BES, banco espirito santo falls. why?

Who is BES? This is quite an easy question to answer: it’s the 2nd largest private financial institution in Portugal and the 9th company in PSI, ordered for capitalization.
Ok. Someone can explain this?

BES
BES

Take a look at the volumes below the chart (…)

Key facts:

  • 9th of July, Downgrade by Moody’s to Caa2 from B2;
  • 10th of July, the market doubts about capacity of Bes to contain the missed payments;
  • 18th of July, Portugal’s Central Bank tests Santander interest in investing in Bes;
  • 19th of July, Bes aks for help (is it too late?);
  • 22th of July, Central Bank asks to Bes for a urgent and anticipated appointment of new CEO and CFO.

Firsts Consequences on financial markets:

  1. Bund rates fall again to record low-Yield
  2. Bond rates jumps
  3. Reputational Damage
  4. Consequences on Portugal (we don’t want new bailouts, I don’t think we will have a new Bankia treatment.
Annunci

[Forex]: the Price-Levels

Setting the price-levels is the way in which traders find the limits of a possible oscillation of the currencies.

It’s made at the beginning of any trade that doesn’t follow a scalping strategy (it’s a hit&run strategy based on quick and very riskious profits made on the use of industry news, it’s mostly practiced in stocks market).

The PL often are recurrent, when the “price” hits more times a price level and comes back we call resistance and support the price level hit downward and upward, the more times it’s hit the more it’s a important level for investors.

 

forex_rs
forex_rs

[Forex] EUR-USD, 5 basic points.

Here we are again, talking about the Forex Market.
In this post, I would like to speak about the most basic pillars in the currency trading.

EURUSD_historic
EURUSD_historic_click to enlarge

 

  1. Forex is one the most reliable market, beacause of what it represents and the lenght of its historical data.
  2. the most important difference between the Forex market  and Stocks market is that the first one represents the strenght of the relative economy, so it is quite stable, we can individuate trends and trend inversions, and it is macro-data and global-data sensitive in spite of Stocks market that follows industry news, annual reports, and other micro drivers.
  3. Let’s start by the main (nowaday) currency exchange: the EUR-USD.
    We are using the Weekly timeframe, just to see the historical series and the range in wich it moves.
    Before the Euro introduction it’s reported the ECU (the virtual European Currency Unit)
  4. In the snapshot above we can see the suddivision of the chart in red lines, the vertical ones underlines the virtual introduction of the EURO for the first time in 1999 and the beginning of Euro notes and coins circulation in 2002; the horizontal ones are indicative of the main price-levels (click to read about).
  5. It’s quite obvious but often it comes forgotten that a currency appreciation is a currency depreciation, so if we trade the EUR-USD we always have to consult the forex calendar and the new data that will have an impact on both the currencies.

In the next posts we will speak about a deeper analysis of the EURUSD change, taking a look at the Price Levels, the Timeframes and the CFDs (contracts for difference).

 
Federico Fois