There were no surprises from the Fed on Wednesday. The FOMC Statement contained little that could be considered a startling revelation. In the midst of this cautious approach from the Fed which seems intent on trying to maintain stability, Wall Street slumped again. Global bourses continue to get hammered also. The FX market has seen rather cautious trading but as of today investors will have to glance into the looking-glass and begin to make decisions. Long-term investment choices appear to be tough and maybe this is why the U.S. bond market has seen an increase in activity recently.
Stocks which in Digital Markets Advisor’s opinion have been overvalued for sometime have been taking it on the chin recently. More important however is the interpretation of current quarterly earnings reports which continue to try to play down future results. While some government officials – including the Fed – foster the ‘sun will come out tomorrow’ scenario, corporations appear to be more than a bit troubled by what they see on the horizon. Investors in times of trouble switch from risk taking to preservation modes, corporations do the same thing and their current outlooks mirror this.
The EUR finds itself on the lower rungs of a stronger value. The Single Currency is testing support. The Spanish GDP has been published and met expectations with a gain of 0.3%. The result is welcome based on the fact the European Union cannot count on Germany to be the only strong economy forever. Spain has been gripped by the worst of the global recession and any signs of life are appreciated by all. In the last ten days the EUR has had a rather interesting range as traders have tried to traverse a rather nervous market place. The Spanish economy serves as a reminder of the crisis that has had to be overcome and still plagues the landscape. While many analysts point to the problems that emerging countries are facing and their currency turmoil it is easy sometimes to overlook the fact that the global economy is very integrated and that when one part of the world coughs that its neighbouring countries and trading partners are almost certain to get sick too.
German Unemployment Change data will be published within the hour. And the Americans will get into the act later today when the Advance GDP numbers are released. Considering the FOMC Statement which painted a rather optimistic economic outlook for the U.S., Digital Markets Advisor suspects that today’s number might be better than expected regardless of other data which has been less than inspiring lately.