articles written about this, it's almost creating FB fatigue.
  • Greece would be heading towards new elections in mid-Jun
  • France would start preparing for parliamentary elections around same time
  • Stock markets would have roller-coaster ride - similar to last few week
So as investor, be careful since next few weeks could be very volatile. 
After all there is real possibility of "Black Swan" event happening
Have a great week
/Shyam

Comments

Post a Comment

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...
Post a Comment
Read more

And the Oscar goes to...

It's Oscar Sunday and time for predictions for few categories - before I digress into talking about drama in DC or markets.  First of all, I want to recognize the damage LA fires have done to the beloved areas of Los Angeles and impacted families across all spectrums. My heart goes out to them and wish them recovery and rebuilding of their lives... This year's Oscar nominees and post nomination period had been interesting to say the least. Due to this, the field is wide open in almost all categories and that's what makes prediction game so interesting. Just to set expectations, I would consider a win if I get even 50% predictions correct given the dynamics of nominees this year. So here are my predictions - "And the Oscar goes to..." Best Picture - Anora (surprise could be "The Brutalist") Best Director - Sean Baker for "Anora" (Surprise could be Brady Corbet for "The Brutalist") Best Actor - Adrien Brody for "The Brutalist"...
Post a Comment
Read more

The Politics and Gamesmanship of TikTok!

TikTok is less than 3 hours from going dark on USA's east coast if TikTok owner Bytedance (and Chinese Government) follows thru its "bluff" to honor the law " Protecting Americans from Foreign Adversary Controlled Applications Act" which goes into effect on Jan 19, 2025. And suddenly there is lots of politics and gamesmanship around TikTok.. Let's look at the players and their positions US Congress: The " TikTok Ban" law was passed by congress with bipartisan support and coincidently it goes into effect one day before new administration takes charge. Everyone knew the exact date and time of oath taking ceremony of new President...but maybe the congress did not think that there would be change of President and did not bother to put effective date post new government taking charge...that created a window of 36 hours of "law being in effect" unless... President Biden: Biden himself did not think that he won't be President for 2nd term. S...
Post a Comment
Read more