Dow Jones Euro Stoxx 50 index hesitated in its rally to resistance at 2500 on the weekly chart, but the trend remains upward. Breakout above 2500 would signal a primary advance to 2900* — and end of the bear market. 63-Day Twiggs Momentum is also rising, but recovery above zero appears some way off.
* Target calculation: 2500 + ( 2500 – 2100 ) = 2900
Respect of the descending trendline on Canada’s TSX 60 weekly chart indicates another test of primary support at 645. Failure would signal a primary decline to 575*. Breach of the zero line by 63-day Twiggs Money Flow would warn of rising selling pressure. Breakout above resistance at 715 is unlikely but would flag that the primary down-trend has ended.
* Target calculation: 645 – ( 715 – 645 ) = 575
“There is now little point in Britain staying in the EU,” said MacShane, who was a minister in Tony Blair’s generally pro-Europe Labour Party government. “It is an historic turning point and Britain might as well get out now, as Europe’s future will be settled without us.”
…….The economic impact of leaving the European Union would be difficult to predict. British companies might lose easy access to European markets — where they now enjoy open trade, with few barriers — but Britain also might be able to negotiate a favorable trade treaty with Europe, as Israel and Mexico have done.
via Cameron’s Rejection of EU Summit Isolates Britain.
Comment: ~ Withdrawal from the EU could harm the same financial sector that David Cameron has vowed to protect. The UK may view tighter financial regulation and/or transaction taxes imposed by the EU as a threat, but interruption to trade/financial flows posed by isolation from the EU would be an even greater danger.
Dow Jones Industrial Average is testing resistance at 12300. Breakout would signal a primary advance to 13400 and an end to the bear market. Rising 63-day Twiggs Momentum is encouraging but will only be significant if retracement respects the zero line.
* Target calculation: 12300 + ( 12300 – 11200 ) = 13400
The Nasdaq 100, however, displays a large bearish divergence on 13-week Twiggs Money Flow, warning of selling pressure. Reversal below 2040 would confirm a primary down-trend. Breakout above 2400 is less likely, but would suggest an advance to 2800*.
* Target calculation: 2400 + ( 2400 – 2000 ) = 2800
The S&P 500 index recovered above medium-term support at 1220/1250, with a short surge in buying pressure, but the situation remains precarious. Breakout above 1300 would indicate that the threat of another bear market has passed, but reversal below 1160 remains as likely — and would warn of another test of primary support at 1100/1080.
The situation is similar to the attempted recovery above 1400 [now here] in 2008. Reversal below medium-term support [1400] in that case tipped us into a bear market.
Having failed to reach an agreement of all 27 EU members, the 17 eurozone countries and the other EU states apart from the UK are expected to sign up to the new deal, which includes:
• a commitment to “balanced budgets” for eurozone countries- defined as a structural deficit no greater than 0.5% of gross domestic product – to be written into national constitutions
• automatic sanctions for any eurozone country whose deficit exceeds 3% of GDP
• a requirement to submit their national budgets to the European Commission, which will have the power to request that they be revised
Mr Cameron said the abandoned treaty change involving all 27 members had been in danger of “distorting the single market”.
“I think I did the right thing for Britain,” he said. “We were offered a treaty that didn’t have proper safeguards for Britain and I decided it was not right to sign that treaty.”
via BBC News – David Cameron defends decision to block EU-wide treaty.
[European Union] leaders, who are still deeply divided over key elements of their crisis strategy, decided they would move to form a pact among at least 23 of the members to tighten rules on national fiscal policy.
But details of the proposed treaty remained to be settled. The U.K. stood aside—after Prime Minister David Cameron failed with what officials said was a “shopping list of demands” designed among other things to protect national supervision of its banks—while Hungary, Sweden and the Czech Republic reserved their positions.
“We will achieve the new fiscal union. We will have a euro currency within a stable union,” German Chancellor Angela Merkel said at the end of the meeting. “We will have stronger budget deficit regulations for euro-zone members.”
The European Central Bank cut its main interest rate by 25 basis points to 1.0 percent on Thursday as the euro zone’s worsening debt crisis outweighed the concern over persistently high inflation.
The ECB also reduced the interest rate on its deposit facility to 0.25 percent and the rate on the marginal lending facility to 1.75 percent, bringing all rates to match record lows reached in 2009.
via ECB cuts rates to 1.0 pct as debt crisis rages | Reuters.
In a note just released by JPM’s Greg Fuzesi, the JPM analysts says that “with the Euro area economy entering a potentially deep recession, we now think that the ECB will cut its main policy interest rate to just 0.5% by mid-2012. We expect the interest rate corridor to be narrowed to +/-25bp, so that the deposit facility rate will be 0.25%. We recognise that the ECB did not cut rates below 1% during the 2008/9 recession. It never fully explained why it did not, but we think that the two most likely reasons will be less important this time.”
via Euro Tumbles As JPM Predicts ECB Rate Cut To 0.50%, “Deep Euro Area Recession” | ZeroHedge.
LONDON—European banks must come up with a total of €114.7 billion ($153.8 billion) in new capital by next June, the European Banking Authority said Thursday, as regulators took their latest stab at restoring confidence in the Continent’s beleaguered banking industry.
The capital shortfalls are spread across more than 30 banks in 12 countries. A total of 71 banks were subjected to the EBA’s exam.
