The market is exactly behaving the same way it did before the last two EU summit. Before the summit, some unknown EU official or secret source comes out and say something to some News channel or News agency and the market changes the direction quickly.
Italy and Greece have passed their budget as they had no choice. Greece was given $2 billion Euro, out of $8 billion and rest is promised during EU summit. Without the money Greece will default. (Its not likely to happen unless EU forget it.)
Today FT came with an article that a second rescue fund (ESM) will be announced with 500 billion Euro. After October summit the plan came out that EFSF will have 1 trillion Euro fire power and China will help them. Soon, China said they are not helping Europe and EFSF last had 440 billion Euro. EFSF didn't even reached 1 trillion dollar and now there is plan to add ESM of 500 billion Euro. I don't think any positive news can come out of EU summit other then rumors from secret source. Even EFSF is not implemented which was promised in October.
Europe needs growth at this time. Injecting 100 of billions of Euro is not going to help. The market will consume all the money and then it will need new stimulus to be happy. Look at US, there was 900 billion stimulus, followed by QE1, and QE2. Nothing has changed the jobless claim comes out at 400k every week and business inventories are increasing and its heading back for recession. Now the market is again expecting QE3.
Anyways, It's not safe to be bullish or bearish in this market. Next week is the right time for investment when things will be more clear. The risk of investment is very high this week. There is plenty of opportunity in this market so don't lose any money this week. Take a break.
As said in my previous article, a disappointment would take the market down to its low of October 2011 while a positive news can take market up to highs of July 2011.
EIA petroleum status is coming out at 10.30 EST. Inventory build up will be bearish sign.
Italy and Greece have passed their budget as they had no choice. Greece was given $2 billion Euro, out of $8 billion and rest is promised during EU summit. Without the money Greece will default. (Its not likely to happen unless EU forget it.)
Today FT came with an article that a second rescue fund (ESM) will be announced with 500 billion Euro. After October summit the plan came out that EFSF will have 1 trillion Euro fire power and China will help them. Soon, China said they are not helping Europe and EFSF last had 440 billion Euro. EFSF didn't even reached 1 trillion dollar and now there is plan to add ESM of 500 billion Euro. I don't think any positive news can come out of EU summit other then rumors from secret source. Even EFSF is not implemented which was promised in October.
Europe needs growth at this time. Injecting 100 of billions of Euro is not going to help. The market will consume all the money and then it will need new stimulus to be happy. Look at US, there was 900 billion stimulus, followed by QE1, and QE2. Nothing has changed the jobless claim comes out at 400k every week and business inventories are increasing and its heading back for recession. Now the market is again expecting QE3.
Anyways, It's not safe to be bullish or bearish in this market. Next week is the right time for investment when things will be more clear. The risk of investment is very high this week. There is plenty of opportunity in this market so don't lose any money this week. Take a break.
As said in my previous article, a disappointment would take the market down to its low of October 2011 while a positive news can take market up to highs of July 2011.
EIA petroleum status is coming out at 10.30 EST. Inventory build up will be bearish sign.
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