Post the earnings for Q3 FY12 which has been decent to say the least; the action has now decisively shifted to Greece and what would happen with default or a bailout. In all likelihood, it looks like the EU prefers a bailout to a default and the flow of funds has morphed into a fountain of life (which flows perennially) in the European Union. The funny thing is that all of the asset managers who matter (read who influence the world markets) just go with the flow; which means that just like the YEN carry trade the same thing now is likely and is happening with the Euro. This Euro carry trade, it is estimated would happen at least over the next 4-6 months.
So when these taps of liquidity flow, they tend to go to the shallowest of corners of the plain; which means places like Asia where the engines are still hot and running.
An interesting piece that I keep following on a periodic basis is in the link above and this summarizes what is happening with the situation across the risk markets today. I found this piece very interesting. In summary, suffice to say that though we are doing excellent at this moment, we are not out of the woods yet. Far from it.
Finally, today’s session, was about higher ground and even more optimism and now actually bordering on “pushing the envelop” which is why getting too much carried away at this moment is a thing one should be very wary about. Though it appears that we are very close to the onset of a nice and steady bull rally, the “stars” are yet to align in a perfect setting for the same.
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