- The big event risk for the stock market and the US dollar is the Lehman Brothers’ Credit Default Swap settlement on October 21. The fear that European banks may be forced to pay out on the default protection has prevented the Euro and British pound from rallying despite the recovery in US stocks. The estimated payout on the CDS could be as high as $365 billion, more than a half of the US government’s $700B bailout plan. The settlement should be most if not all in US dollars, which is why there has been a strong demand for dollars against the next 2 most actively traded currencies. If the CDS settlement triggers no bankruptcies, then the stability that we are beginning to see in the financial markets may last.
Related Posts :
- 10/20/2008 - As Oil heading toward $50, Buy DUG
- Bernanke: More stimulus help is "appropriate" (Update 1)
- Kathy Lien: Lehman CDS Auction Prevents Euro and Pound from Rallying, October 20, 2008
This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer on the bottom for more information.
You are welcome to republish this article, or any portion thereof.
Please, cite the actual/original source. I would be grateful if you could link back.
No comments:
Post a Comment