eurovision (or a lack of) tuesday, page-32

hypomaster

First we need to get those Eurobonds and QE3 agreed.

The Germans would be nuts to agree to Eurobonds. More likely the ECB will first drop its interest rate, low as it already is.

The US markets may be required to tank first before Benny gives the go ahead for QE3. In addition they also need more bad economic data to justify what would turn out to be only another short term stimulus.

There is some talk of China introducing measures to stimulate the economic development of its western provinces - to catch up with its coastal regions. Perhaps this has got markets moving forward today.

The markets will not tank until we get some significant negative economic news from the US or there is turmoil in Europe. While the US market appears to be cheap on the basis of recently reported earnings, profit margins are at historical highs and some companies have already suggested that future earning will not be as robust (over time profit margins will be normalised to their historical average). US multinationals will not earn as much in the future when Europe goes into a deep recession and the high USD means that overseas profits are lower when translated into USDs.

We had a nice bounce today.

loki