Wednesday, November 30, 2011

Stocks Surge on Band-Aid Plan - THE WINNERS

As I mentioned in yesterday's Blog Post regarding Europe's Situation, a Band-Aid would likely be put on the gaping wound that is Europe's sovereign debt issue.

That Band-Aid came in the form of more liquidity. Basically the major Central Banks around the world (Fed, ECB, BOE, BOJ, and SNB). By lowering the price of US Dollar swaps by 50 basis points it floods the market with money. This will help shore up credit for businesses and individuals.

THE WINNERS

  1. Equities - The risk-on trade is back on and with money flooding the world, it will shore up and concerns with Europe in the short-term. This cash will also make its way into the best option right now - Equities. S&P 500 +3.2% ($SPY)


  1. Foreign Currencies - As more US Dollars hit the market, the value of the greenback falls as foreign currencies rise. US Dollar Index -1.2% ($UUP). Euro +1.2% ($FXE).


  1. Gold - A weak US Dollar and the fact the Central Banks realize things are dire, make Gold a currency alternative as well as a safety play. Gold up 1.7% ($GLD).

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