Ireland is not big enough

Despite the fact that I am a medium term bear it feels like European problems in this form is not enough to derail global equity markets and who cares about Irish, Portugese or Spanish equties that continue to slump. So turn the page but fold the corner just in case as I am sure we will revisit it in the nearest future, probably as early as next week.

The mounting social and monetary cost of bailing the US and Europe does not bode well with long term growth prospects and GDP growth for next year is likely to be zero for these countries. Coupled with monetary policy imbalances the risk remain on to downside.

I tend to lean towards deflationary environment in the coming quarters. Strangely enough recent US inflation data showed that in majority only the prices of products with developed futures markets rose... developing world and weak dollar is keeping the US on the edge. thank you, global trade...

Too much talk

All focus on Europe these days. There's just too much talk, but it does not feel like officials will be able to talk us out of this. Looks like the markets are testing too which extent the credit markets can be stretched until long term bond investors come in. Yet the resilient equity markets in Germany and the US suggest market is not yet pricing in contagion.  But it is spreading through higher interest rates that will separate boys from men. Which country is prepared to withstand interest rates hit? Feels like only Germany will be able to...

Otherwise mixed feeling about economy. But I still have questions that remain unanswered. Why China is not raising interest rates as its peers? Is there something we do not know? Is QE in the US a failure or success? Economic data post announcement disappoints but sentiment continues to rise.

Since the news are coming out almost hourly it is impossible to run charts and to have a view as most likely I will be wrong. So sit and wait for the moment.