Τι μια εβδομάδα να δούμε τι κάναμε στις αγορές σας……

 …… or for non Greek readers …What a week see what we did to your markets

It is difficult to describe last weeks events but suffice to say it completed one of the most volatile ever for forex, bond ,equity and commodity markets. The biggest winners in the forex markets was the Jap Yen 4% stronger against the USD which itself was 4% stronger against the Euro. In bond markets the flight to quality saw the German and US government bond markets rally as the blood bath in Greek and other Southern European Countries continued. Equities collapsed everywhere not least the Dow which dropped an incredible 900 plus points on Thursday most in a matter of minutes before recovering 600 points in the same time.
The Greek problem certainly went global. Amazing as it is for a country accounting for just 3% of European GDP, but such is the fear of contagion.

As I write the markets are awaiting announcements from the EU on an Emergency Funding Mechanism which is designed to support Euro members and therefore the Euro. How the markets react will be interesting .Will it be one handed applause or will it put a squeeze on Euro shorts and and also the so called bond market vigilantes’.
It seems that whatever is announced the upshot will be to throw more good money after bad.When the politicians finally realize that the Euro in its current guise is floored and the final cost may be catastrophic.For sure If the so called PIGS were not within the Euro they would not have been able to get to this stage.
The equity markets have been spooked big time and it may well be some time before confidence returns. Risk appetite has been choked and so we will be back to more volatile and uncertain markets.
Good trading opportunities but for Investors not so much fun.

Amidst all this the UK election came and went much as expected. Sterling which had faired better than the Euro lost some ground as the uncertainty of who would actually end up in government dawned on the markets.At this time a Conservative, Liberal Democrat Alliance looks just about more likely. If that happens then Sterling and Gilts may get a lift. However, if that is not forthcoming early in the week then uncertainty and the possibility of a Labour Lib Dem Alliance will weigh on them: Indeed if a Brown Clegg pact happens the markets will vote with their feet at the prospect of a Laurel & Hardy run government.

ps At some point I believe there will be an investor stampede into Gold and other precious metals