Loading ...From very clear blue skies and not an iota of danger; storms for the market are quickly forming on the horizon. The question now is will these storms hit us head on and linger or pass over with little damage. I’m guessing they will cause damage by the speed of which they are forming and by the recent drought of profit taking (hint, sell and take profits! We are going lower).
Our good friend Bernanke will be put is a difficult position tomorrow. All roads lead to near term correction. If he says the economy is improving he will be setting the market up for rate hikes which will put pressure on the recovery. In addition, Bernanke will then have to answer to how he plans to undo his trillion dollar gift out of the market. If he says the economy is not as healthy as everyone thinks, he will re ignite fear and cause a probable sell off. I recommend Bernanke calls out sick just to see how the market reacts (that would cause the real sentiment to come out).
Next we have this Citigroup mess. A group of seven Norwegian municipalities and the bankruptcy estate of Terra Securities ASA (the nice people we screwed) are suing for fraud in a district court in New York against Citigroup Inc. This morning Citigroup management stated that they might have to fill for bankruptcy if they are unable to raise the capital needed to meet their obligations.
Finally, we have to realize that the emerging markets (to some extent all markets) have had an amazing run off the March bottom. It would be foolish not to take profits in those volatile markets. This means to me that the dollar will get stronger while investors sell out overseas equities. Often, when the dollar gets stronger markets go down. There is no indication that this trend will not continue.
Looks like someone is about to get roasted…Rocky Mountain Oysters anyone?
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