Today's action has been quite interesting, I wanted to just note this triangle S&P is currently in. It appears that it will terminate today however, ending the week caught in this still would make monday a gamble.
There is alot of news out. Today there was a good Retail sales story which conflicted with a negative consumer sediment which doesn't really make much sense.
USD is up today, crushing oil and other commodities. It is my expectation that QE2 will disappoint the markets, resulting in a painful correct.
Look at the scenarios:
1) QE2 comes in as expected
Markets will remain flat and then ask "what next? QE3?" if there isn't a real growth recovery occuring then then markets will begin to decline as the monetary fix has dried up
2) QE2 comes in better than expected
The world currency war begins as others will have to ease their own currency to protect their export market
3) QE2 comes in worst than expected
USD rebounds and stock markets and commodities get crushed in the correction
Even in the first case, a world currency war could be sparked. It is interesting that the US government is going out of its way to brand China as a currency manipulator as it continues down the path of devaluation of the dollar for its own personal gain. Also as the world reserve currency, making everyone holding dollars that much poorer which is the rest of the world and its citizens.
It will be interesting to see how this day plays out.
No comments:
Post a Comment