Stock Market: Where Are We Now?

"Risk-taking is starting again, people are focusing on bargain-hunting as stocks have pulled back pretty dramatically in the last month,” said Geoffrey Ng, who manages $1 billion as chief executive officer at HLG Asset Management Sdn. in Kuala Lumpur. “Emerging markets and Asia really stand out in terms of growth prospects.”

Wahlau, this is Nightmare Inversed!
Suddenly, stocks are booming again.

“We had a positive surprise with U.S. manufacturing data,” said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. “That not only indicates that the recent soft patch is temporary, it also tells you that we’ll continue to see strength in global growth. In Europe, they are buying themselves more time away to solve their debt crisis. We should see a decent second half for the economy and the markets.”

No Default Here
Although we don’t know much of what the politically inevitable debt limit extension compromise will look like, we can predict a lot of how it will all play out and the impacts of it all with a large degree of certainty.
The first and most critical thing to understand is there is no way the U.S. government is going to default.
Politicians are trying to make this dramatic as possible. They all want to be the hero of a last minute deal. As a result, they’re likely to take the negotiations to the last possible minute, but there will be no default for a number of reasons.
First, if there’s no deal, the interest can be easily covered by regular tax collections.
Second, you can’t believe the talking heads. Many of them are nothing more than fear-mongers claiming the government is on the brink of default if the debt limit is not raised.
They’re wrong. The real money (a.k.a. the bond market) isn’t buying it and you shouldn’t either.
As of Friday, credit default swaps (CDS) against one-year U.S. Treasury notes (the equivalent of an insurance policy against a default) was trading for 50 basis points.

To put that in perspective, Ireland CDS last traded for 880 basis points and Greece CDS was 2,200 basis points. The U.S. CDS, valued a fraction of the countries truly on the verge of default, show the market sees very little risk here.

- Andrew Mickey
Chief Investment Strategist, Q1 Publishing

I am confident the SG market tomorrow - which is Monday -- will be all green. Reasons:

1. The dow recovered on Friday to close at 37 points up.

2. The ang mohs in Euro are stepping up efforts to identify measures that can stop their crisis from spreading. I think the efforts are gaining momentum. No doubt the Greek default risk has gone up and the euro crisis is no small issue, history has shown that people can rise to the challenge, usually. Let's hope this time it's no exception, becos if it is the fallout will be far & wide.