Feb 1, 2009

Good Bank...Bad Bank

the world's been pretty boring this Jan..sure the latest economic data's been bad, etc etc..but nothing spectacular, certainly nothing compared to the last quarter of 2008. This is not a bad thing. In Jan 2009 credit markets remained tight, equities continue to languish, bonds continue to fly high and  the world seemed as rotten as last year (if not more).. 

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

Stuff o

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