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Kiron Sarkar
November 1, 2011
Hi guys,
I do apologise for not sending out my daily notes over the last few weeks and, in addition, responding to the numerous emails. I am holidaying in the US at present, though will try from tomorrow onwards. Just a short blog today.
Just a quickie on the Greek referendum. The UK's Daily Telegraph reports that the Greek Parliament needs to obtain a 3/5th's majority to pass a resolution permitting a referendum. The Greek PM barely has a majority and the opposition is not in favour of a referendum. The key issue, therefore, is the confidence vote on Friday, rather than the referendum. Newspapers suggest that the PM may lose. In that event, either you will have a general election - presumably in January, or a new person can take over as PM and/or a grand coalition formed. Clearly a speedy response to this crisis is vital. The con idence/referendum vote is set for Friday.
The Greek news makes this Thursday's ECB meeting even more important. I still believe (marginally) that Draghi will go for an interest rate cut - he has already talked about the ECB continuing to buy bonds of the peripheral Euro Zone countries. Most commentators do not believe that, I have to report. However, the situation is now critical and even though inflation (around 3.0%) is above target, it is forecast to decline sharply soon. GDP forecasts for the Euro Zone for 2012 have COLLAPSED.
The ECB is the only game in town. If they do not step up to the plate and buy a serious amount of bonds and cut interest rates, well......
Having said all of the above, I'm currently LONG and will go further LONG into the ECB meeting.
Best
Kiron
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