Tuesday, September 30, 2008

Markets Rebound

North American markets had a strong rebound today. I was interested by a couple of points that I came across in the news:

1. Some news agencies claim the rebound is because the American Fed made mention of continuing to pursue the bailout package by Thursday this week. I am not sold that this has any big reason behind the resurgance in the market. Instead I think a lot of overseas investors took great advantage of many bargain buys after the largest point drop in history, and that helped to kickstart things once again. Also, I am not sure the $700 billion tax payer bailout is what the market needs anyway. To me it just tells bankers and lenders that they can make huge mistakes, because the tax payers will be there to bail them out. I am not sure how effective that message is.

2. I also found it very interesting that China's exchange gained while other economies around the globe lost over the past 48 hours. While China's stock market intially dropped when the trouble began, it quickly rebounded and even ended higher by just over 2%. If the western economies slide into further problems, keep your eyes out for the new economic global super alliance spearheaded by China - Iran, India, and quite possibly even Russia if they play their cards right. Very interesting times indeed. I welcome any opinions on this point - it's pretty much brainstorming at the moment.

Nonetheless, it was good to see the markets rebound. Pretty much all analysts are at a loss to predict what's going to happen in the short-term. They are quick to point out that we are in brand new economic times with no historical backdrop to reference.

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