Well for every 'what if' scenario you mentioned there are 'actuals', which I prefer to trade on.
Credit market freeze - sure they might worsen but right now Italian debt is down -13.28% since the highs a few weeks ago. German access to debt is down -44% from the highs in June and the Spanish cost to access debt is down -25% in the last two weeks.
I believe Italian and German bonds etc are falling because banks are borrowing directly from the ECB at 1% and then buying bonds returning 6-7%. Creating a new carry trade.
The flow of money is therefore increasing as extra collateral required by the ECB to grant credit is effectively a kind of creative QE or printing of new money. The ECB has said it will extend unlimited credit to European banks to purchase sovereign bonds. Bankers won't be able to resist 4-7% returns on Euro bonds.
KZL as you know just raised 25 million in less than 2 days. I think it was the fastest share issue I have ever seen in a while and clearly they had little trouble finding sophisticated investors. Again all actuals above rather than theoretical 'what if scenarios'
I did try to tell you guys that the headlines don't match reality in Germany in particular, where I reside. Business confidence rose again in December, suggesting Europe's largest economy is weathering the euro area's debt crisis. See: German Stocks Gain as Business Confidence Gauge Beats Estimates
With Europe out of focus, there will be nothing to stop this market from surging in early 2012 and I agree with Goldman Sachs & JP Morgan. It will be too painful to bet against them otherwise or you can continue to believe Anglo American media and headlines printed by ratings agencies and people that don't live in Europe.
Just my 3 cents worth.
KZL Price at posting:
28.5¢ Sentiment: Buy Disclosure: Held
