This 2 new trading days of the new year is largely characterised by gloom. We see Marc Faber, Jim Rogers on media toking their wares. Hank has come out to acknowledge the slowdown, stop short of "recession" and without any mention of stimulus package.
Why is that so ? US has run out of monies. With the floods in Nevada, heavy snow in midwest, California, US is actually in a mini-calamity of sort. Falling bridges, etc. Monies is needed to save those facing imminent dangers. It would be fiscally irresponsible to keep printing more monies.
Hence Hank is likely to sit out the slowdown with some gesture packages. (like the SuperFund he proposed).
If Obama is going to win New Hampshire, while the Republican do not have a clear candidate for presidency. Expect the market to sway towards a Democrat win, i.e. Wall-street negative. The Democrats would reinstall the taxes, and cut fiscal spending.
Imagine from now till November, we have 11 months of uncertainty. And as Hank has always emphasised, it is a long drawn process to get over the housing slump.
Tom, Dick and Harry who bought AAPL, GOOG would see their share prices slowly fall back to when they bought it. (i.e. their monies went to nowhere for 2 years).
As for the forex market. the trend is clear. YEN is on a strengthening path. The Japanese are now wary that their assets are so cheap to be acquired by some other Soverign Wealth Fund.
As for EURO, it is facing an upward climb, as a lot of Funds have shorted from 1.4960 level. they are trying all means to stall the EURO rally. However the prize is there for the taking.
GBP is no longer great, however a wild card nonetheless. Possibly the French would contemplate buying the Bickingham Palace soon.
I have clear target in mind. AND to be fair to my readers, it is definitely not a straight line up, with some heart wrenching moments along the way.
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Update 7:20 am Euro now at 1.4725
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Meryll Lynch and Morgan Stanley just made calls for US entering recession in 1Qtr 2008. Except Lehman Brothers.
Wonder who are the people wanting to buy USD. What use can it have in a time of recession ?
may be as food stamp for the poor.
Hank Paulson speaking at 8am. probably the market would show him some respect with a pull back in Euro buying.
Update 8:24 am Hank
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I hope I didnot hear it wrongly. Hank Paulason was on the CNBC saying that the slowdown would last till yr end. And then on the wire, I see Plosser saying growth to return in Qtr 3 and 4.
Hmmm..........
Update 8:41 am Hank, Marty
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the duo, with the CNBC are making jokes on the Strong Dollar. The point is that with the weak dollar, exports have been a pillar of the current economy. At least it prevents US from sliding into straight forward recession. Hank, Marty aknowledges that.
The read in-between the lines is that a weaker dollar is most welcome.
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