Photo: Denis Collette…!!!via Flickr
Sebastien Galy of SocGen writes, in regards to the latest developments:The market wanted a year end rally and it just got a nice boost over the week end.
Hold your breath. Republicans are starting to give in on taxes (FT), China’s economy surprised positively, Canada allowed the CNOOC deal for China’s energy reserves, the US labour was stronger than expected and the Greek debt buy back seems to be going as hoped. Breath.
Monti managed to exit and give the impression it was Berlusconi’s fault, after a masterful performance to turn around the economic boat.
This last point is particularly important.
Last week, there was a fresh bout of nervousness owing to Berlusconi’s party withdrawing support for Italian PM Mario Monti, a chapter that resulted in yesterday’s news that Monti would resign at the end of the 2013 budget process. But there’s less and more here than meets the eye. There’s less because Monti was going to resign anyway, as elections are in a few months. And more in that he did it in a way that made Berlusconi look bad, further extending his long odds of making a political comeback.
Add in the China news and Fiscal Cliff optimism (Boehner and The White House met today) and you can see how some concerns are starting to dissipate.