Weekend End Blog – Europe, more Europe, Emerging Unrest and Ripple

This week, peripheral bonds took center stage. After a massive rally, the market suddenly decided to get rid of them. Spreads widened aggressively, only to revert in the last couple of days.

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Perhaps some periphery investors remembered the graph below. Despite cutting government spending the debt-to-gdp ratio of many Eurozone countries has not peaked yet.

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The Eurozone PMI does look to have peaked, however. The Markit PMI index for May came in below expectations, raising questions about the little growth momentum the Eurozone had going for it.

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More on Europe. Sunday all results of the European Parlement elections will be known. The elections, as unpopular as ever, might indicate people are moving towards Europe and not away from it, based on early results of the Dutch poll.

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In emerging countries the (political) tensions are rising. Thailand’s military seized power in a coup, the latest in a long list of coups. The Rusland-Ukraine dispute could ignite again with the upcoming elections. Meanwhile, China and Vietnam are not getting along either, and North Korea took aim at a South Korean patrol boat. All this, however, is of no concern to the markets.

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An update of markets this year. Japanese equities would have made you cry, -14% so far. Commodities, however, would have made you pretty happy. Total return this year is just below 10%. To be continued…

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The US had a very slow week, with little interesting data on the calendar. The US Manufacturing PMI came in higher than expected though, again pointing towards steady economic growth.

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Finally, some interesting news from crypto currency ‘land’. Bitcoin has started to move up recently. One of its competitors, however, made the headlines. A founding father of Ripple announced that he will sell his entire stake in the ‘digital currency’, creating a massive price collapse. Bitcoin, for now, remains the absolute giant among the ‘cryptos’.

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