Market Sensing Slight Positives |
Greece has announced its economic plan to privatize 87 billion Euros of state assets, 50 billion of which is being planned for bailing out the country until 2015 by selling off loss-making or entirely non-liquid assets. For example, a non-operating airport not far from Athens is being planned to go up for sale. The Postal Savings Bank will also be offered up for privatization; the bank is the country’s biggest holder of sovereign bonds.
Prime Minister Papandreou’s government now faces the task of implementing the entire plan. It seems people who are entirely unconcerned about how to pay back at least a portion of Greece’s debt on time are the same ones that created the plan and chose the assets to be privatized. Greece may become a milkmaid for Europe, much in the same way as Cuba was for the Soviet Union.
Final estimates were given last night on the consumer price level in the Euro zone and the actual figures will be published later today. New estimates confirmed concerns regarding the rising risks of inflation in the Euro zone caused by unemployment in the EU as a whole. This is giving investors reason to believe interest rates will be raised at the European Central Bank’s next meeting on July 7. The bank’s president, Jean-Claude Trichet, also signaled this at the last meeting, using his traditional “strict, vigilant supervision.” The market simultaneously recovered losses and is boosting the Euro against at least 15 or 16 of its major currency peers. It rose in trading in the US yesterday from $1.4430 to $1.4480, exceeding its two-week maximum, on expectations that interest rates will be raised on July 7.
The Canadian dollar also received a positive impulse from expectations that the Bank of Canada will tighten monetary policy. The data that came out yesterday on the Consumer Price Index exceeded analysts’ predictions which will most likely make analysts revise their predictions on interest rates. Deep Trust Trading analysts are anxiously awaiting data expected to be released today on Canada’s GDP. The annual figure is the only one of real interest to investors, and it promises to be worse than the estimated 1.8%.
The fate of gold and oil in the medium-term outlook is of much more interest to Deep Trust Trading analysts and investors at the moment. Both had a chance to develop some recent growth after corrections, but yesterday’s data on oil and petroleum product reserves from the International Energy Agency painted a dismal picture, showing increases in reserves only for distillate. Petroleum storage reserves have gone down 4.375 million barrels and on gas, the most important fuel during vacation season, they have gone down by 1.428 million when they were expected to increase by 600,000 tons. However, the reduction in reserves together with reduced demand in the oil market helped Texas crude oil go from $93.20 per barrel to $95.70 per barrel yesterday.
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