THE DOT - if this turns orange or red be alert

Monday, November 30, 2009

part 2

3. If I were Abu Dhabi I would play hardball with Dubai and the financing banks. Let them make big haircuts on their loans of 30-50% , the same is true for Dubai who has driven an insane policy of hubris ( history repeats itself all over). My assumption is they will let it slide towards default and save it last second scenario type after banks have made deep discounts on their loans.
The point for the markets is that the risk factor has to be priced in again short term before the final window dressing (year end) and propaganda machinery will roll full speed to make people gloabally to spend for Christmas which is the biggest business of the year plus get the CAPEX rolling again at yearend. I can imagine with last years problems and Mirosoft's 7 at hand banks will do some tech spending. The real economy though the second and third tier can not afford any tech spending as they do not have cash or credit available - plus they have no idea if they will survive. The effect on Q4 will not be that good afterall as consumers are on the retreat path ( deleveraging) which is the crucial factor for the 2010 earnings.

4. Pretty bullish the sentiment - which is not good for bulls

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