Banks balance sheets are full of toxic assets, which obligated Central banks across the world to try overcoming their issues by interfering and taking those bad assets from the financial sector in order to sprinkle back some tranquility. Yet the disagreement is taking place, some are with helping the banks and others believe that a drastic intervention will not let banks deal with their own faults.
Furthermore, this weekend the Organization of Petroleum Exporting Countries met all together in order to decide whether to reduce their production for the fourth consecutive time or holding production steady after crude prices had fallen sharply under $50 per barrel.
OPEC decision was to hold their production postponing their decision until May 28th, where they will be meeting again to order to asses the situation repeatedly as the economic downturn continue to weigh on the levels of crude demand.
The past two days all types of meeting took place, Finance ministers and OPEC members are trying to find solution; some concerned about the levels of their wealth and others want to continue intervening in markets. But assessing the two meeting I think no major changes took place because disagreements continued.
Nevertheless, the extended optimism from last week had managed to bolster Asian indices earlier today but pushed in the US future indices in the red zone. Nikkei Index added 1.78% or 134.87 points closing at 7704.15 levels, along with Hang Seng gaining 1.60% reaching to 12725.81 levels.
Nikkei Index gained in todayâ€™s trading after some comments in markets came out that the Bank of Japan might start buying subordinate loans and bonds, in attempt of injecting capital to end this turmoil.
Moving to Europe, the resistance of the European finances ministers from approving another stimulus and interventions would push the European Central Bank to consider further rate reductions just to create a sense of stability.
Today, our calendar contains the European Consumer Prices reading with expectations that prices rose in February 0.4% on the month improving from the previous -0.8%, along with the yearly CPI inclining to 1.2% from the previous 1.1%, helping the Core reading to hold at 1.6% levels.
Not like rivals, Euro Zone until now are not facing any threats of deflation even when their consumer prices had fallen rapidly letting investors believe that deflation would lead to their doom. The dramatic fall in Crude prices from the unprecedented levels seen in July 2008 along with the weakening demand was the main reason behind this rapid fall according to Trichet.
In addition, our calendar contains the Employment data, the employment sector weakened heavily in the fourth quarter after the sixteen economies growth contracted deeply by 1.5% and profits of companies retreated markedly which pressured companies to cut down the levels of employment and terminate jobs to cut expenses. Those actions taken had pushed the Unemployment rates in the zone to 8.2% in December with expectations that more job layoffs would be seen further this year.
From the United States, we have the Net long-term TIC flows where according to markets projections the flow of financial instruments into and out on the United States had increased in January to 45.0 billion from the previous 34.8 billion dollars.
Furthermore industrial production fell in February 1.3% improving slightly from the previous -1.8%, the weakened demand in the worldâ€™s leading economy had stalled the manufacturing sector where they had to narrow down the levels of production so they wonâ€™t face more losses and accumulated inventories.
Worldâ€™s economies continue to struggle and more interventions are still demanded by investors in order to feel back the harmony previously seen.