New Stimulus

After Germany (the U.S. is stimulating all the time), Japan announced some sort of stimulus. Telegraph story:  Japan unveils $80bn of direct spending in $274bn stimulus package. $80 is peanuts for a Japan size of economy. The monetary stimulus was also small. Looks like politicians are trying to convince people they are doing something.

Yesterday’s Mr. Bernanke speech brought some relief to gold as he repeated “extended period” term when talking about interest rates.

Today, the markets moved lower a few hours ago; media climing on news on Nakheel loss and speculation on U.S. and U.K. credit ratings at stake. Bloomberg stories: Nakheel Has Loss of $3.65 Billion in First Half; Moody’s Says U.K., U.S. Aaa Ratings Relatively Weaker. In my opinion the reasons are purely of technical and portfolio re-balancing in nature. Portfolio managers are moving closer to benchmarks and getting defensive to lock this year excellent performance. Plus, the dollar rise has scared a bit carry trade players.

Looks we could be heading for a some sort of a mild holiday correction. Mild because everybody is happy with this year, so the big bets would be scare leading to reduced volatility. Maybe an opportunity for the VIX to break out to the downside.

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This entry was posted on Tuesday, December 8th, 2009 at 7:37 am and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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