Weekend and Week Ahead

Break time from midterm studying. So what has happened over the weekend?

In Europe, the meeting of the leaders of the 27 European Unions took place today to discuss the sovereign debt crises. Progress was made, but a comprehensive plan was postponed until Wednesday's meeting. They did agree today that:

* 100 billion euros is needed to recapitalize Europe's unstable banks. They agreed that capital should first be raised privately, then they should turn to their government's if needed.

* Italy needs to act decisively to reduce its debt of 2 trillion euros.

*They have ruled out using the European Central Bank's balance sheet to boost the region's rescue fund.

What is still in debate is what exactly to do about Greece and how to use the 440 billion euro EFSF most efficiently. They want to make sure the fund is large enough to cover Greece, Italy and Spain should contagion spread.

Definitions: I'm just going to throw out a few definitions of important terms that are showing up in the news a lot lately. According the Investopedia:

European Financial Stability Facility (EFSF) - An organization created by the European Union to provide assistance to member states with unstable economies. The European Financial Stability Facility is a special purpose vehicle (SPV) managed by the European Investment Bank, a lending institution. The fund raises money by issuing debt, and distributes the funds to eurozone countries whose lending institutions need to be recapitalized, who need help managing their sovereign debt or who need financial stabilization.

International Monetary Fund (IMF)- The IMF plays three major roles in the global monetary system. The Fund surveys and monitors economic and financial developments, lends funds to countries with balance-of-payment difficulties, and provides technical assistance and training for countries requesting it.

European Central Bank (ECB)- The European Central Bank has been responsible for the monetary policy of the European Union since January 1, 1999, when the euro currency was adopted by the EU members. The responsibilities of the ECB are to formulate monetary policy, conduct foreign exchange, hold currency reserves and authorize the issuance of bank notes, among many other things.

As for Pre-Market action:

The S&P is down .22%, the Nasdaq down .16%, and the Dow down .21%. 

The slightly negative sentiment as reflected by the pre market action is a definite effect of the inability of the Euro zone to put together a concrete plan. They seem to continually push the deadline off. We need a long term solution in order to really get the markets moving. 

Many more companies are coming out with earnings next week so be on the lookout, although I doubt any earnings reports will overshadow the biggest issue at hand which is Europe. 

Back to estudiando. 

Adios

EZ