The Morning Morsel -When PIIGS Fly

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries–Winston Churchill

This will probably my last Euro piece as it is too front page and even my barber is now an expert. So time to let it go. Maybe now the focus will now shift from Southern to Eastern Europe, the Double AA division. Friday’s hat trick consisted of bad employment, chatter of nitro glycerin buried in the basement at SocGen (derivatives) and rumors that Hungary was on the edge. So with the DOW down over 300 points Friday, maybe each factor counted for a third? Don’t really know, but the underpinnings are slipping everywhere and a catalyst is greatly needed to turn this thing around.

Many of the “pros” now think the Euro will be broken up before the end of this Parliamentary term, others think it will be dead in five years (a few said the end of this week). Five years is a long time in any market especially when intermediate term has become lunchtime.

Germany may leave, (pissed at France) and never really liked the bailout Greece model or the help your neighbor model from the get go. Greece will most likely be “asked to leave” whether they like it out not. Portugal and Ireland also could become orphans.

How about the Euro banks? I’ve been saying for months now that there is a bad keg of beer over there. Why not? Is it Deutsche Bank (DB)? There are huge loss estimates being bandied about at all these banks. We know from our own near death experience that we couldn’t have been more off the mark with even our worst case estimates. According to the Telegraph, at this juncture, the debt could equal 22% of Europe’s GDP. And that is probably a conservative estimate. It always is.

Watch April consumer credit today. Futures are shaking off overnight pressure. Retail sales this week will be a market mover. Have a great week.

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Monday, June 07, 2010
Economic
08:30 Chile April Economic Activity, May Trade Balance
15:00 April Consumer Credit
Events
17:00 Fed’s Yellen speaks in San Francisco. 19:50 Fed Chairman Bernanke to be interviewed by ABC News. Apple Developer Conference (expected 4G iPhone launch). German Cabinet FY11 Budget Discussion. Goldman Sachs Lodging, Gaming, Restaurant and Leisure Conference. AMGN investor event at ASCO. MDT analyst meeting. Ex-dividend: AEE $0.385, PEG $0.343.
Earnings
Before the Open: GIII. After the Close: CHP, CWST, FCEL, PBY.
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