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Week of Dec 15 – Dec 19, 2008

Sunday, Dec 14, 2008

7:00PM Philippine time

The US Auto bailout failure saga is holding the US economy and Investor Risk Appetite hostage. A Whitehouse intervention of 5 to 15Billion dollars is still being debated and as of this writing, no decisions have been made. Analysts are saying that this amount is way short for their immediate cash needs. Personally, I believe that money or not, the Auto Industry may already be done for. (I really hope I am wrong) If the US Auto industry is allowed to fail, this will translate to 1 million more job losses in the US and may spin the country into a depression.

To top this off, Investors are pricing in a 97% chance of a US Fed cut from 1% to 0.25% this coming Wednesday early morning. This has never been done before and will be catastrophic for the USD. I believe that this is and the Auto bailout issue was the reason why the USD already started to weaken last week.

A reversal now of currency strength is now in the works as the USD will start to weaken materially giving back it’s gains since August. The question remains, what will the Whitehouse do for the Auto industry and what will the Fed do for the interest rates?

Having said that, I would recommend to not be trading this week as the chaos and uncertainty will be unlike anything we have ever seen before.

Should anything change I will update this post!

Monsterpips to All!

-Mark

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