Tag: Eurozone

Dollar Correction Not Over

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


It was back on 13 April that I highlighted the breaking point for the dollar, which could lead to a dollar correction after a prolonged rally. What was that breaking point? If inflation gauges showed that the strong dollar weighed on the inflation outlook, then the dollar would begin its correction. And so indeed, shortly after, the dollar began to plunge against its European peer, the euro, as investors switched into euro longs and dollar shorts. The reason? Data suggested that the US economy wasn't growing as quickly as expected, and most inflation gauges suggested that inflation still wasn't returning.

And then, two weeks ago, the tide turned once again and investors began dollar buying once more as core inflation nudged up and the Eurozone, with the looming Greek crisis, seemed weak again. But is the dollar correction really over? Don't count on it… Continue reading "Dollar Correction Not Over" →

Don't Let Fear of a 'Grexit' Keep You Out of European Stocks

Posted on by admin

By: Joseph Hogue of Street Authority

After nearly three years of extremely weak economic growth, the European Central Bank is finally delivering on Mario Draghi's pledge to do "whatever it takes" to get the region back on track.

The central bank is set to pump $64 billion into the economy through monthly bond purchases through September 2016. The quantitative easing program, alluded to in September, formally announced in January and started on March 9, may already be having an effect on the economy in terms of sentiment.

Q4 GDP growth of 0.3% beat expectations, and manufacturing data showed signs of life in March. Exports to the United States could get a big boost this year on a massive depreciation in the euro versus the U.S. dollar.

All things considered, I would say it could be a very good year for European stocks, and possibly most of 2016 as well.

There is one fly in the ointment. Greece is back in the headlines as officials were said to have informally approached the IMF to delay repayment on the country's debt but were denied. Thanos Vamvakidis, head of European G10 FX strategy at BofA Merrill Lynch Global Research, said the country may run out of money if a reprieve is not granted at the meeting of eurozone finance ministers on April 24.

How do we act on what could be a great opportunity in European stocks without running the risk that a "Grexit" wipes out returns? Continue reading "Don't Let Fear of a 'Grexit' Keep You Out of European Stocks" →

Does QE Really Work?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Perhaps you didn't hear about it, or if you did you dismissed it because of who said it, but I found some comments by Greece's finance minister over the weekend about the European Central Bank's quantitative easing bond buying program very insightful – and in synch with my own thoughts.

Speaking at the Ambrosetti Forum in Italy over the weekend, Yanis Vardoulakis warned that the ECB's purchases of sovereign bonds, which started last week, will create an unsustainable stock market bubble that is unlikely to boost private-sector investments in the euro zone.

"QE is all around us, and a great deal of optimism hangs on it," Varoufakis said in his speech, "Presenting an Agenda for Europe. "At the risk of sounding like a party pooper, let me say that I find it hard to imagine how the broadening of the monetary base in our fragmented, and fragmenting, monetary union will transform itself into a substantial increase in private investment in productive activity." Continue reading "Does QE Really Work?" →

Why Eurozone Growth Could Trigger A U.S. Budget Crisis

Posted on by admin

By David Sterman of Street Authority

At this point in President Obama's first term, the world looked very different.

The still-anemic economy made it hard to fathom how we would ever get out from under a crushing government debt load. Government spending far surpassed revenue and concerns grew that our key financial backers (such as Chinese bondholders) would pull the rug out from under us.

Fast forward to 2015, and the notion that our national debt is any sort of real problem has simply vanished. Sure, the Republican party has been recently threatening government agency shutdowns, but this time the issue is immigration and not our nation's unstable finances. The percentage of Americans that believe that deficit reduction should be Washington's top priority has slid to a recent 64%, from 72% in 2013, according to a recent survey conducted by Pew Research.

However, events across the Atlantic Ocean could bring this issue right back onto the front pages. Continue reading "Why Eurozone Growth Could Trigger A U.S. Budget Crisis" →

Greece, Nazis And 3 Strong Sectors

Posted on by The INO.com Team

It's hard for me to believe that the newly installed Greek government is now calling for Germany to make reparations of some $250 billion because of what the Nazis did 75 years ago to Greece. Such is the world we live in.

Make no mistake about it, Greece is the Achilles' heel of the euro and just this morning Alan Greenspan, former head of the U.S. Fed, came out and indicated that it was just a matter of time before Greece exits the euro. I couldn't agree more with him, Greece is just an accident waiting to happen.

Unlike the United States, which is one nation with one currency and laws, the euro has been cobbled together with a number of countries that have nothing in common with each other. They don't speak the language, they don't have the same customs and traditions, and they certainly don't share the same discipline for work. Continue reading "Greece, Nazis And 3 Strong Sectors" →