Investment Views, May 2012

Investment Views is a well-informed, simple to read, monthly analysis of markets, currencies and economies.
 

THE PAIN IN SPAIN

With much of the United Kingdom suffering from drought conditions and hosepipe bans, it was inevitable that April 2012 would be the wettest on record in the UK. Whilst we may not actually have been wishing for more rain, it certainly came. The irony is that although we have enjoyed deluges of almost biblical proportions it hasn't replenished the aquifers and has not lessened the water shortage. The 'wrong sort' of rain, perhaps?

Turning to markets, having spent a good 18 months agonising over the "will they, won't they" of the Greek situation, in March we finally succumbed to "Greece fatigue" and found ourselves looking for a more substantial distraction. The fourth largest economy in Europe definitely seems to fit the bill.

Spain picked up the baton in April as the yield on 10-year Spanish government debt breached 6% and speculation rose that Spain would seek a bailout from the IMF and/or the EU. Many believe that the cost of servicing the countries debt burden becomes unsustainable at 6%; indeed it was this rate that prompted Ireland, Greece and Portugal to seek assistance.

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