Very often I start the day by looking at the exchanges in Asia. It gives me a picture of what mood people are in at the moment. October 17 is tomorrow and the congress do still not have an agreement about the debt limit and Obamacare. People wait and see what`s happening.
The stockexchange in Asia is mixed today. MSCI Asia Pacific didn`t move today. Nikkei 225 is up 0,1%, Topix is falling 0,08%, CSI in China is down 1,42% and Shanghai Composites are falling 1,35%.
Hang Seng are falling 0,4%, Kospi are down 0,03%, Straits Times are up 0,39%, Taiex falls 0,2% and S&P/ASX200 is up 0,14%. As you can see, there is not any big moves in Asia. What moves the markets right now is the White house and Capitol hill.
A default means higher borrowing costs for the U.S and that means a slowdown of the global economy. It`s very difficult to understand why the U.S want more expensive money? A default would be a disastrous.
People at the World Bank and I.M.F said they belived the impasse would be resolved before october 17. If so they have to hurry up. The risk is that the government do not have enough money to pay its bills, and that`s for the first time in history. They are playing a game in Capitol Hill, and for all I know, they will probably come to an agreement in the last hour. It`s a political problem.
Is this the reason that is going to break the bullish trend? If not, we have to look for the unexpected. As long as we have this financial system, there must always builds up an bubble. So, what is the next bubble?
44% of the stocks on S&P 500 are high divident yield stocks. It`s the highest since 1970, and a little bit above it`s 35% average. This is crazy. And this is so called «safe stocks»? We are at the all time high, so it`s time to be careful.
News to look at today: Crude Oil Inventories at 10:30am, Beige Book at 2:00pm.
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