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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

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