The latest plan to preserve the European Union (EU) and save the global banking sector is to force European banks to increase their equity capital. The goal, of course, is to restore confidence and stability. But if that's the case, then why are so many analysts and savvy investors still nervous? To put it bluntly, because they know it won't work. As it stands, the capital shortage is about 200 billion euros ($277 billion) according to the International Monetary Fund (IMF). I think it's more like 1 trillion euros ($1.4 trillion) by the time you factor in all the cross holdings and the daisy chain of exposure that makes the entire banking system there look like Swiss cheese.
READ MORE: http://moneymorning.com/2011/10/17/dont-buy-into-europes-latest-rescue-effort-the-continents-banks-are-about-to-go-bust/
Can We Escape From The Trading Range?
For several months US stocks have traded within a range of 1120 - 1220, give or take a few points. Active traders who have played this range have done very well so far. It has been a big challenge for two reasons:
1. Whenever the market is at the bottom of the range, it looks to many that a crash is imminent.
2. Whenever we hit the top of the range, it seems like euphoria -- an excessive reaction to events.
READ MORE: http://www.econmatters.com/2011/10/can-we-escape-from-trading-range-guest.html
Market Volatility Down, Good For Stocks
The CBOE Volatility Index (VIX) is generally regarded as the “fear gauge” of Wall Street, measuring implied volatility of S&P 500 Index options. The highest VIX readings occur when investors become nervous and anticipate huge equity declines, generally as a result of some crisis as shown on the chart below.
READ MORE: http://www.econmatters.com/2011/10/market-volatility-down-good-for-stocks.html
* French 10-yr spread over bunds climbed to euro-era record as Moody’s said the nation’s Aaa credit rating is under pressure from deterioration in debt metrics and the potential for additional liabilities from the Europe’s debt crisis
* China’s economy grew 9.1% in the third quarter from a year earlier, the slowest pace since 2009
* U.K. inflation accelerated to 5.2%, matching a record high set in September
* German investor confidence fell to -48.3 in October, the lowest in almost three years
* Bank of America said to move derivatives from its Merrill Lynch unit to subsidiary flush with insured deposits; move said to divide FDIC, Fed
* Citigroup closing proprietary-trading unit that incurred losses in 3Q as regulators prepare to restrict banks from making bets with shareholder cash
* Parliamentary debate in Greece due to start today on new round of austerity measures amid public protests, labor-union unrest
* Borrowing costs rose at auctions of Greek and Belgian bills;
* Spanish borrowing costs little changed at bill sales