?The current market rally is not based on a typical autonomous economic recovery but on blind faith that reserve US Federal may withdraw a magic wand and heal with another series of mitigating quantitative (QE2).? As we noted last week, a desperate attempt by the Federal Reserve to try non-conventional is get the economy going again after a massive dose of conventional measures led to the collapse.? Members of took it place the knowledge, but other tax measures outside of the table, they know that they are the only game of the city.Recognition of the Federal Reserve that the economy is in trouble is once more highlighted by the last book published beige hier.Voici a few excerpts from the report:
? "National economic activity continued to increase, albeit at a modest pace... consumer spending has been stable at until slightly, but consumers remain sensitive to prices and purchases limited mainly to the necessities and items not discrétionnairesMarché housing remained faibleLa most reports all suggested home sales were slow déclinAccueil inventories were higher or in commercial real estate market hausseConditions were sifted and construction should remain weak.Reports suggests that rental rates continued to decline in most propriétécontacts industry types seem to believe that commercial real estate and sectors of construction remained low since a certain tempsEmbauche remains limited, with many companies are reluctant to add to the ongoing payroll economic softness provided plans capital expenditure future appear to be limited."?
Thus, you have an overview of the anemic economic picture in the words of the Federal Reserve.? Of course, they indicated some strong points as well.But the weakness of consumption, housing expenditures, capital, commercial real estate and the job fairly well account for approximately 85% of the global economy.?
? In addition some of the main problems concern the market sooner have not really disparu.Les problems of sovereign debt of the smaller EU countries are still persistent just below the surface and lined without being resolved.The wars that threatens currency rushed at the recent meeting of the G - 20 on the road are also a major threat to the global economy.?
In addition the bubble Chinese already highlighted by bearish investor Jim Chanos and others now appeared on the cover page of the New York Times. A new neighbourhood in the city of Ordos, in China, covering 12 miles square and consisting of tens of thousands of homes and dozens of office buildings remain a ghost town virtual, cited as "evidence of a real estate bubble will soon pop send shockwaves through the banking system of a country... was the main engine of global growth." In accordance with article there is as much of a dozen other cities ghost resembles Ordos.
Another imminent crisis which will not go away is early mess recently revealed with the paperasse.Il lock mortgage is no mere detail that some would have believe you. Due to complications introduced by slicing the securitization of mortgage loans and mortgage loans more sliced trimmer, it seems that large numbers of mortgage procedures brought by the parties with no legal right to do so.
The gravity of the situation is highlighted by the fact that Freddie Mac with giant investment houses such as Pimco, BlackRock, Neuberger Berman and Met Life, and New York Federal Reserve Bank has continued to Bank of America to return to securitized mortgages that they have purchased from the Bank or its affiliate program. Other major banks can then be sued and and other buyers are likely to join the fray. The situation is also studied by the FBI, various federal agencies regulate and most General Prosecutor States.With the huge amounts of money involved, should not much imagination to realize that this could have to reveal a large threat to the financial system.
Overall it seems to us that the rally market relies on fragile hypothesized that the reserve US Federal can now all the problems above with proven, unconventional monetary measures that could not be resolved by the massive stimulus provided by either monetary or fiscal conventional tools.From the perspective of QE2 already baked in the cake, we believe that the market is highly vulnerable in the coming period.
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