Just seven European banks failed a health check and were ordered to raise their capital by 3.5 billion euros ($4.5 billion), much less than expected, confirming fears the continent’s long-awaited stress test was too soft. Results of the test of how 91 banks in 20 countries would cope with another recession was released on Friday in a bid to restore investor confidence after the Greek debt crisis spooked markets earlier this year. But it fell on deaf ears. There is little evidence that the tests have been applied consistently and there is a distinct lack of credibility, making this a wasted exercise.
The error in the tests are obviously is in their assumptions. They assume that all the PIIGS countries will be able to repay their debt and the fiscal austerity programs envisioned will hold politically and have no significant negative effect on the economy. These are all false assumptions. However, for a period of time they can fool the people, so for now the “Ponzi” scheme continues. The market was spooked last Friday in whippy action. Everyone knows that it is a game so initially the traders tried to sell off the market, however the results are what they are and traders must trade on the data they have until proven otherwise. So for now the market goes up. This fool’s games process may take time so don’t look for this reality check for at least a few more months, baring any other crisis that could trigger a revisit of this issue.
Market view:
Ha Blue, so I take it you don’t like the short Eur I took on the close Friday. I’m seeing a topping pattern in Eur, a slow rolling over pattern. Hold til right or just take it off when globes opens, hopefully on a little bit of panic, what would you do, thanks?
could be just flagging to go higher….
Blue,
I’m short AUD at 8958 globex after top channel hit and then showed a reversal for overnight trade, targeting 50-100 pips on a pullback maybe to 8800-8850 level prior breakout. Stop 9022 ( convincing new high).
Better trade than EUR short because at least it’s a short at top of channel? And 8980 was prior breakdown level should be resistance. Thinking worst Case it goes sideways on me. You like or this a bad trade, also what do you think about shorting overnight from a timing perspective, is that usually a losing idea? As always thanks a ton!