The Sell Off Continues

Published by Filipe R. Costa on Fri, 09/11/2012 - 10:35
bull bear fight

Daily Market Commentary for November 9: The sell off in equities continues as investors weight their concerns about the US fiscal cliff. Gold was up.

The fiscal cliff is substituting the Eurozone in terms of concern. Investors continue to care about delays for the Greek bailout and the Spanish uncertainty but the real concern is now on the US fiscal cliff as $600 billion in cuts may start on January 1 and they can put the biggest world economy under recession. If that happens, the result will be catastrophic and negotiations are expected to be tough between the President, the Senate, and the House. The Dow closed down again and is trading at late July levels. Investors have been expectant during the last few weeks or even months and are not really believing QE3 can solve all problems.

Gold is up as investors think the FED can adopt even more desperate measures to serve as a balance for any government cuts. That seems unreal to me and it is some kind of irrational thinking but the truth is that it is weighting on Gold.

Mario Draghi add nothing to last ECB conference meetings. The bank is waiting for its first client but it seems no one will ever knock the door. Spain doesn’t want a full bailout because it doesn’t need one and will stay this way for as long as possible.