Countdown

It is really, really tempting to say this is it. Rally out, reality in; and this could well be it; I tend to think so. But we do have a couple of days of event risk ahead so it would behove us to exercise a little caution before piling in on the short side. Tomorrow, the results of the ECB refi are announced and then later on we have the Fed decision and statement. As I said before I’m not sure equities will pay that much attention to the former and the latter, hmmm, I dunno, I struggle to see the market believing or pretending to believe an upbeat statement...and indeed it will be hard for the Fed to come out with one. Still, you never know.

It seems that companies themselves aren’t waiting for the outcome of the these events and yesterday’s sell off and worries of a continuation on that theme have probably expedited the decisions of Drax, Renewable Energy and Peugeot to raise some cash asap. Volumes are running healthily today at 120% of 20 day average, which could be instructive if the market was actually moving today but equities are sharply unch. Perhaps we’re being supported by the stories out of China of a repo rate cut to encourage lending (but hold on, I thought lending was up in China, no??) and also of the Nat. Statistic Bureau coming out and saying Q2 GDP of 8% was on its way and that the economy had bottomed. In any case, we’re flat-lining here and the real moves are happening in FX. The Euro is having a big bounce, and ahead of the slew of Euros coming into the system with the Refi, this vexes me. Speaking to a contact in FX, I’ve been told Middle Eastern funds have been selling $ all morn and buying EUR and GBP. Well cable is off today and EURGBP is really having a bounce so it doesn’t look like there’s much bid for GBP at all. BOE Chief Economist Dale made some comments but they didn’t seem to have much in them. Commodity currencies, especially the Kiwi have stemmed yesterday’s haemorrhaging and that can be attributed to the China stories and the m&a movements and musings in the sector.

It is interesting to note that the World Bank GDP cuts that got so much press yesterday actually look like they were released mid June! I hadn’t noticed this but saw it on Naked Capitalism. Sometimes the market just ignores what it doesn’t want to hear. At the moment though, it seems focused on the risks, and with more negative statements coming out today from Peugeot, Maersk, BASF et al, I don’t think it will take much to tip us lower; probably not until after tomorrow’s events however.