Keeping the pedal to the metal – my short summary of the market for today. The price movements indicate that the markets assume the FED will not cut back the QE program for a while (in my opinion, this year they won’t – but greatly depends on the fiscal situation as well) which probably will slowly drive the equity market higher. Great oversimplification, I know, however the evidences of the main trend with ample liquidity are back on.
Significant adaptations have occurred in the EU in the last two-three years and the periphery performed very well lately on the back of the overall bullish sentiment for European stock market. I can’t tell whether any of the countries will need more austerity but they are on the right track and ECB’s balance sheet is like the waist of a bride – thin but with room to get more robust… Latter eventually happens so it doesn’t come as a surprise.