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From: Keith Feral5/29/2012 11:21:39 AM
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Euro trying to grope for support at the 1.25 area today.

Pressure on Spain is still there today, but the market is basically ignoring the problems. Spain was down around 3% and the rest of Europe was doing better.

Greece getting bailout funds to their banks which were damn near depleted. Greece now has about $3 billion worth of liquidity left to run the country.

Sales in S Europe are falling off the cliff. Down around 10% in Spain or Greece or both. Spain needs a bailout pronto. Not sure what the ECB will do at the June 6 meeting, probably nothing. They could be in a position to stop kicking the can down the road, and just sit back and take the pain now and let the market run it's course.

I wish the FED had adopted a similar course of action over the past 2 years. QE and OT reduced debt payments on the national debt and delayed fiscal reform in the US. It also kept the dollar cheap to drive more exports.

The positives from lower debt and higher growth were probably necessary evils to buy the US economy enough time to run off the bad loans in the banking sector. Europe is still lagging by 12 to 24 months in that respect. S Europe could be lagging by 3 to 4 years.

Market is starting to look like it's levelling out, with the 1 BIG caveat that systemic risk is still not priced in from Greece or Spain. At least Greece and Spain are bailing out the banks right now. That shifts the debate from unsustainable yields in Spain to more sustainable yields if yields start heading back to 6%. Given the bond rally in Germany and France, they could divert their buying power to Spanish and Italian bonds.
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