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Asia, Global Indices, US Indices Futures Rally

Published on December 8, 2008

Asia, Global Indices, US Indices Futures Rally

December 8, 2008

Asia rallied, Europe is up and so is the US Indices futures. Markets are buoyed by the “stimulus plans” all around the world but mainly from US President-elect Obama’s supposedly largest spending on infrastructure since the 1950s to revive the economy. Dr Copper is up and so is the Oil and gold. US$$ is weakening and there is strong FX movement in a select basket of currencies (GBP, JPY, AUZ, etc.)

Interesting enough, Mr Market has very short lived memory and euphoria quickly takes over the gloom. We’ll see if the futures can sustain and take the Dow past 8,900 at close. If that happens, we are probably looking for another 700-800 points quick rally before it touches the next resistance. A point worth noting will be whether it is a bull rally within a primary bear market rally or have we found the bottom and a new primary bull market has emerged. No one can predict and let Mr Market show it by its action.

There is an interesting piece from Bill of PIMCO, as part of his Dec’08 market outlook

“My transgenerational stock market outlook is this: stocks are cheap when valued within the context of a financed-based economy once dominated by leverage, cheap financing, and even lower corporate tax rates. That world, however, is in our past not our future. More regulation, lower leverage, higher taxes, and a lack of entrepreneurial testosterone are what we must get used to – that and a government checkbook that allows for healing, but crowds the private sector into an awkward and less productive corner. Dow 5,000? We don’t have to go there if current domestic and global policies are focused on asset price support and eventual recapitalization of lending institutions. But 14,000 is a stretch as well. One only has to recognize that roughly 20% of bank capital is now owned by the U.S. government and that a near proportionate share of profits will flow in that direction as well. Better to own corporate bonds than corporate stocks, but that’s a story for another Investment Outlook.”

He does have an interesting point “One only has to recognize that roughly 20% of bank capital is now owned by the U.S. government and that a near proportionate share of profits will flow in that direction as well”. This is a key point when you are developing your investment strategy for the next years. In addition to the SWFs (Sovereign Wealth Funds), government will be the decisive force in shaping tomorrow’s economy.

Alright, let the markets open, all I can say, as I have been saying these days, trade carefully and trade profitably,

Profitable trading, OP

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