QE in Europe— the European sovereign debt situation It is not surprising that Europe’s short embrace of austerity has been unsuccessful. There is never a choice for austerity until all other alternatives have been exhausted. History is replete with examples. Why don’t some of these stock market commentators read some global economic history? It is obvious now and has always been obvious that Europe will go for QE. It does not matter what they say about austerity. We have been advising investors to watch what they do. They are bailing out Ireland; Portugal is right behind and . . .
Continue Reading: JUST A FEW POINTS BEFORE THIS HOLIDAY WEEK.
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Europe Will Be the Next Region to Create Liquidity for the World The coming European bailout of Ireland and Portugal will have to include some method of quantitative easing (QE), or the printing of new money. The European Central bank will claim they are not using QE, but using newly created money must be a part of the plan. Often, when hiding their bond-buying, governments will use means to disguise their actions. Clearly, very few professional investors have an appetite for Portuguese or Irish bonds unless they are put under some political pressure, so the buyer of last resort . . . Global Markets Up, Up, And Away The world markets moved like Superman last week. They lifted off and moved higher in a decisive manner. In the ongoing contest between bulls and bears, the bulls have had the upper hand in many markets. Wall Street also moved firmly into the bullish camp with U.S. stocks eclipsing their April 2010 peaks. To us this means that the technical short-sellers who had been bearish on U.S. stocks and expecting a correction bought back their short positions and took their losses. Pullbacks will come, but the trend is up for: emerging markets . . . U.S. Election The election went according to prediction; gridlock is the most likely outcome for the next two years. President Obama is faced with a choice to either move more to the center on domestic issues, or focus on foreign policy. Let us consider the how a period of political gridlock will either support or hurt various legislation, and how gridlock will affect various industries over the next two years. With a large Republican majority in the House of Representatives, a three to four seat Democratic majority in the Senate, and a Democratic president, we expect the following: . . . |
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