With the continuing spread of the financial crisis from one country to the next, along with Spain’s lack of control over its spiraling budget deficits, and its lack of a growth plan, the results were quite evident.
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New York, NY (PRWEB) October 18, 2012
In a recent Investment Contrarians article, editor Sasha Cekerevac reports that Standard & Poor’s recent downgrade on Spain’s sovereign debt and its negative outlook suggest that there are still large risks to Spain going forward. Even so, Cekerevac notes that this could be taken as positive news for some investors in that this could be a potential bullish opportunity within the eurozone over the short term.
“With the continuing spread of the financial crisis from one country to the next, along with Spain’s lack of control over its spiraling budget deficits, and its lack of a growth plan, the results were quite evident,” states Cekerevac. He adds that “With unemployment at approximately 25%, Spain is far from a recovery.”
According to Cekerevac, the negative market sentiment, permeating through Spain and the eurozone, is directed toward the Spanish government’s unlikely ability to rein in their budget deficit, and develop an economic structure that will return the nation to growth.
The reason for this potential bullish investment opportunity is an additional push for the Spanish government to go to the European Central Bank (ECB) for help, explains Cekerevac. He reports that the ECB is ready to initiate a Spanish bond-buying program, if Spain were to ask for aid.
“For the short-term trader, having the ECB step in to buy bonds is obviously bullish, just as it has been extremely bullish in America, buying treasuries and mortgage-backed securities ahead of the Federal Reserve,” states Cekerevac.
While this certainly isn’t a long-term trade, purchasing Spanish debt before the ECB should be quite profitable, reasons Cekerevac. The only problem in this thesis, Cekerevac concedes, is that it doesn’t consider the election in Catalonia on November 25.
“If the newly elected Prime Minister of Catalonia wins with the mandate to secede from Spain, this could be a new and unknown chapter in the financial crisis within the eurozone,” states Cekerevac.
The Investment Contrarians expert concludes that because of this uncertainty, investors should wait until the election is concluded to take advantage of this possible bullish opportunity.
To see the full article and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.
Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.
George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.