Liams Last Post Gloom returnswith Blood red screens...

Good Afternoon …

 

Well the only thing good about it is that is the afternoon. So much for the market resilience of the last few days.. weak across the board is the story…with the Dow echoing the mood in Europe and dropping more than 200 points in the first hour of trading.

 

Once again very little corporate news of note. The Irish Government decision to extend the Bank Guarantee was met with a muted reaction as the markets were very much consumed by the stories surrounding the Spanish Banks have been lobbying the European Central Bank to act to ease the systemic fallout from the expiry of a 442 billion euro's($542 billion) funding program this week, accusing the central bank of "absurd" behaviour in not renewing the scheme. Banks across the euro zone, but the Spanish in particular have found it hard in recent weeks to secure liquid funding in the commercial markets, with inter-bank funding virtually non-existent.The 442 billion euro ECB facility, which charges interest at a rate of 1 percent, is not set to be renewed .A special offer of six-day liquidity will tide banks over until the following week's regular offer of seven-day funds. On Wednesday, the ECB will also be offering unlimited three month liquidity, and further offers of three-month liquidity will keep banks going until at least the end of the year.  BarCap estimates that at least 150 billion euros of the ECB funding that is maturing will not be rolled over into shorter-term three-month schemes, forcing banks to shrink their own lending.

The Economic statistics out today did little to foster any cheer either with US consumer confidence dipping after 3 months of rises. The drop was large a fall of 10 points to 52.9 provided ample fodder for the double dip camp. There was more negative news overnight when Japanese data showed that the Japanese recovery has slowed and the Chinese Conference Board revised down estimates of China's potential growth.  The Conference Board said its leading economic index for China rose 0.3pc in April. This is the smallest gain in five months and much less than its reading of a 1.7pc increase reported earlier this month.

The New York times article on Ireland did little to help sentient either  with its main message while praising Ireland was that despite its strenuous efforts, Ireland has been thrust into the same ignominious category as Portugal, Italy, Greece and Spain. It now pays a hefty three percentage points more than Germany on its benchmark bonds, in part because investors fear that the austerity program, by retarding growth and so far failing to reduce borrowing, will make it harder for Dublin to pay its bills rather than easier.

So the main movers in Ireland were the Banks in trouble with large downward movecs . AIB -9.5% and Bank of Ireland -5.5%  and similar moves from Irish Life which was down -8% .

The decline in US consumer confidence fed through to CRH -5% and Smurfit Kappa -4.3%. The Airlines which had been doing ok joine d in the losses today with Aer Lingus -02.5% and Ryanair -1% as they announced a reduction of capacity in the UK for next winter of -16%  . Ryanair stock was supported by the news from Capital Research that their holding in Ryanair is now 15.04% according to Bloomberg.

At 5pm , Wall Street is down -251 points , 0r -2.5% with the Eurostoxx50 index down -4.3% and ireland with its now smaller exposure to the financials in the index down -2.7%

The problems are still simple and difficult to resolve , Sovereign debt concerns feeding into a liquidity crisis and with markets reliant on ECB liquidity any signs of that being withdrawn or access made more difficult was always going to cause market trauma.

Lets see what tonight brings…

Have a good evening .

Liam

 

 

 

 

 

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Liam Boggan

　

Merrion Stockbrokers

Tel.: 353-1-2404171

Mob:353-87-2313505

www.merrion-capital.com

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