Monday, 12 September 2011 10:10

Eurocalypse Trading Commentary 9-12-2011 Featured

The following is a quick trader's opinion from BoomBustBlog trader, Eurocalypse:

The price action was very weak on Friday, and Euro (the currency) broke major supports last week. With the rumours of downgrade of French banks + Stark's demission, one can only be surprised we didnt open -20% or more on banks, and 2 points or more down on the Euro... ! Market already short ? !

The end game is near. Speaking with traders here and there, there is a sentiment of despair and/or inevitability about what is going on.

Regarding France, my bet is for the RBSation of the French banking sector... At some stage, liquidity issues will become too big, and there will also be strong political pressure for the govt to do something, and maybe something bigger than they would like to do. In 2008 it was loans only, this time they'll take preferred or even shares at the market price (big discount to book value). Portends big dilution for current shareholders. Once this happens, assuming Italy isnt trading like Portugal or Greece at that stage, we would have a tremendous rally/repricing in the share price.

My black swan is for Japan to try the Swiss strategy in the FX market...

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