SINGAPORE, SINGAPORE–(Marketwire – March 5, 2013) - In his Market Brief of The Week for 4 March, leading global foreign exchange trader, educator and author Mario Sant Singh – whose views are widely sought after in the Forex industry – focuses on messaging from the Central Banks and on China economic announcements:
Comments by European Central Bank President Mario Draghi on the euro’s recent strength prompt it to fall more than a cent against the dollar.
Read the original: Draghi pledges ‘monitoring’ of euro
Italy’s caretaker Prime Minister, Mario Monti, promises to cut labour taxes in an interview seen as the launch of his election campaign.
Go here to read the rest: Italy’s Monti launches campaign
Eurozone crisis threatens to flare up again as outgoing Italian prime minister Mario Monti holds talks with centrist politicians
The eurozone crisis threatened to flare up again on Thursday as outgoing Italian prime minister Mario Monti held talks with centrist politicians over the agenda for reform which he published on Christmas Eve.
Some analysts believe Monti could assemble a coalition for next February’s general election, setting up a battle with his predecessor Silvio Berlusconi.
The Vatican’s newspaper, Osservatore Romano, offered support for Monti, saying his message was “an appeal to recover the higher and more noble sense of politics that is … to take care of the common good”.
But Berlusconi attacked Monti’s performance, saying on Rai 1′s Unomattina TV programme that pressure from European countries, particularly Germany, had “crushed” Monti’s technocratic administration. The head of Italy’s centre-right People of Liberty party also attempted to woo the Italian public by pledging to abolish a property tax introduced since he left office.
Jens Weidmann, the president of Germany’s Bundesbank, warned Italian politicians that the country could not afford to stray from the reform path taken by Monti during his 13 months in power. Weidmann told the business news magazine Wirtschaftswoche that any deviation would be “disastrous”.
“Italy suffers from low growth, low productivity and lack of innovation. But under the Monti government Italy has set ambitious goals for reform in order to regain the confidence of investors, and had success with it,” said Weidmann.
He said eurozone leaders “must not underestimate the distance ahead” before the region’s debt crisis is resolved.
German finance minister Wolfgang Schäuble was more upbeat. “I think the worst is behind us,”he said, arguing that European leaders had realised during 2012 that they must push on with economic reforms to maintain competitiveness.
With Germany also heading to the polls next year, Schäuble claimed conditions in Europe’s largest economy were “better than expected”.
In Spain, though, small shareholders who invested in Bankia when it floated in 2011 were warned that their stakes would be virtually wiped out when the bank is recapitalised. Spain’s bank rescue fund has calculated that Bankia, which was riddled with toxic property debts, has a negative value of €4.2bn. New capital is expected from the EU, possibly on Friday, but the price will be borne by an estimated 350,000 domestic investors.
The news came as Spanish healthcare workers held more protests on Thursday against plans to privatise some hospitals and health centres in the latest signal of opposition to Spain’s austerity programme.
The tensions in Europe, combined with the ongoing fiscal cliff deadlock in Washington, made for a jittery day for those City workers who returned to their desks after the Christmas break. After initially rallying, the FTSE 100 fell back to end the day unchanged as traders grew more nervous about the situation in America.
An early sell-off in New York wiped 100 points off the Dow Jones at one stage, and came after Japan’s Nikkei closed at its highest level in 21 months. Japanese investors were encouraged by a pledge from the country’s new government to battle deflation and kickstart the economy through new stimulus measures.
In the foreign exchange markets, the pound fell to a two-month low against a basket of currencies. Traders said fears over the UK economy were hitting sterling.
Italian Prime Minister Mario Monti says he is not siding with any party in the next elections, but remains available to head a future government.
Continued here: Monti ‘available to lead Italy’
Has Mario done a good job for Italy?
Read the original: Has Mario Monti done a good job?
Italian stocks fall sharply after Prime Minister Mario Monti says he will resign early and former premier Silvio Berlusconi signals he will run for office again.
Here is the original post: Monti news hits Italian shares
What’s scarier than the return of Silvio Berlusconi? For some investors, it’s his likely opponent in the race to succeed Mario Monti as Italy’s prime minister: Pier Luigi Bersani.
European Central Bank President Mario Draghi backs calls for a eurozone super-commissioner with the power to veto government budgets.
Read more: Draghi backs super-commissioner
As François Hollande’s broadside on the eve of the EU summit suggests, Angela Merkel must shift her stance on the eurozone
Angela Merkel does not like to appear isolated on the eve of a European summit. And yet this is exactly what François Hollande set out to do in his interview to this newspaper and five others today. He suggested Ms Merkel was too preoccupied with domestic policies to give Europe the response it needed in a time of crisis. He demanded Berlin reverse its opposition to the decisions taken at the last summit, and gave short shrift to a German push for a federalised eurozone. To say the French socialist president lacks the bottle it takes to be a leader is to underestimate the determination he displays to put his case across.
It is one which an increasing number of eurozone countries and institutions are coming round to. Mario Draghi, the European Central Bank president, wants to buy Spanish sovereign bonds on condition that Spain activates one of two bailout funds. Most eurozone members want Germany to stick to the deal they thought Ms Merkel had signed up to in June, to use the European Stability Mechanism to break the cycle between weak banks and sovereign debt. And to do all of this by the end of the year whether or not there are elections coming up in Germany. Most, too, belatedly in our view, would agree with Mr Hollande’s central assertion that recession is a bigger threat than budget deficits.
And yet, for the moment, none of this is happening. The damage that Ms Merkel’s foot-dragging is causing is creeping ever closer to her country’s borders. Germany’s growth rate will be slightly higher than forecast in spring, but next year’s will be halved to 1%. If the strongest economy in the eurozone is grinding to a crawl, it should say something. Unfortunately, Ms Merkel could be tempted by the current fragile equilibrium in the money markets to play, again, for time. Already expectations at what will be achieved at this week’s summit have been downplayed. The big decisions will come in November instead. Which is perhaps why Mr Hollande launched the broadside he just has.
But just one indication of the trouble the eurozone as a whole is in, and the current risk of contagion if Greece goes belly up, is contained in a report which assesses the economic knock-on effect a Grexit would have on everyone else. According to Bertelsmann Stiftung, it would not only suck €674bn out of the world’s leading economies, but if it triggered a Portuguese exit as well, global losses would add up to €2.4tn, or €2,790 for every German over eight years. If Spain left, the accumulated per capita losses would soar. If Italy followed, France would lose €2.9tn, the US €2.8tn, China €1.9tn and Germany €1.7tn by 2020. A global international crisis. So for Mr Hollande to say that we are “near, very near” to the end of the crisis is perhaps the closest he came in this interview to being blithe.
Mr Hollande has got a limited number of cards to play to strengthen his position with Ms Merkel and he has used two of them already. When he first lined up his interests with Italy’s Mario Monti and Spain’s Mariano Rajoy, Germany was less than amused, but it has since accepted the need for collective leadership. The second card Mr Hollande played was to stick to the austere fiscal target he inherited from his predecessor. Although few think a French budget deficit of 3% of GDP is feasible next year, the target gives Hollande credibility. The third card – reforming his country’s structural deficit, a task that has eluded all of his recent predecessors – will take a lot longer, if it happens at all.
Other than waiting for disaster to strike, this means Ms Merkel has to move. She will not shift on eurobonds, or the speed with which she has to act, but she might move on the principle of bank recapitalisation. It will be at best an incremental step. The bigger question is the political cost of what is taking place. Bankruptcies, fire sales of state assets and soaring youth unemployment across the southern belt of Europe won’t lead to spontaneous outbreaks of Beethoven’s Ode to Joy. More like drumming Wotan’s descent into Nibelheim.