Wednesday, October 29, 2008

Stating the Obvious

Gradually, markets appear to be suggesting that they expect the U.S. will lead out of the financial crisis, despite being at the center of ... "weakness", shall we say?

This is because Europe appears in a weaker position to weather their storm; "Asia" is not de-coupled enough to do it on their own, even with oil in the 60s; and the Emerging economies of Latin America and elsewhere have been hit by the commodity bust and the mother of all currency crisis, in which they have an ... er, international handicap.

It's possible that this will reverse, some time down the road. We'll see how much 'domestic demand' China and others can 'stimulate' through the relaxation in global interests rates, which should hit a near cycle-low today, as the Fed is expected to ease the Worldwide pain with a policy rate cut.


Keep a list of the IMF "bailouts". They have been increasingly good long-leading indicators of historical buy opportunities...

There will be long lists as to whether yesterday's rally was more than a rally to be sold. Sadly, so far, it doesn't look like a "... and-didn't-look-back" rally to me.

Still, the market has shown that it is quite vulnerable to good news. Suppose the drop in gas prices forces bears and doomy-economists back to the drawing board on "consumer deleveraging" thesis ... that's worth positioning just for the sake of it.

On the other hand, 2 million "structural defaults" over residential housing will have ruined the credit rating of ... 2 million. Have I said anything about preventable foreclosures, yet today? Preventable foreclosures, Preventable foreclosures, Preventable foreclosures, ...

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