What's going on?

The S&P has slipped below 800 to 750 levels with such ease that I fear we are indeed going to 600 as I thought earlier.


Here are the main views:
Real Economy

* Pain in the real side of the economy. Look for S&P to keep going lower

* The stimulus package will be moderately ineffective, inefficient and quite small. I think the market is falling in part because the REALIZATION of Obama's plan was far lower than the EXPECTATION!. We were hopeful but are disappointed that he, the smart new prez, has no magic bullet

- Currency views:

* EUR is under severe danger over the medium term- all the differences in various countries' political economies will come to fore... the interest rates will have to be drastically cut for a longer term than is currently priced in AND the stability of EUR currency itself is threatened.
* The short EURUSD trade has made a lot of money so far. Also long USDJPY may be the trade to get into... with Japan's horrible GDP numbers.

Below is something I read in a publication that shows how badly the small countries are doing...

Dubai Receives Capital Injection To Ease Debt Burden
• As concerns about the emirate of Dubai's financing needs mount, it launched a bond issue, the first tranche ($10b) of which was fully subscribed by the Central bank of the UAE. Dubai is estimated to have $14b in interest and principal payments due in 2009 (EFG-Hermes via WSJ) and it is slated to run a fiscal deficit in 2009
• Central bank of the UAE had $44.5 billion in fx reserves in September (most recent data) but has since provided liquidity to several of the country's banks. Instruments are five-year bonds that carry an annual interest rate of 4 percent
• The loan, the first major step of a long-anticipated support from oil-rich Abu Dhabi via the federal government, should ease the cost of insuring against a default, which in recent weeks saw five-year credit default swaps on Dubai debt rising to levels similar to Iceland (FT) Doing so might also lower risk premia on Dubai banks