Brave New World

Edge of the cliff time 17/02/2009

A very scary day today. In most of my posts so far I have been monitoring developments in the FX market, and with it the level of risk appetite. Today we have witnessed a total collapse in risk appetite, as the news of the last few days- a lacklustre G7 meeting and a terrifying level of debt exposure of Western European banks- has weighed heavily on the markets. US equity markets are testing their post Lehman lows- the Novemebr 20 low in the Dow to look out for being 7552, and the price of US government debt has soared. US 10 year bills have dropped 20bps- a huge number. Gold has risen another 3.4% to $973 per ounce, a seven month high.

Later today, President Obama will sign in the new fiscal stimulus package; widely viewed as weak and hijacked by Congressional Democrats and Republicans. The markets obviously don’t like it. 

And if that isn’t depressing enough reports are coming through that R. Alan Stanford of Stanford Financial Group in Texas has been charged by the SEC of a “massive ongoing fraud”.