Where volatility doesn’t shake up people

As mentioned in previous articles, much of the world is over-indebted, after a long period of boom and buzz. Some banks are still too highly leveraged or their capital base is thin (and vulnerable to write-downs of e.g. Greek government debt, see Dexia for a recent case). Governments are too much in debt, one or the other seems ripe for default. Continue reading

Cash from fallen angels

In times of market turbulences in the USA and in Europe, caused by uncertainties about the economy, fears of a double dip recession, concerns about sovereign debt and possible implosion of the Eurozone, equity markets are under pressure. This is partly justified because any forthcoming recession would put a dent into EBIT of corporations and likely therefore a dent into the future free cash flow of companies. On the other hand, markets are also hammered down by emotions, by the king amongst them: fear. Continue reading

Perspective on financial markets – bad surprises in store for Q4 2011?

Europe: European stock markets are in the doldrums. The EuroStoxx 50 had recovered from its major low in early 2009, but then went into free fall in Aug 2011. Equity markets are now much driven by the bad news about European sovereign debt crisis, either real bad news about European banks or speculation that the banks are still undercapitalised and some may hit the buffers should Greece default sooner than acceptable for the banks. From a technical point of view, the outlook is not rosy with a few key technical indicators boldly pointing south. Continue reading