Coming into Feb, the economic news should continue to remain rotten. However, this month will be historic for the steps that will be taken by governmnets around the world to fix their banking systems..Banks remain starved for capital and credit is not flowing through the economies. Without a healthy banking system, no fiscal stimulus, no matter how big, can have an impact even close to what policy makers are hoping for.
The banking bailout, if credible and convincing, may easily trigger at 5-8% rally in European and American markets and 10%+ rallies in emerging markets such as India. Good trading idea would be to buy 5% out of money calls and selling 12-15% out of money calls expirying this Feb.
Stuff to look out for this week: Banking bail out details