In the Spotlight: Greek Elections and the Eurozone, ECB Stimulus, New Saudi Ruler
January 23, 2015 9:00 am
Greece and the Euro Zone
This coming Sunday will see a general election take place which has the potential to seriously upset the apple cart in Greece and possibly affect the Euro zone as a whole. As things stand, the far-left Syriza coalition party is poised to gain the largest number of seats under the country’s proportional representation voting system. Greece currently has an agreement with the so-called ‘Troika’, of the European Commission, the ECB and the IMF, however, the leader of Syriza has stated that the end to such ‘national humiliation’ is near and that Greece ‘will finish with orders from abroad’. Although nearly three quarters of Greeks in a recent poll stated that they’d prefer to stick with the Euro, it’s unclear whether a Syriza-led government’s policies would ultimately be compatible with such an option. Similarly, though Germany has given some indication that the Euro could cope with the Greeks saying antio, while this may be true economically speaking, once one country takes the plunge and leaves the Euro, how long will it be until other countries consider testing the waters themselves?
The ECB and QE
The other major piece of European economic news this morning is the ECB’s announcement of a major quantitative easing program valued at around €1 trillion. ECB President Mario Draghi announced a combined monthly purchase of public and private sector securities totalling around €60 billion, with the current plan seeing the program run all the way through to September 2016. The Euro subsequently fell to a new eleven year low against the Dollar, but European indices surged, with the DAX and CAC both up significantly in the aftermath of the announcement; today both indices are currently up by around 1.4%.
The King is Dead – Long Live the King?
After nearly a decade on the throne of Saudi-Arabia, the nonagenarian King Abdullah bin Abdulaziz Al Saud has passed away. The throne will now pass to his half-brother Salman. The country’s policy of succession passing along to the various sons of Ibn Saud means that as the years go on the reigns of Saudi kings are likely to get shorter due to the advancing age of the heirs.
With the transition of power in the world’s largest oil producing nation, what now for oil prices? Brent Crude is up by 1.59% this morning as markets mull over that question. The recently deceased King was a key supporter of Saudi Oil Minister Ali al-Naimi, but it’s as yet unclear as to whether Mr Naimi will enjoy the same level of support from the country’s new ruler. The Saudi Oil Minister has been a firm proponent of OPEC’s current policy of maintaining its output in an attempt to drive US shale drillers out of business through lower oil prices. However, it remains to be seen whether King Salman will follow in King Abdullah’s path with regards to this matter.
Greece and the Euro Zone
This coming Sunday will see a general election take place which has the potential to seriously upset the apple cart in Greece and possibly affect the Euro zone as a whole. As things stand, the far-left Syriza coalition party is poised to gain the largest number of seats under the country’s proportional representation voting system. Greece currently has an agreement with the so-called ‘Troika’, of the European Commission, the ECB and the IMF, however, the leader of Syriza has stated that the end to such ‘national humiliation’ is near and that Greece ‘will finish with orders from abroad’. Although nearly three quarters of Greeks in a recent poll stated that they’d prefer to stick with the Euro, it’s unclear whether a Syriza-led government’s policies would ultimately be compatible with such an option. Similarly, though Germany has given some indication that the Euro could cope with the Greeks saying antio, while this may be true economically speaking, once one country takes the plunge and leaves the Euro, how long will it be until other countries consider testing the waters themselves?
The ECB and QE
The other major piece of European economic news this morning is the ECB’s announcement of a major quantitative easing program valued at around €1 trillion. ECB President Mario Draghi announced a combined monthly purchase of public and private sector securities totalling around €60 billion, with the current plan seeing the program run all the way through to September 2016. The Euro subsequently fell to a new eleven year low against the Dollar, but European indices surged, with the DAX and CAC both up significantly in the aftermath of the announcement; today both indices are currently up by around 1.4%.
The King is Dead – Long Live the King?
After nearly a decade on the throne of Saudi-Arabia, the nonagenarian King Abdullah bin Abdulaziz Al Saud has passed away. The throne will now pass to his half-brother Salman. The country’s policy of succession passing along to the various sons of Ibn Saud means that as the years go on the reigns of Saudi kings are likely to get shorter due to the advancing age of the heirs.
With the transition of power in the world’s largest oil producing nation, what now for oil prices? Brent Crude is up by 1.59% this morning as markets mull over that question. The recently deceased King was a key supporter of Saudi Oil Minister Ali al-Naimi, but it’s as yet unclear as to whether Mr Naimi will enjoy the same level of support from the country’s new ruler. The Saudi Oil Minister has been a firm proponent of OPEC’s current policy of maintaining its output in an attempt to drive US shale drillers out of business through lower oil prices. However, it remains to be seen whether King Salman will follow in King Abdullah’s path with regards to this matter.
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