Written by Marc Courtenay

Monday, 05 December 2011

Agora Financia l said it very well today, 

"This week “could be the most important and volatile seven days in all of 2011,” says Michael Pento.

The eurodrama might be coming to a head... and the Federal Reserve will play a leading role, taking an ever-more active hand in keeping the Rube Goldberg contraption known as the eurozone from flying apart."

Their "5 minute Forecast" went on to say,

"On Thursday says Mr. Pento, “The European Central Bank will most likely make a crucial decision as to whether or not they will monetize massive quantities of insolvent European debt without sterilizing those purchases” — that is, the pursuit of outright money printing.

“ECB head Mario Draghi has already lowered the interbank lending rate one-quarter point in his first few days in office.”

“Now he is expected to take interest rates down to 1%. And in addition, if the European Summit meeting [on Friday] yields an acceptance to broad-based austerity measures, the ECB may finally assent to purchasing PIIGS’ debt in unlimited quantities and duration.”

After the market's close, Standard & Poor's placed the sovereign ratings of Germany, France and other euro zone nations on "credit watch negative," the step that precedes a downgrade. Stock index futures edged lower after the news.

"The market felt in some ways it was past these worries for the time being, and now they'll have to revisit them, or at least churn them over in their minds," said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.

Markets have had a tough going with the euro zone's crisis for months. Hope that European policymakers were entering a possible solution sent the S&P 500 to its best week in almost three years last week with a rise of 7.4 percent. But now it appears the markets may be in another threat that may require a "RETREAT" ? Frankly, I could use a "retreat" for awhile, just to regroup and reconsider all this.

 Chicago Fed Governor Says "Fed Must Act Now!"

Reuters filed the following report earlier today, "The Federal Reserve must take immediate action to inject new life into a moribund U.S. recovery or risk letting the nation settle into a permanently lower growth path, a top Fed official said on Monday.

"There is simply too much at stake for us to be excessively complacent while the economy is in such dire shape," Chicago Fed President Charles Evans told the Ball State University Center for Business and Economic Research. "It is imperative to undertake action now."

"Evans' renewed call for monetary policy easing came even as the U.S. unemployment rate tumbled to a two-and-a-half-year low, and a variety of economic data suggest that U.S. economic growth may rise sharply this quarter, topping a 3 percent annual rate.

"Known for his dovish views on inflation, Evans was the only Fed policy maker to dissent last month on the central bank's decision to leave monetary policy unchanged. Then, as today, he called for further easing to boost the recovery."

So something very big is about to be unleashed this week. I'd encourage you to read the article with the partial title "Dow 14,000" at Seeking Alpha for more insights and possibilities.

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