Despite the majority of economic data being poor, the market continued to focus on expectations of yet more QE. What was surprising was how the market held up after Chairman Bernanke's testimony, when no new money was added, just more vague promises. Could it be that the Federal Reserve now realises the debt outstanding is now so large that the effects of printing more will be minimal, and so talking about it is one of the few tools left ?
This leaves the market in a continued vulnerable state, that was aptly demonstrated on Friday, when the Spanish region of Valencia made it known they were running out of money. Over this week-end we hear that another region, Catalonia, is also in trouble. We therefore expect weakness this week and our current short position still stands with a target price of 1330. We will of course be watching Apple's results on Tuesday, and with a raft of other technology companies reporting, it could be a volatile week.
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