subject: Ireland Bailout Is Done. Who Is Next? [print this page] Ireland Bailout Is Done. Who Is Next?
This morning Ireland is expected to accept a bailout from the European Central Bank (ECB) and the International Monetary Fund. However, there is still a lot of uncertainty regarding which nation in the European Union will need a bailout next. At this time Portugal is the one country that looks as if would be the next bailout candidate. It is important to remember that in May 2010 the ECB did a $1 trillion European bank bailout that was similar to the Toxic Asset Relief Program (TARP) in the United States. However, as we can see this bailout by the ECB did not last that long. Spain and Italy are also being mentioned as candidates for a bailout in the not so distant future.
When the European Union begins to experience problems many major institutions will run or move money into the U.S. Dollar Index and flee other foreign currencies. Therefore, when the U.S. Dollar Index trades higher the stock markets will deflate or trade lower. Please remember that most commodities are traded in U.S. Dollars and commodities are usually the first asset class to deflate and trade lower. Should the U.S. Dollar Index decline intra-day or pullback the stock market should bounce higher or even rally if the U.S. Dollar Index really declined sharply.
Goldman Sachs Group Inc.(NYSE:GS) is declining sharply this morning. The stock is trading lower by over $5.50 to $161.15. When this stock struggles or declines most other financial stocks will remain weak. Morgan Stanley(NYSE:MS) is also trading lower by 0.66 cents to $24.96. The large major bank stocks such as Bank of America corp.(NYSE:BAC), and Wells Fargo & Co.(NYSE:WFC) are trading slightly lower on the session.
Monday's are usually a light volume trading session that have favored the upside over the past year. Often companies will announced mergers, acquisitions, and stock buybacks on a Monday. This action usually helps to keep the markets positive to begin the week. However, should the news out of Europe become worse and another nation in the Euro-zone say they need a bailout the markets could decline. Keep one eye on the U.S. Dollar Index at all times as the major stock indexes will trade inverse to the dollar.
Nicholas Santiago
InTheMoneyStocks.com
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