The early January effect.

(Jan 6th 2009)
It is quite early in the month and in the year to give a judgement about the ' January effect' in the markets and trading volumes are rather thin. January is usually the month big institutional buyers and Pension Funds step in the market and begin buying in volume. Pension Funds are especially pressed to get better results this year.
After last year's fall and losses there are plenty of bargains to get and the money is available. The currency market is still a bit shaky and could turn out to be an extra volatility factor.

The dollar rose on news of the Obama Stimulus Plan and tax breaks for the general workforce. The recent rise of the American Dollar is a signal of a return in confidence in the USA. Gold went south by a rising dollar
Germany is coming up with a 50 Billion dollar economic stimulus plan, although Prime Minister Angela Merkel is still negotiating about the fiscal stimulus measures.

Auto sales in December were particularly bad, with in the U.S. for the first time the Big Three's (Ford, GM and Chrysler) share sinking below 50%.
Worldwide the auto industry looked like already in depression with Toyota closing up plants for January and part of February (even some days in March), only the French brands seem to do a bit better. In the Netherlands the auto sales for 2008 were only 1.1% lower than in 2007.
With the diplomatic flurry in the Middle East and the growing rage about the humanitarian situation in Gaza, Israël is expected to end its campaign within the next two weeks.
The wintercold days in Europe are ending and the yearly ritual of the Russia/Ukraine gas conflict become less important, and the only important question remains; "Who is lying the best?".
European markets were between 1% and 2% higher this morning with the DAX (+ 1.3%) strong and Volkswagen shares up 6%, Porsche owns over 50% o of VW and has to do something with Scania. U.S. market futures point to a higher opening. Retail figures from the UK were better than expected. The overall market sentiment is cautious but positive with renewed discussions between 'bulls and bears' flaring up.

More details emerge of the SEC's handling of the Madoff affair, and voices for a reorganisation of the Securities and Exchange Commission and better regulation sound louder. Bernie Madoff is accused of violating his bail terms.

Tip: It is certainly worth looking at Japan, the Japanese economy and the stock market, how they did over last 12 years and in their deflationary period in the beginning of this century, and learn lessons from it. Do not be over optimistic!

Worldwide there is a danger of expecting too much, too fast and too soon from the U.S. and the new President.