Wishing and Hoping and Thinking and Praying...

Not many days when we all focus on Slovakia this much... unless England is playing them at football…

Bearing in mind yesterday’s comment focused on the importance of emotional reactions, perception and confidence on the marketplace, there was something interesting in the news this morning.

An EU summit was delayed for a week to enable them to try and put together the grand, solves everything, rescue plan for European banks, governments and everybody else. I am pretty sure that a couple of weeks ago the media and the markets would have been full of comment about more prevarication, lack of decisiveness and general cluelessness of the powers that be. Yet this morning I heard it suggested that this delay was good news? It means, apparently, that they may be close to a solution and want a little more time to work out the details before making a grand announcement

It may indeed mean that, but then again it might mean they are prevaricating, indecisive and clueless- there is, after all, plenty of evidence of that in their handling of the current crisis up to this point. I am just interested to note that markets seem now to be willing to wait out this month in a fairly calm manner and give the EU leaders the benefit of the doubt, to see if they really can pull a cute little furry thing with long ears out of the millinery.

Eventually a solution will be found. It will probably involve the establishment of a European lender of last resort, a huge liquidity fund and a lot of banks being recapitalised, preferably in a way that doesn’t put sovereign governments in danger of default. This confidence means that a degree of bargain hunting or bottom fishing for value is appropriate. People running shorts now have a little cause for nervousness. It may be a week early to go charging in with all guns blazing, however.

There are encouraging signs of confidence returning… even small signs of some liquidity in the markets, but it is still no more than a good start and confidence can vanish very quickly again if the EU produce another fudge and no firm action between now and early November.

Have a good one…