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The 68 billion ($90 billion) in bailout funds are only expected to meet the country's financial needs until the end of 2013. But Ireland has a trick up its sleeve that it hopes will allow it to avoid a second official aid package: Kenny would like to transfer one-quarter of Ireland's public debt -- the amount that was amassed solely from bailing out the country's banks -- to the EU. "By June, following the decision of the European Council, we expect agreement on the modalities of reducing the burden that the Irish taxpayer took on from the recapitalization of the going-concern banks," Kenny reportedly said shortly before Christmas.
Should Ireland not be able to negotiate a "sharing of the banking pain" and actually require a second bailout it will not be good news for the Euro. Such an outcome would send to the bond markets the message that even the "best pupil in the class" cannot successfully emerge from austerity. This would indicate that Greece, Portugal and Spain, who have far less growth than Ireland, would have no chance of ever achieving economic independence. Accordingly, the market would anticipate that Euro-wide austerity would need to go on for at least another 4 year lending-cycle with no certainty of success. This would spell deep trouble for Euroland which is why I believe, "come hell or high water" Prime Minister Kenny will get what he needs. The European Commission sorely wants to be able to announce that Ireland can at last herald the departure of the hated "troika of austerity". Thus Irish financial sovereignty would finally be at hand following 4 years of harrowing fiscal deflation. "Where Ireland goes the rest could follow" will be the Brussels' mantra. What a positive message such a result would spell for the Euro. For many this would be a most unexpected outcome but they say you can always count on "the luck of the Irish" even in a year with a "13" numeral.
Distribution is where fund managers, in anticipation of a future stock market decline, sell into rally highs thus diminishing their power. Distribution is indicative of an anticipated bear market. To support this thesis I continue to attach the following charts: AAPL. BIDU, BBBY, MSFT, BWLD, DLTR, MNST and DG: Apple Inc: Daily
I await to have my skepticism quashed through more positive price action. Until then I advise the mitigation of capital risk through the purchase of equities only following strong market pullbacks and by the protection of any exposure through the disciplined use of stringent stop losses.
Charts: Courtesy of StockCharts.Com. (C) 10th. January 2013 Christopher M. Quigley. All rights reserved.