Italy Overtakes Spain As Weakest Link

Lior Alkalay - INO.com Contributor - Forex


Among the big four Eurozone economies, i.e. Germany, France, Spain and Italy, it’s clear which two are the growth drivers. Of the others, that is Spain and Italy; Italy was considered to be the more stable. Spain’s bonds were deemed riskier and its banking sector weaker. But that is a thing of the past. As it stands today, Italy has overtaken Spain to become the weakest link among the Eurozone’s largest economies, with a banking sector desperately in need of a bailout. And if Italy’s banking crisis is a rerun of Spain’s, we can certainly expect some troubles in the Eurozone and, consequently, for the Euro.

Spain vs. Italy in Two Charts

When we compare data on the Italian economy vs. the Spanish economy, we can see an interesting picture emerging. When we examine the trend in bankruptcies filed for both economies, it’s clear that both countries had relatively the same trend in bankruptcies until very recently. Bankruptcies in Italy have started to surge while bankruptcies in Spain have been decreasing.

Spain vs. Italy Bankruptcies
Chart courtesy of Tradingeconomics

In the bond markets of the two countries, a clear divergence is occurring. Credit Default Swaps for Spain and Italy, which had moved in tandem in the past (with higher risk premiums for Spain), started to diverge back in 2014. Credit Default Swaps for Italy are now much higher. Continue reading "Italy Overtakes Spain As Weakest Link"

Are These The Greatest Success Stories In Europe?

By: David Sterman of Street Authority

It's been five years since the Financial Times first made use of one of the less flattering economic acronyms: PIIGS. Back then, Portugal, Ireland, Italy, Greece and Spain were seen as economic basket cases, and it was widely assumed that one or several of them would eventually default on their massive debt burdens.

While such an event has yet to pass, Greece remains quite sickly, and Portugal and Italy continue to wrestle with profound economic dislocation. To varying degrees, these countries have failed to embrace the badly-needed economic reforms that are essential to sow the seeds of a lasting economic recovery.

Yet despite heavy odds, Ireland and Spain are clearly on the comeback trail. Thanks to broad-based reform packages, their economies have begun to turn the corner. And with the aid of a very competitive currency, their futures are looking far brighter than most would have suspected just a few years ago. For investors, exposure to these dynamic turnaround stories can be had through a pair of country-specific exchange-traded funds (ETFs).

Ireland Is Back In Business

Ireland and its citizens are remarkably resilient. They have been through myriad crises over the past two centuries, and always manage to bounce back. Most recently, they saw the country's economy crash and burn in the economic crisis of 2008-2009. Irish banks eventually grew so weak that a wave of bankruptcies were a real possibility. By 2012, unemployment in the country had risen to nearly 15%. Continue reading "Are These The Greatest Success Stories In Europe?"

Article source: http://www.streetauthority.com/node/30602195

It's more important to the market than the Fiscal Cliff, the sequester and all the debts of Italy, Greece, Portugal and Spain combined

The drama of the Fiscal Cliff and the recent sequestration circus, plus the trials and tribulations of these four countries (which have run up huge deficits) have been well documented and known for quite some time. What is more important, in my opinion, is not the size of the debt which is staggering, but rather what is happening in the market and the market's perception of current events.

Market perception trumps everything else out there. Market perception trumps market fundamentals every time. Market perception is the one card that the government cannot control. It is the card that can potentially give the individual trader an edge.

So what is market perception? Well, have you ever noticed that when some big world event happens, or a new "hot" IPO hits the markets (remember FaceBook, Zynga and Groupon?), traders expect that market to go in the talked about direction and typically it does. What doesn't get talked about is how the market then corrects itself and the technicals really come into play.
Continue reading "It's more important to the market than the Fiscal Cliff, the sequester and all the debts of Italy, Greece, Portugal and Spain combined"

It's more important to the market than Italy, Greece, Portugal, and Spain combined

The trials and tribulations of these four countries (that have run up huge deficits) have been well known for quite some time. What is more important in my opinion is not the size of the debt, which is staggering, but rather what is going on with market perception.

Market perception trumps everything else out there. Market perception trumps market fundamentals every time. Market perception is the one card that the government cannot control. It is the card that can potentially give the individual trader an edge.
Continue reading "It's more important to the market than Italy, Greece, Portugal, and Spain combined"