Business Spectator - Drama unfolds in Europe
Next month there are US elections, summit at the top about the new financial picture of the world (Sarkozy insists that this is not just a meeting but that there has to be some legislation set as well). These, along with the unwinding positions in currencies, commodities, and equities may finally provide a bottom.
Of course, that should last for a short time only. Central banks are poised to cut the interest rates further and a stage for a quick bounce is set. Where to, noone knows. But, the indexes will not remain this low for a protracted period.
When markets are deleveraging value goes out the door but when it finishes there will be a huge bounce.What is happening in the markets now is another round of deleveraging. After hedge funds, now we see brokerage houses and private investors cutting their positions taken with borrowed money - margin loans. This is causing the further fall in prices and indexes. Well, player after player, they are moving out of the game. Soon there will be noone to sell and it will be time to start anew.
Next month there are US elections, summit at the top about the new financial picture of the world (Sarkozy insists that this is not just a meeting but that there has to be some legislation set as well). These, along with the unwinding positions in currencies, commodities, and equities may finally provide a bottom.
Of course, that should last for a short time only. Central banks are poised to cut the interest rates further and a stage for a quick bounce is set. Where to, noone knows. But, the indexes will not remain this low for a protracted period.
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