Saturday, 18 August 2007

Is the mini-crash over?

Last week made it official: we have experienced a mini-crash in global terms in all stock exchange markets. The word “injection” appeared in the news characterizing the intervention in the markets by the main international central banks and when this occurs bad things have happened, are happening and will probably continue to happen for a while. Nevertheless there is no certainty on the future.

Next week is the one to determine next months trends some repeat. Why? Because now is sure that bad things have happened and that bad things are happening. So, will they keep on coming?

Besides the capital injections the U.S. Federal Reserve did some fine tunning in the lending tax rates to the banks. The news of this measure is said to justify the last Fridays clear recovery. The question now is to know if the reaction next week is to maintain that the risk prize (in the sub-prime) is paid or, contrarily, it will be to realize that oops! If the feed is meddling with the tax rate then things (that still are unclear in dimension) must be worst than we thought of.

All this can be found in the text books, all this is fine field for the hardened gamblers. Some stocks may be very, very cheap at Fridays prices… or, in other hand, they may not be.

Care for a crystal ball on animal spirits?

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