Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Financial Markets And Governments Are Rolling The Dice!

Stock-Markets / Financial Markets 2012 Jun 17, 2012 - 02:28 AM GMT

By: Sy_Harding

Stock-Markets Best Financial Markets Analysis ArticleGlobal markets had been plunging since March on worries about the dangerous eurozone debt and banking crisis and its threat to global economies.

But over the last two weeks they’ve been rallying quite impressively, even as the crisis in Europe has taken another frightening turn for the worse, and as tomorrow’s Greek election neared, with its outcome just as critical and uncertain as before.


The driving force of the rally is obviously that the worse the situation becomes the greater the hope that massive rescue efforts will have to be forthcoming. And with the additional evidence this week of how rapidly the tragedy of Greece is spiraling toward Spain and perhaps even Italy, next week has been determined by analysts as the make-or-break week.

Either governments step in with massive rescue and stimulus efforts or it’s a Lehman-type ‘game over’ for the euro-zone, with potential devastating results for the rest of the world.

I’m not sure the situation is that extreme, but the hype that it is has anxiety through the roof.

Most investors seem to be standing pat with whatever are their positions, short or long, doing nothing either way, as evidenced by the low trading volume. But short-term traders are very active, some betting on the make, some on the break, with the make side dominating so far.

Yet, as evidenced by the many opposing opinions among analysts, and the public statements of participants, the outcome is far from assured either way.

Among the silliest statements was that of Spain’s economic minister Luis de Guindos, who in efforts to calm the country said on Friday, “The government is on top of things.”

That assurance even as Spain’s borrowing costs touched a euro-era record of 7% on its 10-year bonds, the level that forced Greece and Portugal to require massive bailouts, and that assurance given even as the Spanish government is pleading for help and urging Germany to do more to resolve the crisis.

While markets are convinced something massive is in the works, all that European Central Bank President Draghi has said is that the ECB “will continue to supply liquidity to solvent banks where needed”, as he has said for months.

Reuters moved markets higher with a report that an un-named G-20 aide told them that “Central banks are preparing for coordinated action to provide liquidity.”

But German Chancellor Merkel released a statement Friday repeating Germany’s opposition to euro-zone members jointly guaranteeing a broad euro-zone bond, as well as France’s recommendation of a “financial stability package”. She said the solution is not for Germany to guarantee the debts of other eurozone countries but for an agreement on sweeping new rules for the political union of Europe.

That doesn’t sound like it’s an absolute foregone conclusion that the G-20 summit meeting this weekend will be successful in agreeing on hoped for massive coordinated action.

Meanwhile, in the U.S. traders are convinced that this week’s additional evidence that the U.S. economic slowdown is still worsening will convince the U.S. Federal Reserve to get off its butt and take action at its FOMC meeting next week to re-stimulate the economy.

The Fed has been saying only that it is monitoring the situation and stands ready to take action “if it becomes necessary”.

As far as the economy is concerned it seems to be time for action. But with markets now rallying so strongly the Fed may not feel as pressured to act. In the similar slowdowns of the last two summers the Fed waited until not only the economy seemed to be sliding dangerously toward recession, but until the stock market was down 20%, in danger of crossing the 20% threshold into a bear market. The Fed’s concern was probably higher two weeks ago before the stock market bounced back in this new rally.

So here we are at another highly uncertain juncture, markets convinced the European Central Bank and the U.S. Federal Reserve will both come to the rescue with substantial additional monetary easing; that eurozone officials will patch up their differences and agree on a major plan to rescue the eurozone no matter which way the important Greek election goes tomorrow; and that the G-20 nations will also decide on a major coordinated global economic stimulus effort.

It certainly all seems needed and likely. But OMG it’s a lot to expect and accomplish in yet another weekend of emergency meetings and uncertainties.

With the way ts are factoring expected good news into prices there’s even the risk of it being another classic case of ‘buying the rumor and then selling the fact.’

There is no way to handicap the outcome. Not even the participants who will be making the critical decisions seem to have a clue. That does not meet my criteria for street smart investing. There are always uncertainties in investing, but this is big-time crazy uncertainty, just as capable of producing big losses in a hurry as further gains.

In the interest of full disclosure, I and my subscribers closed out our downside positions in inverse etf’s this week, taking only small profits. We will take the cowardly role and sit out the next few days in cash.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2012 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules