Thursday, 19 April 2012

IBEX - the Spanish market is warning of major trouble

I've been regularly highlighting the Spanish IBEX index recently, I believe it is a major warning for all those who think the EU will somehow be able to keep kicking the can. Sure, the 'Greece thing' appears to have been successfully kicked along for another 6-18 months, but Greece is irrelevant, its tiny. Spain on the other hand is huge, and a vital component of the European economy.

The Spanish IBEX broke the critical 7000 level today, and is now back to levels not seen since the 2009 collapse wave low. There is now a very straightforward 2000pts to the downside, due within the next 1-6 months.

Spain, IBEX, 20yr

The EU is a horror story, we all agree on that, yes?

Spain is the literal tinder box of the EU, and many do foresee major civil unrest starting up in the next few months. Youth unemployment is around 50%..and the main level is well over 20%. Further austerity/public sector cuts, will only add to a severely bad situation, one that is spiralling out of control.

The Spanish stock market is merely reflecting what the underlying state of the country is. The IBEX is down 57% or so since the 2008 peak, and it reminds me of the Greek market...

Greece, Athex', 20yr

Greece is down over 85%....I'm guessing both Spain AND Italy will end up like this. The UK is only marginally better, since it can at least print its own currency to fund is own deficit spending - just as the US Federal Reserve does.

more later..on those daily cycles for the US indexes :)