Italy Archives - Page 3 of 3 - the patient investor

November 10, 2011

Watch Europe’s Bank Deposits, Not Its Political Moves – James Wood

People are now moving euro-denominated deposits out of Greece, Portugal and even Italy in protection against a possible exit of these countries from the European Monetary Union…….What is the effect of the movement of deposits? The banks losing their deposits will soon be facing a liquidity crisis. A publicly understood liquidity crisis leads to bank failures. In short, the focus on political considerations misses the looming problem of a liquidity crisis and bank failures.

via Watch Europe’s Bank Deposits, Not Its Political Moves – Seeking Alpha.

November 7, 2011

Italy Nears Tipping Point as Bond Yields Spike – WSJ.com

Less than two weeks after European leaders unveiled an agreement that was designed to bolster confidence in the region, the yield on Italy’s 10-year debt drew close to the 7% mark, a line in the sand of both practical and psychological importance to the market. Psychologically, 7% has become a beacon due to the fact that Greece, Portugal and Ireland each sought bailouts soon after their debt reached these levels. While analysts said it is too simplistic to say that Italy will be forced to ask for support if its 10-year debt yields 7%, they said the recent selloff is taking the country to the tipping point.

via Italy Nears Tipping Point as Bond Yields Spike – WSJ.com.

October 28, 2011

Europe’s rescue euphoria threatened as Portugal enters ‘Grecian vortex’ – Telegraph

Monetary contraction in Portugal has intensified at an alarming pace and is mimicking the pattern seen in Greece before its economy spiralled out of control, raising concerns that the EU summit deal may soon [be] washed over by fast-moving events.

via Europe’s rescue euphoria threatened as Portugal enters ‘Grecian vortex’ – Telegraph.

October 25, 2011

Euro Crisis Plan in Doubt

The 17 eurozone countries have not reached final agreement on the details of two key elements of the plan — reducing Greece’s massive debts and boosting the firepower of the bailout fund, two European officials said. They spoke on condition of anonymity because the talks were confidential.

Because of that, the 10 EU countries that do not use they euro won’t sign off on a plan to force banks across the continent to raise billion of euros in capital and insisted the meeting of finance ministers be called off, the officials said.

One of the officials said that the eurozone was also still waiting for Italy to take concrete action to control its debts and kick start growth.

“It’s a real mess once again,” the other official said.

via Euro Crisis Plan in Doubt.

October 25, 2011

Europe approaches zero hour

As I mentioned in an earlier post, there is bound to be a relief rally when EU leaders announce details of their rescue package — followed by a pull-back when traders figure out the costs. The danger is that Germany and France do an “Ireland” and rescue the banks but put themselves at risk. Both have public debt to GDP ratios close to 80 percent and it would not take much to push them into the danger zone. A down-grade would raise their cost of funding and place their own budgets under pressure. If they are down-graded then the kids are home alone — there will be no adults left in the room.

The FTSE 100 displays a decent bullish divergence on 13-week Twiggs Money Flow, warning of strong buying pressure. Breakout above 5600 would offer a target of 6000*, but expect retracement to test the new support level. Respect would confirm the advance.

FTSE 100 Index

* Target calculation: 5500 + ( 5500 – 5000 ) = 6000

Germany’s DAX is headed for 6500, but a weaker recovery on Twiggs Money Flow suggests this is a bear market rally. Respect of 6500 would indicate another test of 5000.

DAX Index

The French CAC-40 index displays secondary buying pressure. Respect of 3700 would signal another test of primary support at 2800.

CAC-40 Index

Madrid rallied to test resistance at 900. Again buying pressure on 13-week Twiggs Money Flow appears secondary. Respect of 900 would signal a decline to the 2009 low of 700. Breakout, however, would signal a rally to test the descending trendline.

Madrid General Index

Italy’s MIB index is testing the descending trendline near 16500. Respect would test the 2009 low at 12500. Breakout would offer a target of 19000*.

FTSE MIB Index

* Target calculation: 16 + ( 16 – 13 ) = 19

September 13, 2011

Europe Is Urged to Take Bolder Action on Debt – NYTimes.com

“China is a poor country with only $4,000 per capita income,” Yu Yongding, a Chinese top economist and former member of the central bank’s monetary policy committee said in an interview in China. “To talk and think about China to rescue countries with $40,000 per capita incomes is ridiculous.”

China is ready to help, Mr. Yu said, “but European countries first should show that they have a clear road map and convincing policies to preserve the euro and solve their problems as well as the political will to make necessary sacrifices.”

via Europe Is Urged to Take Bolder Action on Debt – NYTimes.com.

September 12, 2011

Dow rallies on light volume

Dow Jones Industrial Average rallied on unconfirmed news reports that China is set to buy sovereign debt from troubled Italy. Light volume indicates an absence of selling pressure. This is a bear market, however, and rallies are likely to be of short duration, while breach of support would lead to sharp falls.

Dow Jones Industrial Average

* Target calculation: 11000 – ( 12000 – 11000 ) = 10000