March Madness, A Smorgasbord Of Risk Factors - The rest of March is going to get very volatile due to the smorgasbord of risk factors - EU meeting this Friday and on March 25 regarding European Financial Stability Facility (EFSF), regional elections in Germany, debt ceiling discussions in the US, and continued speculation on QE2 and possible QE3, and talk of double dip recessions due to oil price spike. Case in point, the Euro was able to rally off yesterday's lows in face of continued concerns on Portugal. Portuguese 10-year bonds continue to yield over 7% which is the level that both Greece and Ireland had to throw in the towel. The reason the Euro rallied was due to rumours that the European Central Bank was checking prices of some peripheral bonds lending to speculation that the ECB was ready to step up and buy bonds in order to support the Euro. As far as I'm concerned, the Euro will move higher because the ECB or the EFSF will be there to lend support by buying bonds. The market keeps worrying that a bailout of Portugal will lead to contagion in Spain, but I disagree. A Portuguese bailout will help Spain because lets face it, these bailouts or not for the countries but rather the lenders, aka the banksters, so if Portugal gets a bailout then Spanish banks will be made whole thus easing the pressure on Spanish debt. Elsewhere, the GBP was able to reverse a four day decline after a report showed the U.K. trade deficit narrowed more than economists forecast in January as exports surged to a record. In Asia, Japan's January machinery orders rose 4.2%, which was more than twice than expected, but the Yen still moved lower against the USD as Japan's fiscal concerns are currently trumping economic news. In Canada, the CAD moved higher, breaking free of its recent trading range, as commodity prices moved higher and global equity markets advanced.
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