View: Negative Schatz yields to become the norm, equity correction a selling opportunity
There seem to be two scenarios currently; the first being that European ‘can kicking’ will continue, and despite things looking like they might totally implode at any moment, they will somehow manage not to for the visible future. Quite what this can kicking achieves of course is beyond us, it’s a bit like that drunk who knows that tomorrow is going to be a write off, so might as well plough on with those Jaeger bombs regardless. If we had to nail down the date of tomorrow in this context we’d say between the start of September and end of October 2013, the probable dates of the next German election and Octoberfest. The alternate is that can kicking is actually no such thing, it merely reflects policy paralysis and that the core/periphery divide is unbridgeable. The steps that appear after EU summits are vague and tied to such extended timelines directly due to this. The hard line taken by both Finland and the Dutch is telling, neither seem willing to compromise on the austerity driven solution despite the fact that we’re way past the point where this is really a valid crisis response. Signs of German compromise seem to have hardened their stance if anything. The ECB meanwhile refuses to act, believing that it is the responsibility of politicians, oblivious to the fact that consensus politics can’t achieve much with such disparate agendas. Some might say there is a third scenario where a workable strategy that allows the Eurozone to rebalance and grow slowly emerges, we’d just say good luck with that.
Full report below…
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