And it all is going so swimmingly along the lines of my predictions... except...
Volumes on IL&P were actually up relative to the markets per the first chart below (most likely due to the retail investors still running through some spare cash),
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZtptnuIBIdavcb5jVLYzVdsyxbA5EAB9pCBIGDb1-5rzR1uLmtZ9Lx-Gcr6gm0F0ATXrWpq8MbzqlVBVSEz9N-WcqHtXI6je6ybrxCMaEImteYhR-f0WnHoyzi5GE-AyeK9tMZm6b1cPD/s280/Picture+7.png)
and subsequently, correlation between IL&P and the broader sector is staying out of the range where IL&P price deterioration can be attributed to the market-wide downgrade alone (chart below),
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhlWcM5gcW2wDLjjctap85mYtnl-x-nM8Tf7EOiKUGMQwUwg-dBX54_5h7iXRPjSaBVu72YgkPIsnIN9nYVCFKtXg7hJaJuFLzseJPvrJkHAuGkycTaOQXUUPGhbA2lJuZ7GcWGjbhu3XT0/s280/Picture+5.png)
but the general price direction of IL&P is pretty much bang on my forecast (per second chart below): after a short uptick earlier in the week, we are again in the rapid downward momentum relative to other banks stocks.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmbSwdVkI-dmCkmvK9jEdPKEF_3QKA0KCK9V7vf-aHvHdN4R97aPGMisw7zwjr4WrxYz_94lLtq64LYZKlImsJllCJf0UQSuPhpc9JL97p4YtsrOUc_a4ce3618IxS-b_0Diqi4YCM9Cw7/s280/Picture+6.png)
The twin stories unfolding alongside each other:
- renewed Bear market momentum for the Irish banking sector, and
- more severe downgrades in IL&P than in the sector itself
are not over yet, so expect a bumpy ride today and more downgrades next week. This week, the catalyst for the sector was a clearly anemic bond issue signaling a threat to the banks guarantee scheme and to the capacity of the state to continue injecting capital into the banking system. Next week - balance sheet worries, lack of any coherent plan on bad assets on behalf of the State plus the Live Register figures - out on Wednesday - will be back to the fore... Oh, and there is an added pressure emerging as well - the rising risk premium on political instability...
No comments:
Post a Comment