Posted by: jhamon | January 25, 2010

MysteryHedgie: Markets Hate Uncertainty…

http://www.independent.org/publications/tir/article.asp?a=430

The above link to a piece by Higgs talks about the political and legal uncertainties resulting from FDR’s frequent “redrawing of the rules” as one of the reasons the economy and markets stayed tenuous into the 1940’s.

The developments in Washington over the past week are creating a similar air of unease.  The status of health care reform, the broadside against bank proprietary trading, the controversy surrounding Bernanke’s reappointment… all these items raise the level of uncertainty, as Washington 2010 attempts to “redraw the rules.” 

Markets abhor uncertainty; expect further defensive trade toward lower price targets (SPX 1085, EEM $39) pending more clarity, which may occur with the State of the Union speech on Wednesday.  Bigger picture the developments of the last week justfy a reduced risk/defensive profile as US politicans manoeuvre, China keeps its foot on the brake, and the Western consumer continues to retrench.

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Responses

  1. As the saying goes “those who do not remember history are bound to repeat it”.
    It ‘s something like that.
    I just hope to be able to glean my own advantage from what we can learn from history.
    Your blog looks like a place I will hangout at.
    Here’s to mining for those nuggets of info/insight.


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