2 Ways To Win With The Drama Of The Euro Zone

There is a strong rally in risky assets denominated in euros and some of you may wonder whether it is justified and should be pursued. I am an analyst by trade, so I try to see things from a long-term perspective: Does the bond auction in Portugal successfully resolved the crisis of the euro, and why investors should pay attention to emerging markets? . This crisis has already had known for about 8 años.Bueno only thing I can say is that any measures to solve the root problem. First, came to the rescue of Greece, then you play for Ireland, and now we are finishing with Portugal. We all know that you can not make a successful bond auction if the banks participating in it have the guarantees of the European Central Bank (ECB) to have the Portuguese bonds in their hands. Private institutions that are willing to put their capital at risk will have to intervene to determine the market value of Portuguese government bonds, likely will be lower without the intervention of BCE.Sin however, Greece, Ireland and Portugal are small countries. The real test for the euro will come if the problem is increasing in Spain, which has a GDP of $ $ 1,374 trillion, twice the size of the three countries combined.

Spain also has 20% unemployment and a large deflationary shock by austerity measures. The Spanish bond yields have been rising (the yield on the benchmark 10-year was 4% in October, while the sands now 5.35%). The spread of German bonds has been rising steadily throughout the year, from 65 basis points in April to 235 at last count. We're not going to lie, the big picture remains the same beyond individual improvements as in Portugal. I want my audience to say that this is an ideal time to invest in companies that are undervalued but with strong growth

This is only temporary, because the disconnect between monetary and fiscal policy in Europe is still there, where the various economies have divergentes.El Bundesbank policy requirements would probably have tightened interest rates in Germany due to its excellent economic performance and acceleration economy, but there is a powerful Bundesbank to speak for the market has forced momento.El bond investors to redeem government bonds from the periphery of Europe by the German bonds, which results in additional relief of German monetary conditions in addition to the ECB rate cut to 1% short term. You can see an inflation problem in Germany and an asset bubble in the not too distant future, in addition to the deflation that already exists in España.Implicaciónes Markets Investment EmergentesLos emerging market investors should be concerned about this situation, especially since note that the Greek drama in the first part of 2010 caused a correction. An eventual dissolution of the euro, which can be several years away, can not be ruled out. This event has the potential of a financial crisis that rivals the final solution of the transient 2008.La dentendría bonds fall in the countries of the European periphery and the currency only temporarily for reasons mentioned above.

This makes debt default insurance (credit default swaps) of the Spanish government to have great value at current levels, may be acquired by a few. I had suggested a couple of investment in Banco Santander Chile (NYSE: SAN) and Santander (NYSE: STD) on July 9, 2010. That meant going on a long term position and a position SAN short term STD. The ratio increased from 6 to 10 at the time, before returning to the current level of 7.72. This is a good time to put the same investment again. There is nothing fundamentally wrong with Chile, while Spain is in deep trouble. SAN can be a division of ETS, but is locally funded and protected from the problems of the parents through a separate corporate structure. This is a long way to go with the term "healthy" Santander, while we leave out the "bad". For those who can practice short-term timing, I am of the view favored by the strong but fast STD rebound is likely to vanish and the action will make new and fresh minimal this year.

It is difficult to pinpoint the exact level will happen in time, but any renewed weakness in the Spanish government bonds, or any rally in the sovereign CDS contracts should give you a clue. Many European financial houses are flooded with problems due to public debt in euros that have not been diminished. Please, these are all actions that must be avoided, as it will mean huge losses when the real shock take lugar.Cuando wrote "The euro is in trouble," the March 12, 2009, there was no crisis to speak of euros . Then, when it became clear to me that the drama was about to unfold, I wrote "Why I am bullish the dollar?" On December 30, 2009. From now on, I see no solution to the euro todavía.Como and I comment, the picture is complicated, but that's where utedes have to take advantage of the situation. Any questions do not hesitate to write me a comment or mail.