Market Review and Trends
Global investors go bungee jumping. Updated 7pm includes US data prediction
By Patrick See  •  September 30, 2011
(Posted Friday, Singapore time 330am)

When hopes and speculation for a favorable FOMC meeting brought global indices to one of their best week a week ago, the FOMC announcement reversed its course.

'Operation Twist' which was widely expected lowers longer borrowing cost. It doesn’t expand the balance sheet at all. There is no stimulus to push up the economy. Hence, market was disappointed and the bears took the stage. The problem here is that most investors follow (blindly) the herd without knowing the effects of such an announcement (operation twist). Classic bull trap.

Again, hopes and speculation for a Germany-Merkel vote which gives new powers to the EZ rescue fund was short lived. Not knowingly to most of you, the implementation would produce undesirable side effects, too!

Coupled with a better US GDP final revision for Q2 which came in better than expected, the US markets pared most gains with ...
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By Patrick See
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