20 March 2008 - 21:27Market Commentary 3/20/08

Yesterday’s release of the Bank of England’s minutes showed only two members voted to cut rates by 25 basis points in stark contrast to the slash happy Federal Reserve who seems eager to provide cheap money for desperate banks.  Today’s UK retail sales showed that there is reason for the hesitation since they rebounded nicely after a big disappointment two months ago.  Plus money supply while less than expected still came out at a disgusting 12.3% year on year.  Meanwhile inflation in Germany came in much higher than I expected I must admit and shows why the ECB needs to keep rates where they are or actually tighten if anything. Meanwhile the EU trade balance was a lot worse than expected yesterday at -10.7 billion euros which is pretty huge and a far cry from the surplus they recently enjoyed. This gives a good explanation as to why it was not able to recover at all today. While the pound was able to make a little it of headway. With tomorrow being good Friday you can probably expect low volume in the US and European sessions. That doesn’t mean of course that someone will try to take advantage of the illiquidity to move the market while most people are out. That is why I rather just make my trade tonight while the non Christian countries are trading and be flat tomorrow. If you see something big happening tomorrow by all means jump in if not have a nice Easter.