Starting with the Thanksgiving Day, consumers have focused mostly on promotional deals and have made fewer impulse purchases as they are still concerned about the state of the economy. Retailers are in fact driving traffic to their stores through much targeted promotions that ultimately will lead to reduced profit margins. This year, it appears that the Black Friday and Cyber Monday surveys could not provide a clear picture about the retail sales numbers for the entire holiday season. In part, that could be attributed to a warm November weather, which kept consumers from buying winter clothes. US retailers have decided to extend discounts on computers, toys and clothes beyond Christmas to attract consumers who held out for lower prices and have gift cards to redeem. Continue reading ‘Shop Till You Drop’
Monthly Archive for December, 2009
Undoubtedly, December 22nd 1989 has been one of the days I could never forget. To this day, it still stands at the crossroad of my life. Twenty years ago I was a little younger but much more restless unwilling to buy all that propaganda cooked-up by a communist regime and put in practice through a mad dictatorship. Amongst many things that have been said about the so-called Romanian Revolution one part is indisputable: it was a coup d’etat well designed by Moscow and blessed at the Malta Summit. In 1989, one country after the other – from Hungary to Bulgaria, was removing from power the leaders of the Communist Party. Romania remained the last soviet bastion in Eastern Europe where Ceausescu seemed like he had not received the Warsaw Pact memo labeled “The Communism Is Dead”. Continue reading ‘Remembering The 1989′
For the last 10 years, the Greeks, the Italians, the Spaniards or the Irish, have enjoyed a good time, spending much more than they afforded. For some of the countries of the 16-member euro currency zone — Greece, Ireland, Italy, Portugal and Spain, the prolonged dream of everlasting consumption has turned into a nightmare. The new reality has raised the probability of default and the risk that the country may be forced-out of Eurozone. Though the prospect is very unlikely, it has to be taken into account very seriously. Since the beginning of the month, when massive problems have emerged within the EU-16, the EUR currency has dropped significantly against the USD, from a level of 1.51 to a level of almost 1.43. According to FX data, the value of the dollar’s net short position fell to around $11.8 billion in the week ending December 13, from 21.8 billion the previous week. Continue reading ‘EUR – On The Verge Of Breakdown’
The Austrian central bank is attempting to calm the financial markets that are increasingly worried about the regional banking system as two major events shocked the markets for two consecutive days. On Monday, the central bank nationalized Hypo Alpe Adria – Austria’s sixth-largest bank, a unit of German public-sector bank BayernLB — a move designed to prevent the bank from sliding into a bankruptcy fueled in part by bad loans, most of them originated in Eastern Europe. Today, Austrian daily Die Presse reported that the Austrian National Bank (ANB) and financial market watchdog FMA had put Volksbanken on a watchlist for endangered financial institutes. At 1530 GMT, shares in key Austrian banks were underperforming the wider Austrian market. Erste Group Bank was off 3.8%, while Raiffeisen Bank was down 6.1%. Continue reading ‘Austria – EU’s Weakest Link’
While S&P 500 is having a hard time breaking the 1,111 resistance level, emerging-market stocks fell for a fourth consecutive day. Over the last couple of weeks, few events have shocked the financial world: Dubai World is struggling to restructure its debt, Greece’s bonds faced a downgrade by Fitch and Standard & Poor’s lowered its outlook on Spain to negative. The MSCI Country Index for Greece declined almost 12 percent in December, Dubai’s equity index fell 6.4 percent yesterday, while MSCI Spain sank 2.4 percent. Continue reading ‘Sovereign Debt Crisis’
A currency carry trade is defined as a leveraged cross-currency position built-upon an interest rate differential that is targeted to higher expected risk-reward transactions. The aforementioned trading strategy consists of borrowing low interest currency capital and investing in currencies with higher interest rates. Alternatively, the borrowed currency capital could be invested in various classes of assets with a superior perceived return. Normally, carry trades would be limited opportunities, as long as the markets react efficiently and quickly close the existing window of arbitrage. However, carry trade strategy does violate one of the fundamental theories that govern the foreign exchange market: the uncovered interest rate parity (UIP). According to the theory, UIP states that the expected change in the spot rate must reflect the interest differential between two currencies. The same theory predicts that the country with the high interest rate will witness its currency depreciate. Continue reading ‘USD Carry Trade’
Recent Comments