The euphoria on stock markets draws to a close

Written by admin on October 14th, 2009

Soon the euphoria on stock markets dry up, the dollar's decline will stop, and the world stock markets for some time to enter into a phase of stagnation.

There is every reason to believe that the current season of reporting in the United States will be extremely positive wave, and it will be one of the turning points in the development of crisis situations in the stock markets of the world. The main importance of the information records have the largest U.S. banks, which are likely to be overwhelmingly positive, thanks to the restoration of values of almost all financial assets held in their portfolios.

official release of positive U.S. corporate reports and data on the housing market will be perceived by the American community as the end of the acute phase of crisis, and for the Fed to become a political cause for long-overdue beginning of the recovery of excess funds from the financial system.

In these circumstances, investments in stock assets, obviously, will lose their attraction for short-term speculative capital accumulated in abundance at the trading floors for the time of unbridled growth. Stock markets face a widespread closure of long positions in risky assets, which will last several weeks.

This process will be accompanied by a strengthening U.S. dollar for most currencies, declining profitability of U.S. government bonds and the continuation of growth in value of other defense assets.

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