EURO Sinks Below Level It Was Originally Introduced In 1991; Oil Falls Again; European Stocks Retreat
European equities are selling off this morning, following yesterday’s retreat by stocks on Wall Street. This morning, the EURO currency fell to a nine-year low; and, below the level it was originally introduced — versus the dollar — as the European court endorsed the ECB bond buying program — or, the ECB version of Quantitative Easing. Brent and West Texas Intermediate are also down again this morning near the $45 range. Consensus on the street is that we will likely see oil fall to $40 and perhaps even the $34-$36 per barrel level.
While a lot of attention has been focused on oil, and rightly so, copper is also at a +5.5yr low; and, copper mining companies are under pressure this morning — with heavy selling in some of the bigger names: Antofagasta, Glencore, and Boliden, according to CNBC. “An overnight slump in copper prices has spurred fears that it is a lack of demand — the bad kind of deflation that has the potential to spiral downwards,” said Marius Paun and Jonathan Sundaria, two commodities dealers at Capital Spreads in a note to clients this morning.
Greece Has ‘Negative Implications For Europe’
“The ongoing political turmoil in Greece — in the run up to a general election on January 25th, has not only increased the risk of a Greek exit from the Euro; but, could also nave negative implications for other European countries,” the ratings agency Moody’s said in a statement. In a note published Wednesday, Moody’s Investor Service conceded that the likelihood of Greece leaving the currency union was lower than it was during the peak of the region’s debt crisis of 2012; and, remains “relatively unlikely.” But, it warned — ‘if it were to happen — “a Greek exit today would likely trigger renewed recession in the remaining Euro area.”
“Any exit from the single currency would be a defining moment for the Euro; it would show the monetary union is divisible, [and] not irreversible,” said Colin Ellis, Moody’s Chief Credit Officer.
I have been writing that was concerned that the U.S. stock market would not be immune to the uncertainty and economic downturns in Europe, and particularly Greece and Russia. I personally in a substantial cash position in the portfolio; and, am buying equities — especially in the oil sector — on pullbacks. V/R, RCP