Nov

22

 A debt-reduction committee with special powers that was supposed to dissolve congressional gridlock in Washington is instead on the brink of failure, setting the stage for $1.2 trillion in automatic spending cuts.

Finally. Hopefully the US will show the Europeans that solving the economy problems by just issuing new debt is not an option. Markets have just reacted printing higher prices for EURUSD. It seems that the Euro continues to be relatively strong despite the situation in Europe.

How long can the markets be blind and not see the obvious?

Signed,

a frustrated short on the Euro.


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2 Comments so far

  1. Craig on November 23, 2011 10:26 am

    Everyone is focused on the news and monetary policy when talking about financial markets. The economic setup and inflation indications may not be important given what’s happening but they might. If Europe is similar to the US, the economic setup has the lagging index outpacing the coincident since April. Inversions are normally a setup that is positive for cash and bonds and negative for stocks and metals. The leading inflation index having negative growth rates is bullish for cash, bonds and stocks but a negative for the metals. Maybe everything is so crazy that economics don’t matter. I used to think politicians could do anything but the ramifications wouldn’t show up until the economic setup was in place. Maybe that’s not true any more but it’s still worth considering.

  2. Paolo on November 25, 2011 2:37 am

    May be precious metals are a different story. In the turmoil that is happening (or still about to happen?) they could play a new role and develop new correlations).

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