Today's vote in Germany's parliament on strengthening the European stability fund will almost certainly succeed. Yet, the Bundestag is voting on too little too late. If this past weekend's IMF/Worldbank meetings are any guide where little was achieved but Gaithner managed to talk up the markets, a supportive Bundestag vote will lead to a short lived rally.
None of the underlying issues are being resolved or discussed. European and U.S. policies likely continue to be medium-term supportive for US government bonds (particularly on the long end), and supportive for ETFs / mutual funds short the Euro, oil, and emerging market currencies. Gold is likely to resume its upward trajectory.
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