Can anyone explain this? Yes I can!

Houses and Holes, sans Twitter and not looking at his Bloomberg Terminal properly: ASX and AUD go vertical. Same in regional bourses. Can’t find any explanation…

The Prince: risk markets have all jumped on the release of a statement following the end of the first day of the EU Summit (no 19 to solve the crisis), that conditions for emergency loans to Spanish banks have been eased. This means the removal of the seniority preference for ESM/EFSF rescue funds, which means the Spanish and Italian banks can be recapped directly, without any further austerity measures. We think. I’ll leave it to Delusional Economics to flesh that out properly.

Its not much, but its something to get markets moving on the last trading day of the financial year.

The Italian PM Mario Monti, according to Bloomberg has said euro-area leaders have NO PLANS to boost their baillout funds. So a bit of a dampener there…

I think the real reason markets have moved so much is because, as I was up last night watching the Euro and US markets, most were watching the EuroCup football matches (traders, journalists and I’m sure a few EU officials on their Blackberries/Galaxies and what not).

So its up to optimistic Asia to jump! Also, most of the US traders have been called back in to the office, if my Twitter feed is any guide.



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  1. Asian Stocks Climb as European Leaders Drop Conditions on Spain Bank Aid

    Asian stocks climbed after European leaders meeting in Brussels agreed to drop the condition that emergency loans to Spanish banks give their governments preferred creditor status at a summit in Brussels.

      • Turned on the telly and news tickers on Sky Business and Bloomberg are all about some kind of Euro “breakthrough”.

        Yawn. How many breakthroughs have we had now?

        An “analyst” on Sky Biz was just saying “if it wasn’t for the Euro our market would be a thousand points higher”. Dear me. Spruikfest ahead!

        • Herman said…

          Euro-area leaders agreed to drop the condition that emergency loans to Spanish banks give their governments preferred creditor status, European Union President Herman Van Rompuy told reporters after a summit early today.

          I haven’t seen this much excitement since the Merkozy press conferences!

        • this is why the markets will rally…becuase expectations are so low and something meaningful has been delivered. abit like how everyone here was calling the LTRO a “fizzer” without actualy understanding what it meant. this is just the next stage in the euro’s progression from monetary union to monetary + fiscal union.

          • I agree – This appears to be the first real step towards a genuine central banking system. It won’t fix the poor position of Greece, but it will recapitalise the banks and give them time to sort out the problems of the individual countries.

            Governments and central banks are given the responsibility to do what they need to do to stabilise the financial system, and when they do everyone seems surprised.

            This what we should expect.

  2. Sebastionbear

    Just looked myself after returning home and thought WTF! Came straight to MB looking for answers…………….

    Think I’ll get the popcorn out for the ride this afternoon 🙂

  3. Damn I was just preparing for my tax loss selling and suddenly I’m in the green again, oh wait…

  4. Short term solution for EFSF/ESM bond buying. Gold took off so the markets are concerned/don’t believe it’s a solution anyway..

    • Interesting that the USD has lost about the same as AUD gained, so a rush from safety 🙂

  5. Van Rompuy said, ECB proposed to be the EU banking supervisor by end of this year, and the ESM can recapitalise banks directly. Wow! Will be amazed if this happens.

  6. This is going to make the German Constitutional Court more likely to stop the ESM ratification. They already warned against any further burdens on Germany. Removing seniority and conditions is not going to make them happy. Let’s see if they have the integrity and courage to stop the ESM.

    Still, it would just be a referendum and Merkel would spend big on scare campaigns and propaganda to ensure people vote the right way.

  7. GunnamattaMEMBER

    And just imagine how happy they will be on the streets of Dublin once they learn that there was no need for their government to stand behind the dodgy Irish banks (well all Irish banks actually) because they could be recapitalized directly from the EU!!!!!

    Should be good…..