Hey folk
I am going to talk about the US and the Europe.
The US is facing a dateline by 2nd Aug 2011 to raise the debt ceiling or face a possible default. The 2 party in the US govt have not seen eye to eye on many issue yet.
US govt is really too big to fail. If they fail, the whole will be hit by a massive shock wave, worst then the previous one we had.
China one of the largest lender, will have problem. Singapore too hold many US treasuries. Things will turn ugly. The world will turn ugly.
My take is they will sure come into a consensus. Sure they will!
But it is before or after 2nd Aug??
If is before 2nd Aug, I think the equity market will either fly thru the roof or have a correction before doing so.
If after, then i think we might see the market drop drastically and then rebound and give it a massive bull run.
Europe is never a region i like to invest in. One of the reason is i think they are too welfare. Workers can go on strike for whatever reasons. Too much union protection for the workers, do not do a favour to the economy.
Germany and France are the only major 2 countries that support the EU together with Scandinavian countries like Norway etc. However, Greece, Italy, Spain, Ireland, Portugal have big problems. Greece is facing default. Now what the EU are doing is to prevent the default to happen now. Push it further down the route. Push it to perhaps 2 to 3 years later. It is inevitable that the situation can never be solved, unless these countries suddenly have super good growth for a long term.
Europe countries unlike Asia when in 1997 financial crisis, we could devalue our currency to make our export cheaper and in turn drive our economy. But EU use a unify Euro. They can do that.
My take is the problem is not solved, it just push further to future.
My forecast for S&P500 since the beginning of the year till now have not changed. I still am bullish about the market.
S&P500 to end at 1630s to 1650s
Gold to about 1800
