Thougts to the economic situation... Market facts that show the direction of global economy... a look on the currency markets. - Euro new 3 year high against the USDollar - Swiss Franc highest high ever against the Euro Big money is flowing into the Swiss economy but not over the regular exchanges. Most big money that is invested in Swiss companies is transacted off exchange because exchanges don't support the liqudity necessare for the big money. An intersting fact is that most of this money is coming from the US. European economy isn't as strong as the currency shows today.. but as we can interpret from the currency movment is that the US economy has a very low trust by big investors. What does this tell us? This makes people loose their believe in the american markets... many private housholds have to sell the stocks they own. Until today most of them was believing the philosophy of the buy and hold strategy and used this for an excuse for their holding. Now they are very nervous and affraid because everything gets worst and worst. In all the newspapers alternative Investments are discussed.. The selling of Life Insurance rises exponentially... the demand for Hedge Fonds is high as never before... Big companies bleed with the very bad news... Dollar is weak... Conclusion: we are right now in the phase where weak money is transfared into strong money. weak money is affraid and the only goal they are now facing is to get out of the market. Weak money has to go out of the market otherwise there is no bullish power that can support the market at some level... the market can only turn when all weak money is cleaned out and strong hands are in the market. Weak money has then to come into the market again when the trend of the general market is moving up again sometime in the future.. actually supporting the trend... but today there is no money that is willing to support the trend. well... hope that doesn't sound to confusing..... just thought to write some sligth thougts here.....
just a speculation here but i've heard this "take" from several places: foreigners who hold most u.s. debt and have big stakes in u.s. equity are pulling out of the dollar. the pressure on the dollar will result in inflation, and other negative consequences for the u.s. economy (weakness in equity AND debt). foreigners feel u.s. economy prospects are weak, and the American economic system is seen as subject to the risk of terrorist attacks. This change in mentality can jeopardize the "premium" values USD and US debt have traditionally enjoyed. And since, US economy depends on foreign debt, again this can have bad consequences. The fact that Swiss frank hit new highs against Euro shows that investors are looking for stability. And of course SF is more stable than Euro.
wild, what nonsense? http://finance.yahoo.com/q?s=EURUSD=X&d=c&t=2y http://finance.yahoo.com/q?s=CHFEUR=X&d=c&t=2y
I don't think the euro's strength against the dollar reflects a view that the euroland economy will outperform. In fact, the idea that currency values are linked to economic performance is a relatively new phenomenon and may well be ready to go back on the shelf. No doubt there is some flight to safety and reversion to traditional portfolio allocation levels at work here, but the traditional fundamental of currency values, relative yields, is also at work. Ten year government bonds yield around 4.7% here, versus 4.9 in europe. Real yields show a bigger gap--2% in $ versus 3% in euro's. short term rates have an even bigger gap. 3 month bills pay 1.8% here, versus 3.4 in europe. real yields again favor the euro, .2 versus 1.4. Thus foreigners pay a relatively large price to hold dollars, even if they avoid the stock market. Many FX traders are momentum type players, so a move with fundamental backing can become self-sustaining.
An interview with Bob Prechter stating that the coming depression will be worse than the 1930s. He is calling for a Deflationary Depression... http://www.elliottwave.com/affiliates/ctc/part1.htm