Wednesday, October 29, 2008

Stocks move Higher

Stocks had a great day yesterday closing up almost 900 points. Alot of people were calling this the bottom and saying that we were now going to turn up....well I hope so (and think so) but don't be so quick to that conclusion. This to me was a relief rally. It happened across a few different assets classes. The Dollar moved lower. Emerging Markets strengthened and interest rates (in EM) came off. This is a good first step but I think we need a little follow through in the days ahead. I like that this all occurred after the terrible confidence number we saw today (38 expected 58 , I think were the numbers). To me those were to be expected. Equities were off considerable and that is how people judge there wealth. Sure you house price can fall, but as long as you can pay the mortgage (I know that is a big IF these days)it really doesn't matter, but when your 401k is falling in value people stop spending...fearing for their future.

I am looking for the Dollar to continue under pressure and for the U.S. yield curve to steepen out a bit. The Fed will cut tomorrow, probably 50bp which I do not see doing alot now, but would cripple stocks if they didn't and the Fed knows this.

Good Luck and Good Currency Trading.

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