Another Lousy Day for the Euro

The euro is having another lousy day, breaking right through $1.30 on the euro-dollar, now approaching the lows for the year that we last saw in January. The immediate cause was Italy's five-year bond auction, which cost them a record 6.47 percent. They paid 6.3 percent in November.

Even the Germans are paying more. They auctioned 4.2 billion euros ($5.4 billion) of two-year bonds at a yield of 0.29 percent, up from 0.39 percent at the last auction.

The dollar index is at the highest level since January.

German Chancellor Merkel is just on the wires, again reiterating that eurobonds would be a mistake and that the combined EFGS/ESM ceiling would not exceed 500 billion euros.

The arc of European stocks has been straight down this month. With the S&P 500 down 1.7 percent in December, the German DAXX-Xetra Index is down 5.9 percent, France down 3.8 percent, Italy down 3.4 percent. Asia is mixed, with Shanghai down 4.5 percent, the Nikkei up 1 percent, Hong Kong up 2 percent.


1. The House approved extending the payroll tax cut and unemployment benefits, but it will not likely pass the Senate. This seems to be hostage to an add on related to the Canada-to-Texas Keystone XL pipeline. The bill would require President Barack Obama to speed up a decision on that pipeline. It's a difficult one for him, because environmentalists are opposed to it, but it would unquestionably create thousands of new jobs.

2. You think stocks have had a tough year? The initial public offering market is in worse shape. Everyone is excited about the IPOs coming this week...who ever saw so many IPOs in December? Jive Software, Zynga, Michael Kors, Luxfer Group, Sanchez Energy, and Bonanza Creek Energy.

One big problem: They've been lousy investments. Two-thirds of the IPOs that have priced this year are trading below their initial IPO price. The Renaissance Capital IPO index is down 20 percent this year. The IPO market, as Kathleen Smith at Renaissance noted on our air this morning, has suffered from the same macro worries as everyone else. Truth is, these IPOs are getting done at discounts.

3. Mining equipment manufacturer Joy Global is down 4 percent on a poor outlook: "Slowing global growth is tempering the demand for mined commodities."

4. Avon Products is up 10 percent pre-open as CEO Andrea Jung is being replaced as CEO. She will remain as executive chairman. A committee of the board is looking to find an external CEO. Third-quarter earnings were below expectations.
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