Overview

Despite of the turbulent period, I am trying to keep an overview on what is happening:

1. Finance: The situation of the western banks relaxed due to the gov support. But the financial system seems to break away in other parts: more and more east european countries face financing problems (mainly Ukraine and Hungary). On top of that, Austria cancelled the bond auction because of the too big yields requested by banks for a loan to a AAA rated western country. This is a very bad sign. Why? Banks can be saved as long countries have access to credit! If also the countries have problems to get money, there is nobody left.

2. Auto: the sales dropped in October in Germany by 8,2%. And they plunged in US 32%. These numbers are dramatically, they are impacting not only GM or Ford, but the whole industry, Toyota and german automakers.

3. Raw materials industries: everything goes down, inclusive oil and gold. This makes me anxious actually - gold is going down, despite its reputation of safe harbor during recessions.

4. Constructions: plunging all over the world, but US starts signaling a bottom.

In these conditions, we should be happy if the xmas rally will bring djia and dax 25% away from the highs. This would make djia about 10500 and dax around 6000. The fundamentals are pretty bad now and these are the tops that (I believe) we can still reach this year. Maybe this will be supported by dramatic rate cuts made by ECB in the next 2-3 months.
On the down side, there is plenty of room and I am afraid we are going to see new lows next year.

Regarding the romanian market, I just want to note that one anomaly is fixed or on the way to be fixed: Petrom share was trading far below the price paid by OMV and the price the employees will pay for the 8% stake. Yesterday it came back to normal levels. But bad news are coming also from this area: Petrom reduces their ambitious investment plans. It is a symbolic bad news, Petrom being for me kind of GE of Romania, pointing where the whole economy is heading.