A Fruitful Thanksgiving

Published by Filipe R. Costa on Mon, 26/11/2012 - 10:32

Daily Market Commentary for November 26: What a week it was! After several days of losses with the Dow taking a dive into the 12,500 level, recovery has already started and the the blue chip index has returned to near 13,000. The small break for Thanksgiving was very fruitful!

The beginning of last week was not really the best as the IMF and the ECB couldn’t reach an agreement regarding the Greek bailout and they are expected to conclude negotiations later today. It became obvious there’s no way Greece can reach its debt target of 120% of GDP by 2020 without a haircut on the current debt pile. Extending time for Greece will give some fresh air but not enough to solve problems. If there is some agreement in the direction of further cutting debt today, then the Euro may be boosted higher.

Economic data across Europe was better than expected with PMI data showing contraction but to a less extent than first anticipated. In Germany the Ifo index was also reported better than expected helping to lift the Euro against the USD.

The sentiment is now risk on and will continue this way as long as today’s developments on Greece are positive and the negotiations on the fiscal cliff continue on the right trails.