I’m going to risk a bit of market timing although I’ve always sucked at it. This is what I predict in the very short term:
1) This week iPhone 5 is coming out. Spring was already organizing sales for October and there is no way that Apple can ship devices to them on time unless they begin doing it right now. Aside from that, I’m already on 2 final betas of iOS products, which I cannot make public due to EULA but I can say that they are final. I doubt we hit friday without iphone 5 out, and since Steve Jobs is gone, i’m expecting they try to make a big splash on it. Maybe add the famous NFC to it?
2) Greece is gone. They’ve just hit a 60% interest rate on their 2 years note and 20% on their 10 years. No country whatsoever can handle that level of debt for an extended period of time, and they’ve been on that range for close to a year. I don’t think Europe would let them “just default”. It would be majorly stupid and a huge risk to the system. My guess is that they will schedule an orderly debt restructure in a way that they can protect their financial institutions. What’s next? who knows. I would set my eyes on Portugal, but with Greece out of the way I think the EU could have more leverage for bailouts on other countries.
3) European fiscal union. This won’t happen overnight, but I think we are setting the stones for it. We do want Eurobonds, but they can’t do so because we are all fiscally independent. On the other hand, while publicly saying that it’s not possible, if you pay attention all countries are adding fiscal restrictions to their constitutions. I think the govts are laying the ground work bit by bit on a fiscal union, so that after whatever happens to Greece, they are better prepared for the next one.
4) The fed will do “Operation Twist” on sept 21. What this means is that the FED will buy longer term Tresuaries to try to bring down the yield on the 20/30y bonds. They are already at record lows, but they want them lower to promote long term lending. I wouldn’t be surprised if they even bring back the 50 year bond. In any case, this is a safe strategy with almost no cost to the fed, so “Operation Twist” is practically a done deal.
5) US and the EU will give some kind of stimulus package. This can be on the form of Obama’s last idea, or a QE2.5 or QE3 or whatever. They are not going to let their economies collapse when they are so close to steady recovery.
6) Rafael Nadal will win the US Open today. Just because he is cool like that.