World shares dropped following concerns that the two-day meeting of EU leaders, expected this week, will have very little impact on the debt crisis.

The late trading in the afternoon in New York appeared to weaken after the Standard and Poor’s 500 indicator dropped by 1.71 percent. The Dow Jones indicator of the industrial average declined by 1.27 percent, while Nasdaq Composite indicator weakened by 2.00 percent.

According to the latest reports from Bloomberg News, the European market, the Stoxx 600 indicator closed by indicating a loss of about 1.5 percent on a couple of the previous trading sessions. That wiped out its last gain for the year.

Among the greatest issues of concern about European market outlook were an additional decline in oils prices plus the latest action of the bond yields especially those on US treasuries. Although these treasuries were deemed a safe-haven, they have maintained a drop while the ones on Spain and Italy indicate a continuous increase.

According to a recent report from Bloomberg, the 10-year US note yield dropped 7 basis points to about 1.61 percent. This forced the bonds to record the greatest intraday decline since June 15^th.

Mandy Xu, a strategist in equity derivatives at Credit Suisse, NYC told the Reuters that the dropping oil prices plus the declining bond yields show global growth, while increased autonomous credit spreads along with a strong US dollar imply that the current European disaster won’t be solved anytime soon.

Spain’s two-year bond yields increased 39 basis points to around 4.83 percent. This largely attributed to the request issued by the state to the EU for more aid. It had requested for more than 100 billion euros for its banks.

Germany’s Chancellor, Angela Merkel, still insists that some of the problems facing the Euro Zone can be solved through Euro Zone bonds.

Merkel was reported by Bloomberg as saying that it is not a brave prediction to claim that most people in Brussels will be focusing on Germany once again. She added that she expects the forth coming meeting to focus more on ideas for a joint liability and pay less attention to improved mistakes and structural measures.

Today, the euro showed a weakening trend after it dropped by 0.7 percent against the US dollar. The news that the Greek’s finance minister had resigned a few days after taking over the job did not have any positive impact on the currency. The euro didn’t fare so well today either, weakening 0.7 per cent to US$1.2483.

Accusing Merkel of misleading Europe, billionaire George Soros told Bloomberg that the EU officials have only three days to solve their differences.

Credible sources also told Reuters that the worsening situations in Europe are evidently taking its toll. They added that the credit Suisse is expected to layoff some of its senior officials in its European investment banking department by a third. This is mainly due to the stiffer regulations and weakening market.

Another source said that the European investment banking business is expected to layoff 60 directors and managing directors.

Major international banks are optimistic that there will be a rally and a complete rebirth in the stock market in case Greece proceeds to exit the currency union. They believe that in case of such an eventuality, global authorities will have no other option but to flood the world system with massive liquidity.

The BoA has announced that expects a severe short-term clutch in risk investments after more speculative funds slow down positions starting with a climb in tattered bank stocks along with Club Med Bonds. The bank also expects the bank to rise by 10 points to hit $1.40 against the USD following a slump to $1.20 right after the panic.

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The benign result suggests that the ECB comes in handy with enough support from the US Federal Reserve, BoJ, and other important central banks in line with 2008-2009’s concerted action.

The Bank of America insists that the EU will relinquish its limits in order to help Greece remain in the Union as they consider the real risk of contagion. In the event that the idea does not work, it anticipates a couple of dramatic actions.

The ECB plans to cut borrowing rates, give more Quantitative easing, and launch a mass stock buying program in Spain and Italy. They will also provide more capital to banks and develop a pan-European scheme of deposit securities. All these efforts are expected to have a major impact on the Euro.

David Bloom, the chief of finance at HSBC says that the crisis in the Euro is now over. He also adds that key central banks have an obligation of offering massive help, which will serve as a soothing ointment for the markets. David also noted that the Fed has its doors open for additional QE promising that a strong rally is on the way.

Mr. Bloom expressed his dissatisfaction with the way the ECB is handling this matter saying that it does not have to wait for compliance from the EUM’s wayward nations. He said that by doing so, the bank will be holding everyone right at the bottom of the deep financial pit until they call for help.

A monetary union without the burden of Greece is likely to seen as a strong bloc by the traders, but a lot depends on how Greece will fare.

Right now, the worst that can happen to the currency union is a double whammy. This can only happen if the authorities are unable to control the wide infection of the EMU and Greece finds its way out of the current crisis. This means that Greece would make profits from the devalued currency.

Bloom says that in case of such an occurrence the Euro would collapse dramatically. He is however certain that such a scenario is unlikely.

Gary Jenkins, a bond adviser has however warned that people betting on a collapse should be careful saying that world central banks are expected to flood massive liquidity that will render the LTRO a small change.

He also said that this is the time for the ECB and EU leaders to show that they are financially capable of purchasing debts on the minor market. He also noted that the situation right now is either quasi-financial union or a bust.

The bond adviser also warned that it will be fatal for the union if Greece were exited in acrimony. Such an event would cause massive losses of up to 200billion Euros for the currency union. This will in turn damage the much needed political consent to build the EU financial union and put Euro zone members together. He therefore urged the authorities to ensure that whatever they come up with is for the benefit of Greece.

Seeped out reports from Berlin propose that Germany’s treasury has created a plan that would see them rescue Greece with funds from the EU in case of a return to drachma.

Bank of America suggests that the exit of Greece from the Euro and the contagion would cause a drop of 4 points in Euro zone GDP. It also suggests that the recovery from such damages would be slow. Range for financial incentive is largely worn out. China together with the up-and-coming powers is unable to stabilize.

Economists attribute the apparent cooling of retail sales in April to seasonable weather and rest by the buyers after enormous pre-Easter vacation shopping spree. These comments come just at a time when investors are eagerly waiting for this week’s CD report.

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According to BBC’s Mark Lowen, smaller parties have a better chance of winning more votes in the ongoing Greece parliamentary elections since majority of the people are opposed to the austerity plan.

Greece is currently involved in parliamentary elections where the two major political parties are expected to lose votes in an anti-austerity remonstration.

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Japan goes on a nuclear nook following the shutting down of its only nuclear power reactor for maintenance purposes last night.

Takada, the utility’s spokesman announced that the reactor stopped producing power at around midnight last night. Then the fission stopped later at 4 in the morning.

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Yasushi Mieno, the former governor of the Bank of Japan has passed on. The former governor is always remembered for the role he played in the introduction of the lost decade of stagnation. He also caused a lot of distress in the country’s landed property and stock market bubble. He died at 88.

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XAG/USD (Silver)

Silver trading market indicator- 4H chart- indicates signs of the market being controlled by range. For instance, resistance stands at R1:33.05 and R2:33.25, while support remains at S1:31.15 and S2:30.97. This range can give more directional clues.

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The fact that the price remains below the 200 4H’s plain average price along with 55 and 21is a clear indication of a bearish bias. Under normal circumstances, any bearish average price configuration of a bearish sell would offer 200 above and 100, 55, 21 and 8 going down. But right now the arrangement is 200, 100, 21, 55, 8 suggesting a bearish bias, but with some choppiness against such bias.

Another bearish indication comes from the idea that the most recent rally succumbed to range resistance and dropped away from the center of the range. This draws the conclusion that bears have taken over in terms of consolidation.

The silver market index shows signs of the market moving sideways. The drop in prices begins at R1:33.05 and R2:33.25. Rally begins at S1:31.15 and S2:30.97.

Irish Finance Minister Michael Noonan remains hopeful that a deal in talks with its bailout lenders to delay paying a cash installment on EUR31 billion in promissory notes pumped into failed banks will be struck in the next few days, the finance ministry said Sunday, but gave no details of the technical issues that are holding up matters.

Since last September, the Irish government has been in talks with the European Union, International Monetary Fund and the European Central Bank to reschedule the notes provided about three years ago for Anglo Irish Bank Corp. and Irish Nationwide Building Society, now jointly renamed the Irish Bank Resolution Corp., or IBRC.

The ECB’s permission is required because the next installment of about EUR3.06 billion on the note is due to be made to the Central Bank of Ireland next Saturday to pay down emergency funding.

Last week, Finance Minister Noonan said talks with the European Union authorities and with the ECB had made progress and that the installment could be settled by way of paying out a long-term Irish government bond.

However, it remains unclear how the payment will be made but the chances of it being done by a direct injection of an Irish government bond into IBRC are very slim, European officials familiar with the matter told Dow Jones Newswires.

The officials said the ECB’s governing council last Wednesday failed to approve an Irish government plan to redeem the promissory note with a long-term bond, because it was felt to violate the ECB’s ban on monetary financing of government deficits.

Instead, the ECB went in the opposite direction, saying that it would no longer require national central banks to accept government obligations from countries with bailout programs as collateral for its loans, the sources said.

According to euro-zone officials, one variant under discussion is for the Irish government to issue its long-term bond as planned, but then to swap it for debt securities from the temporary euro-zone bailout fund–the European Financial Stability Facility. That would reduce IBRC’s borrowing costs as it could use the EFSF paper to access the ECB’s conventional credit windows.

Discussions continued Sunday between Irish finance ministry officials and “all relevant” officials in Ireland and Europe about unspecified technical matters, a spokesman for the finance ministry said.

“We are hopeful that an arrangement will be reached by next weekend,” the spokesman said.

Ireland has been struggling with the legacy of massive debts from a banking bust that started in late 2007. The huge costs of saving banks like Anglo Irish forced Ireland to strike a EUR67.5 billion bailout deal in late 2010.

Karl Whelan, professor of economics at University College Dublin, said he believes a wider deal involving the restructure of the whole of the promissory notes can now only be done through the EFSF or its successor the European Stability Mechanism. “And that requires European political approval,” he said.

It would also represent a significant milestone for the EFSF, whose role was expanded late last year. Euro-zone governments agreed to that change under pressure from the ECB, which had insisted that governments, rather than the central bank, should be responsible for resolving failed banks and managing their risks.

However, euro-zone governments so far have been unwilling to make use of that new role for the EFSF, and officials said last week that there was still no decisive political support for such a decision.

All actions of the EFSF require unanimous support from euro-zone governments.

The latest reports from Citigroup indicate that North America would-be the next world’s largest gas and oil supplier.

According to a report that was recently released by the Citigroup, the Mexico’s deepwater drilling and oil sands in Canada are some of the few projects that make North America the next big oil and gas supplier. These two projects are expected to push the continent’s oil and gas production to almost 26.6m barrels daily by the year 2020.  .

The report also indicated that this energy sector could cause a startling reindustrialization and renaissance of the U.S economy.

The White House has been dominated by the most annoying question of how America’s future energy requirements can be met in the last couple of week. A number of republican representatives have been accusing President Barrack Obama of not being able to solve the problem of the rising petrol prices.

Experts have noted that the matter is having a lot of political significance among the Republicans and Democrats, the country continues to suffer major energy crisis. The report also indicated that the U.S managed to export more fuel than it imported in 2011, the first time since 1949.

This was partly attributed to the emerging supply although the decreasing domestic demand also had a hand in it. Domestic demand for fuel dropped to about 18.8m barrels daily. Experts are also optimistic that the decreasing fuel demand in the U.S will continue since a number of new fuel efficient technologies have been adopted.

This is also seen as another way of making North America a great player in determining global fuel supply. Experts argue that the growing supply of hydrocarbons indicates the potentiality of North America transforming into the next Middle East in the coming decade.

However, the concerns over America’s fuel policy cannot be attributed to economic factors alone since the political and environmental factors also have a major role to play. The report also shows that with political congestion in Washington hazardously high, it is very implausible that an all-inclusive energy plan will be attained very soon.

The latest reports from the Bank of America indicate that- in the near future- one member of the Euro Zone will exit the currency merger. In its recent survey, almost half of the respondents are expecting one member to leave the merger. The survey, in which only financial managers were polled, was published on Tuesday. Read More