Charts: The Euro was up today, probably because Germany is forbidding German hedge funds from certain types of shorts on Euro-debt. Short covering caused the Euro's pop. The S&P 500 was only down .5%, closing at 1115, exactly break even for the year and sitting dangerously on an important support level. In early going the index cratered and briefly plunged under the 200-day moving average but then climbed steadily to register a mild loss. The reversal was no doubt due to the Euro’s gain. So the market was buoyed by technical factors, not fundamentals. The market is still in a correction.
Fundamentals: China’s tightening policy is working. Chinese real estate prices are declining, averting a real estate bubble similar to what Japan and America have gone through. In the long run this is good news. For now it is threatening China’s construction boom which is hammering the price of iron ore, copper, and other commodities. This slow down coupled with the Euro-zone debt crisis is putting tremendous pressure on the recovery.
Geopolitics: Yemeni and Saudi commandoes raided an Al-Qaeda in the Arabian Peninsula (AQAP) camp and rescued two German hostages that AQAP was holding for ransom. It is heartening to see our allies giving AQAP a black eye.
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