The Top Ten Reasons Driving the Stock Market Back to its Year Highs at Year End
Those concerned that the US sub-prime crisis will continue to have an adverse impact on the Equities front should read John's article. In it, he talks about why he believes the Stock Market will move up by year end, despite ongoing circumstances. Even though the Fed has cut rates by 0.25%, financial stocks tanked as investors were expecting a 0.5% cut. Are people over-reacting to the whole situation? We will know in 2 weeks, won't we?
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3 comments:
Thank you for mentioning my article.
You are correct to observe that market participants have been disappointed by the Fed's last rate cut of only 25 bps.
In fact, the last two FOMC meetings have disappointed investors.
While this is short term bearish, the recent weakness did occur on overbought conditions, and so the FOMC announcement was a convenient excuse for a retrenchment.
The week beginning Dec 17 we will see the Fed inject $40 billion into the money markets to provide liquidity in the short term credit markets. They will inject twice more in January 08 and make further cash injections as needed depending upon how market conditions evolve."
This is an example of a major central bank providing "Liquidity on Demand."
As ample liquidity is made available to the credit markets, the widening of the credit spreads in the LIBOR and US Commercial Paper markets we would expect to begin to narrow considerably thus easing the recently heightened pressures there.
As a point I have reiterated time and again over the past several months on my blogsite, this liquidity on demand that central banks are providing to the money markets not only papers over the losses incurred by financial institutions, but the excesses of this liquidity must spillover somewhere, and the best place to look for that spillover is in the sectors of the global economy that are growing and into equities who have a sustainably higher earnings growth rates.
feel free to browse my blog for more information on these topics at successfultradingtips.com
John Bougearel
Gostei muito desse post e seu blog é muito interessante, vou passar por aqui sempre =) Depois dá uma passada lá no meu site, que é sobre o CresceNet, espero que goste. O endereço dele é http://www.provedorcrescenet.com . Um abraço.
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