The worst has yet to come

Greece has yet to default. Though an almost certainty, in my opinion I do not think Greece would default as long as JC Trichet is the President of the ECB! Who is taking over?

First of all, I am NOT pessimistic. It is a reality. And if you are wondering, what’s happening out there, please read on.

As mentioned in my previous blog, the ‘big boys’ didn’t get Greece, so they are targeting the rest of the PIIGS, namely Portugal, Ireland, Italy and Spain. They are doing it now.

The credit rating agencies has yet to emerge in full force on PIIGS. In my speculation, they would emerge when the ‘French’ rollover of voluntary new debts is announced. This would certainly escalate the current scenario.

On the two largest economy – US and China.

Coupled with the US drama  between the Democrats and the GOP on US debt ceiling, a decision has to be made by next week (not Aug 2^nd) the latest, otherwise, there would not be sufficient time to pass it through the red tape.

As mentioned in my earlier post, China accounting scandal and financial institution are being red flag by Moody, now. If you recall, I mentioned this much earlier but why are global investors / speculators triggering these events (only) now. In other words, why did China and Hong Kong markets react now and not much earlier?

For the record, VIX had spiked from 16.00 to (currently) 18.39. Day high for VIX is 19.06. Similarly, Gold rose from US 1,510 to a high of US 1,557. Last but not least, the USDX spiked to a high of 76.41 today. The Gold pricing and USDX levels were not seen since last April.

In other words, what the market is telling you is to back off! For the moment, step out of the box and have a better picture. My Generals have been telling me (in turn I am sharing this with you) do not fall into the bull trap, last week or two. We are still sidelined.

And if you are thinking of the US corporate earnings to booster up confidence, do not hope this would happen. Let me explain, the quarterly results reflect the earnings of the previous quarter. Even if the results are good, the speculators are focus on WHAT is happening today!