Why keep an eye on government actions? They have the ability to move markets, like it or not - so we have to account for the government in our trades.
Right now, here's what I see:
- It's an election year - government will therefore do everything in its power to buoy markets. This includes masking statistics (see yesterday's post on inflation) and keeping asset prices afloat (if inflation is triggered, so be it).
- Rates are coming down further, dollar be damned.
- Don't be surprised to see a socialistic, inflationary housing rescue plan pumped through (as everyone figures out Paulson's plan was pure show.