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Jul 18, 2012, 04.47 PM IST
Louise Cooper, senior financial analyst, BGC Partners, says that it is all about QE at the moment. Bizarre expectations for QE are trying to boost the markets and yet there is a low float of skepticism as to whether QE will be of any use.
The technology sector is the worst performing sector in Europe and it was slammed yesterday. Today's result of Ericsson, the telecom equipment company, have disappointed the market and the stock is down 5%. Alcatel, the French telecom equipment company issued a profit warning when they announced results.
Below is the edited transcript of her interview to CNBC-TV18.
Q: Are the markets holding their chin up purely because of this expected monetary stimulus?
A: It is all about QE at the moment. Bizarre expectations for QE are trying to boost the markets and yet there is a low float of skepticism as to whether QE will be of any use.
The minutes of Bank of England meeting today revealed the decision to boost QE in the UK by 50 billion pounds to take the final stimulus package to 375 billion pounds.
Q: Apart from cues on further stimulus, is there any thing important data point that you are watching out for?
A: The technology sector is the worst performing sector in Europe and it was slammed yesterday. Today's result of Ericsson, the telecom equipment company, have disappointed the market and the stock is down 5%. Alcatel, the French telecom equipment company issued a profit warning when they announced results. Nokia is likely to post its results on Thursday, the share of the company is already down 45% since the beginning of June.
A lot of bad news is expected for Nokia and there is awful lot of bond yields coming out about this sector.
Q: Will it be a micro-corporate related news that will keep the markets engaged or are there any macro issues like bond redemption or bond auction which might cease the market attention and account for some knee-jerk downtick?
A: At the moment we have to focus more on macro. But to be honest, it is very low volumes, nobody quite knows what position to put on because there is so much uncertainty regarding the eurozone crisis.
It is quite confusing that though the UK unemployment rate is falling the GDP has been very disappointing. So, there is some confusion as to why that is happening.
There is lot to occupy people's mind regarding what is happening to economic growth but there is also a lot of uncertainty about where we go and that is the reason that we are seeing such low volumes.
Q: What is your view on the euro-dollar at the moment? And what factors can trigger further downside?
A: Greece is a worry and a disaster. We need to look out for Spain. Last week they implemented massive 65 billion euro austerity program, they did implement a lot of austerity so the new government took off at this end of last year. I think austerity will start to seek through into GDP numbers and the numbers will start to look hideous coming out of Spain.
So, once that happens then everyone will start taking a red pen to their deficit numbers, the debt position of Spain look similar to Greece and I think the whole Greece scenario will replay this time in Spain. I would be waiting for that whole cycle to start. So, I am looking at Spanish GDP numbers very closely.
Q: What is your company asking the investors to buy at the moment?
A: Equities are not expensive but that doesn't necessarily mean that they will flying up anytime soon given with the massive uncertainty that we face.
Jun 18 2013, 22:39
- in MARKET OUTLOOK
Jun 18 2013, 22:39
- in Business