每日市場點評 ---- December 6, 2007

Bulls are back, in full forces. For the second day in a row, all three major indices registered more than 1% gains with Dow closed only 4% below its historical high. More important, investors are once again embracing risky assets. Everything from commodities to insurance to semiconductor to homebuilders is up huge. Although some may argue it has more to do with shorts covering than real buying, we have to accept the fact that the current trend of the market is clearly up, as simple as that. There is also evidence that money is moving from treasuries to equities. It is very likely that some fund managers have no choice but to chase the market to make their returns look comparable to the rest of the market before the New Year’s Eve. It is not difficult to see why bulls have reasons to celebrate. They have both the Fed and the US government behind them. With today’s detailed sub-prime bailout plan, the previous fear that 2008 will see more foreclosures and therefore worse housing conditions is greatly relieved. Suddenly, it seems a soft-landing is not just possible, but probable.

Separately, ECB kept its key interest rate unchanged while BOE lowered the interest rate. I would like to point out that there is a key difference between ECB and other central banks. That is, ECB is not a central bank for a single country and its sole mission is to keep the EURO region’s inflation in check. For other central banks, they will be more or less influenced by political pressure and therefore have to worry about economic growth. The ECB policy clearly shows more monetary discipline but at the same time lacks the flexibility to experience various economic conditions. Only time will tell which policy is better.