The IMF finally announced it's Latvia "bailout" plan on Friday. The plan involves lending about €1.7 billion ($2.4 billion) to Latvia to stabilise the currency and financial support while the government implements its economic adjustment plan. The loan, which will be in the form of a 27-month stand-by arrangement, is still subject to final approval by the IMF's Executive Board but is likely to be discussed before the end of this year under the Fund's fast-track emergency financing procedures, and it is not anticipated that there will be any last minute hitches (although I do imagine some eyebrow raising over the decision to support the continuation of the Lat peg). The Latvian government admits that some of the IMF economists involved in the negotiations advocated a devaluation of the lat as a way of ammeliorating the ...

In our November 19 post, we said we are monitoring five key dimensions on ten key asset categories to gauge when, how and how much to commit the cash we raised in the summer to the markets in the future.

1. Technical Market Factors 2. Valuation Fundamentals 3. Risk Levels 4. Government Intervention Policies 5. Economic Conditions

Ten Key Asset Categories Relative Performance Since Oct 1:

click image to enlarge

Headlines Re - Government Policies and Economic Conditions:

The headlines in the financial press over the last 24 hours, clearly show that our 4th and 5th monitoring dimensions are not near to being settled enough to risk cash. Consider this headlines sample:

Nov 19 (Financial Times) — Junk bond yields spike — Average yields on US junk bonds have topped 20 per cent for the first time amid rising concerns about a protracted

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Trading Theme returns…  Automakers’ bailout vote today…  Not using all your arrows…  Housing Starts go back to 1959! And Now… Today’s Pfennig!

OK… Whew! What an awful day yesterday for the currencies… In the morning, they ere in rally mode with the euro gaining ground to well within the 1.27 handle. But then the Trading Theme set in, and those gains were wiped out. The Trading Theme was set off by the awful Housing data, which reminded everyone of the deep, dark , dangerous days ahead… I bought some euros, and watched them rise, and went off to do something else… When I returned, they had fallen… UGH! The Japanese yen, however, rallied, as is the case with the Trading Theme… Risk trades get unwound, which benefits dollars, and yen. I’ve explained all this before, so I won’t get into it again, but there’s someone that has gone into the problems

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