Entering The Wild West
April has been anything but a walk in the park for investors around the globe. Issues surrounding Europe’s debt crisis, increased volatility in U.S. equities and the downfall of Apple’s stock have weighed heavily on the minds of investors both big and small. Swimming around in their head is the obvious question of “what’s next?”
The week of April 23rd will prove to be the arbiter of things to come if the market has any say in it. There are three components to the week that could very well shape the future and what’s to come in the second half of 2012.
The first piece of the puzzle is earnings. Big, trusted companies by the likes of Apple and Netflix are going to have traders picking up volume ahead of Tuesday in order to place their bets and hedge their existing positions. Companies will need to demonstrate that they’re coming back to life and will need to not only beat the Street’s estimates, but will also have to offer proper guidance. Multiple misses will be interpreted that no one can get anything done properly and the economy isn’t safe.
With the pressure of earnings, there also comes the ever-going mess in Europe. Saturday’s meeting of IMF Governors in Washington D.C. was essentially call to arms. Echoing IMF head Christine Lagarde’s demand for additional contributions to the swelling fund, U.S. Treasury Secretary Timothy Geithner said that it’s up to members of the EU and the European Central Bank now. These countries must get their debt situation under control or risk taking down all of Europe. The IMF continues to seek an additional $430 billion as a buffer against the Eurozone crisis.
Lastly, there’s the issue of financial regulation (or lack thereof). Clearly overburdened, the Securities and Exchange Commission and Commodity Futures Trading Commission all seem to be lost in their cause. Regulators came recently saying that banks had two years, until July 2014 to be exact, to conform to the Volcker Rule as it stands now. Problem is, the final version of the rule still doesn’t exist, which has a created a massive headache for both sides of the table. Banks and other firms are debating how to spend their cash on compliance and are wondering if it will be obsolete by the time they implement it. Meanwhile, the SEC seems to be picking and choosing where it wants to enforce, creating uncertainty as to what the regulator’s next game plan is.
It’s game time for the markets as April winds to a close. The events that unfold will undoubtedly have a material affect on sentiment and what plays out in the rest of the year.
CEDX opened on 6 September, offering contracts on Cboe Europe single country and pan-European indices.
The MOU covers certain security-based swap dealers and participants.
Equity underwriting on European exchanges rose 70% in the first half.
The analysis is based on transactions publicly reported by 30 European APAs and venues.
A similar service is available on the BIDS platform in the US equity market.