Friday, July 22, 2011

Weekly Wrap

Friday ended flat, to end a week that had a positive bias. There were some decent housing numbers but not so great employment numbers from the US. Greece got a haircut on its debt, effectively a default, but perception seems to be everything in the market and the prices moving higher in the euro seems to be some risk on for the time being.
All the Italy debt media coverage seems to have subsided, as austerity measures have been put in place.
Gold is holding 1600 - there seems to be continued inflation/sovereign risks being priced in.

I took a long position in the AUD in the 1.07 range, for the 1.08 consolidation breakout, finally breaking my losing streak that spiraled since the euro one day flip on Italy.

Whilst reading 'More Money that God' by Mallaby this weekend; I realised that in the 90's we had both the Asian Crisis and Russia default on debt and now we have the Euro Crisis. In comparison, the Asian crisis seemed to have lasted a shorter period of time, but the shakeout (and recovery) was greater. My impression on this current Euro scenario is that the liquidity and debt injections from the euro bank is a key stabiliser; albeit the 'can being kicked' further down the road. This delay of the inevitable seems to be a concern with sluggish economic growth in the region - Asia had high growth going for them after the shakeout - what will the Europeans produce to get out of this slump?

On the US Debt front, it looks like it's going all the way down to the wire, as both parties are probably going to come to some agreement by the coming week.

Either way, the price action depicts a rally this quarter, and the markets to begin the weak may be uncertain, but a retest of the AUD at 1.08 then will look to hold this position to the year's high at 1.10. I may look to hedge the position with short EUR positions as it is retesting the upside of the trendline near 1.44.



I've added heavily to my equities portfolio the past two weeks; PAN, BHP, CSR, ANZ.