Thursday, December 22, 2011

ECB news.. again - this time Refinancing

Euro news continues to dominate the headlines, even in the current illiquid trading markets.

Last night we saw futures higher on the ECB's LTRO which brought in 3 yr auction of E489bn - which is a positive for the financing issues for all the major financial institutions.  However, the market as volatile has either priced in the news (2 nights ago) or there's just no direction from this headline at the moment whilst the major players are now on holidays.

The US housing data on Monday re-iterates the continuing trend in improving economic situation out of the US - this combined with the fact that the USD is the safe haven has seen both the sp500 outperform emerging markets.

Gold has been a huge target of profit taking and selling and partly to the stronger USD - however the past 3 years has seen 20% + returns in 2009/10 and 10% returns this year - the trend of Gold prices may remain given the liquidity that is still being pumped into the global economy.

Market prices have been volatile within the ranges - the sp500 continues to hold above 1200 and the emerging markets continue to drift lower - I see that sector themes and pair trading will be a key strategy to focus on in 1Qtr 2012. 
Financials should perform and take the lead in asset prices if the euro situation starts to show more positive sentiment from the media community - and commodities should follow suit as demand picks up globally.

Geopolitical issues will remain in 2012 - with some notabls - N.Korea's new leader Kim Jong-Un, Conflict with Iran, Iraq civil war possibilities, Russian Election uncertainties.