There are numerous reasons to continue to be bearish on the Euro, not the least of which is that we aren't convinced that the full impact of the "CEE effect" has been priced in. The focus of this piece is not to do a full investigation (though there is plenty of material to do a full investigative piece) but we want to present some data for your consideration.
First, the CEE countries are still extremely leveraged; for illustrative purposes, we compare them below to Asian countries in '96.
Second, this debt is owed to a lot of western banks (i.e. Euroland banks).
Finally, the trade flows are extremely weak in the region. This of course is far from surpring when you consider the larger macro forces that we have discussed before.
We have to believe it's not a question of if, but when we are going to see a rate cut. A half-assed bailout package and a slow reaction to market signals doesn't quite inspire confidence but eventually the ship has to come around. Right?
Thanks to GS and Credit Suisse for dataSphere: Related Content Print this post