This week saw many investors go bargain hunting in the first two days of the week as fears over a Greek default temporarily subsided. Many had focused in on the Greek Prime Minister and a crucial vote that took place earlier in the week in which the Parliament voted on if it had confidence in his leadership. Thanks to being the chairman of the largest party in the legislature, George Papandreou passed this crucial test. Markets rose in anticipation of this event as most had expected him to remain in power, however, the real test comes next week when the government must push further austerity measures through in order to secure more bailout funds from the richer European powers.
Thanks to this slight reduction of risk, investors scooped up equities across the board in Monday and Tuesday trading, as well as the beginning of Wednesday’s session as well. Yet this did not last as the Federal Reserve held an important policy meeting to discuss rates, its outlook for the economy, and the future of QE. The central bank kept its benchmark at the ultra low level and promised not to raise them for an ‘extended period’ citing a still weak economy. However, Bernanke also ruled out another batch of quantitative easing, suggesting that although the economy remains on shaky footing, it isn’t bad enough to warrant an extension or expansion of the now infamous bond buying program. “The FOMC is firmly on hold pending more information,” said Jim O’Sullivan, chief economist at MF Global in New York.
With these developments taking shape, some our ETF plays from Monday have done quite well as investors around the world are breathing a sigh of relief, at least for the time being. As a result, we’re taking this opportunity to shift exposure in our all-ETF portfolio to take advantage of European events:
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