02/15/2009 – US set to pass fiscal stimulus package

* US set to pass fiscal stimulus package
* Brutal range environment prevails
* G7 unlikely to save the world, but may see JPY weaken
* Key data and events to watch next week

At this writing, the US House of Representatives has passed the 7 billion economic stimulus package, and the Senate is set to vote later this evening, with passage expected there too. So it looks like the US will have the much ballyhooed and maligned stimulus package and the question is “now what?” The most likely answer, I think, is “not much.” It will be months until the stimulus money finds its way into the economy and months until it has any effect on economic data, so we are left with sentiment as the primary driver. Given most economists’ views that the package will at best cushion the US downturn, a relapse in sentiment is as likely as any rally. In the meantime, the global recession continues to weigh on the near term outlook for risk assets, generally lending the USD support. The offset to this will be concerns over the US ability to borrow the expected .0-2.5 trillion it needs this year to fund the TARP, the stimulus package, and normal operating deficits.  Full text »

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