This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

European Stocks Rebound as Stability Returns

Stocks in this article: DB BBVA BFR BMA

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Ivan Martchev for InvestorPlace

NEW YORK ( InvestorPlace) -- The massive rebound in European equities -- particularly in eurozone financial stocks like Deutsche Bank (DB)and BBVA (BBVA) -- is due to the aggressive monetary and fiscal actions taken to stabilize the eurozone sovereign debt markets.

Since many indicators of eurozone financial stress are improving, the above stock market reaction is normal and likely will continue should formerly problematic sovereign bond markets continue to stabilize.

When I was asked to comment on the European multi-asset rally this week, I almost called up a familiar bond expert, as this eurozone rebound is as much about stocks as it is about sovereign bonds.

But at the risk of sounding like a Spaniard trying to speak Portuguese , I decided to take a crack at the sovereign bond side of this massive European rally, as I had been following the issue for some time.

Related Article: Are U.S. Banking Stocks Finally Safe Investments?

The eurozone sovereign bond markets look like the mirror image of last summer. At the time, most spreads to the German benchmark bunds were expanding; now, most -- except for Portugal -- are contracting. Bigger sovereign PIIGS markets like Spain and Italy are well off the yield highs seen last November and currently are allowing those governments to borrow at much more affordable rates.

The same banks that seemed like pretty decent short candidates in an environment of rising financial stress during the summer of 2011 seem to have survived the storm and now are seeing their shares rally and re-price for the new, more benign market environment.

I think this is the stock market reacting to the normal resolution -- if there is such a thing -- to the Greece default and the subsequent orderly CDS Greece bond auction. As the Greece default did not drag Europe down into a black hole, the current 66% likelihood that Portugal will do the same is not bothering investors, as the much larger sovereign debt markets in Spain and Italy indicate. They show sovereign 10-year yields of 4.84% and 5.20%, respectively, which are very close to 52-week lows.

Related Article: Dividend Failures: 6 Big Stocks Refusing to Reward Shareholders

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs