(Reuters) – Tuesday was the worst day for the Wall Street after The Dow recorded a decline of about 200 points. This drop is a clear indication of disarray in Greece and fears that China’s delay would impact adversely on global growth.

According to analysts, there will be retract for a couple of weeks especially due to the overstretching of the market. However, the benchmark still maintains an upward trend despite Tuesday’s decline. The S&P 500 still remains up by about 7% for 2012.

Since November, the Wall Street’s angst gauge has jumped to almost 21, which is way above its 50-day changing average. It is also clear that for every one stock that rose, about ten others fell the NYSE, with most banks and small shares being the worst hit.

Notable also is the fact that there has been very little pullback in the equity really since December especially due to expectations that China’s could manage to revive its economy and Europe’s debt disaster would be dealt with.

According to Burt White, the managing director and CIO at LPL Financial, the current pullback is important in enabling the market to reassess how the expected growth predictions for 2012 look like.

Apple Inc experienced a fall in its shares but outdid the wider souk after unpredictable swings in lately. This saw the stock close down 0.5% at $530.26 on Tuesday.

The EU is optimistic that Europe’s slump could transform into full-grown recession especially due to disintegration in domestic spending, exports and production in the last months of 2011.

Another notable point is the expansion of Brazil’s GDP by a scanty 2.7% in 2011. This expansion adds to fears since China slashed its growth stance. However, the anticipated growth in the upcoming markets has enabled the Equities to maintain an upward trend.

Creditors in the market are expected to exchange their bonds in order to avoid default that could cause the Euro region almost $1.3 trillion damage. However, such a swap would cost creditors more than three- quarters of their bond value.

The reassessment of feasible security damage in the event that the Greek’s agreement with private borrowers fails has forced traders to sell their stocks of major banks for fears of being exposed to Greece.

GSPF plunged 2.5% while the BKX dropped 2.7%. Morgan Stanley (MS.N) dropped 5.3 percent to about $17.32.

It is also important to note that Greece does not intend to extend its deadline on bond exchange with private debt holders. It is pessimistic that there are possibilities of the deadline being extended in order to have more creditors participate in the offer.

Basic resources stocks also fell as product prices tumbled pushed further down by the U.S. dollar.

Alcoa Inc (AA.N) fell 4.1% to $9.47 while Freeport-McMoRan Copper & Gold Inc (FCX.N) dropped 2.5 % to $39.44.

Volume was somewhat heavy with almost 7.5 billion shares sold on the New York Stock Exchange, NYSE Amex and NASDAQ, remaining above the normal average of 6.9 billion.

Apparently, Surprises for the Federal Reserve are far from over. Fed is soon expected to suffer another blow after a congressman from Texas prepares to refurbish it. And for your information, it is not the usual Ron Paul who is doing it.

This time it is Rep. Kevin Brady who prepares to launch legislation this coming Thursday that would see the Federal Reserve lose one of its primary goals of solving problems that are currently facing the job market.

In his argument, Brady said that he wants the bank to direct all its efforts to dealing with inflation.  He even illustrated that only the Federal Reserve that has dual mandate to deal with unemployment and stabilize prices. It should therefore follow the path of other central banks and chiefly deal with the effects of inflation, Brady said.

Brady also adds that the Federal Reserve has no capacity to deal with unemployment. According to pudding, Fed has almost hit its annual target of about 2% growth in economy. However, the 8.3% increase in the rate of unemployment is beyond the acceptable levels.

During his speech at the American Enterprise Institute, Brady said that it is only the president and the Congress that can provide a reliable business environment by controlling the budget, revenue, and other regulatory policies.

If the bill is enacted it is expected to deter the Fed from buying other treasuries apart from the U.S treasuries. It is also expected to push for an increment in the number of Fed’s regional presidents that are allowed to vote at Fed strategy meetings. Today, Fed only allows five of its regional presidents to vote, on rotary basis.

Apart from Brady, a number of other Congressmen such as Rep. Ron Paul and Barney Frank have tried to restructure the Federal Reserve but to no avail.

Different psychologists And financial experts have now come to conclude that the reason why there is a string of unending Wall Street outrages and surprises is that a large number of people working in the fiscal industry today are lunatics.

This can be supported by a recent article published in the last edition of CFA magazine that claimed that almost one of every ten people on the Wall Street are Psychos.  CFA is a business journal for chartered fiscal analysts.

The author- Sherree Decovny- who previously worked as an investment broker also said that the estimate was arrived at after an intensive research that included various qualified experts and a psychologist who cares for people who work on the Wall Street.

Martha Stout, Harvard University psychologist wrote in her book “The Sociopath Next Door” that one in every 25 Americans does not have conscience. She therefore calls them sociopaths.

Both sociopaths and psychopaths suffer from lack of proper social traits such as empathy and unbridled risk taking. Ms DeCovny says that these people failed to learn right from wrong in their childhood. They look very okay from outside but in reality, they are nothing short of Jeffrey Dahmer.  She also claims that most psychopaths do extremely well in areas where aggressiveness is highly rewarded.

Ms DeCovny adds that she has come across a lot of psychopaths including Ponzi-schemers and book-cooking company executives. They almost bear the same traits such as charming and I have come to know many psychopaths, from Ponzi-schemers to book-cooking corporate executives. They are always charming and egotistic.  They also have a wonderful sense of wittiness and twist facts more than a roulette wheel.
You can never notice their inadequacy until their replace their Armani suit with an orange boiler suit.

Ms. DeCovny reports that she only knows of one man who admits that he is a real psychopath.
Mr. Antar, former senior financial officer at Crazy Eddie, once pleaded culpable to felonies but he was not sentenced to a jail term for providing prosecutors with evidence for charges against his own cousin Eddie Antar.  Mr. Antar also admits that for people to survival on Wall Street, they have to be Psychopaths in their own different ways. He is currently teaching legal firms and other law- enforcement agencies, how to identify psychos. Although he says that one can easily redeem themselves from the condition, he believes that it is very easy for them to snap back.

Mc. DeCovny advises that there should be a thorough screening of interviewees seeking employment in financial institutions in order to identify their psychopathic traits. These institutions should also constantly monitor their employees’ anti-social behaviors.

Mr. Antar concludes that it is very easy for people to worship psychopaths by mistaking their showiness for leadership.

Experts now liken Japanese shareholders to the frog that; when it is stuck in a pot of boiling water, it will immediately jump out. But if it is put in a pot full of cold water and is heat gently, it won’t even notice that the water is getting hot.

Although the bank of Japan was, initially, quite apprehensive about Quantitative Easing, it has now decided to follow the path of other major central banks by purchasing Japanese government. This is a way of rescuing the bank of Japan from the struggle of deflation that it has been enduring for the last two decades. The bank expects to continue purchasing government bonds up to the time when inflation will hit its new 1 percent target.

But what makes this move risky to bond investors in Japan? In any case, buying of BOJ will definitely push the yields further down.  Well, the greatest threat is inflation. Due to many years of deflation, a lot of bond investors in Japan are always pessimistic about possibility of Japanese policymakers generating inflation. In fact there is a universal belief that Japanese policymakers can never generate inflation irrespective of the kind of extreme measures that they put.

Some experts also claim that Japan is now suffering from serious inflation if not hyperinflation. Such situations occur when a government incurs large deficits continuously forcing monetary authorities to take up the responsibility of buying government’ obligations.

In an attempt to break this process down, strategist Dylan Grice gave the following explanation.

For starters, Grice is convinced that Japan pays higher borrowing rates than what its tax revenues provide. What’s worse, this happens despite Japan having the lowest interest rates. Grice further notes that the gap is unsustainable. He says that if Japan is to stabilize its obligation to GDP ratio, it will have to cut down its financial spending by about 13 percent of GDP. It will also be expected to produce a chief surplus of about 3 percent GDP.

Although bond investors in Japan may be used to deflation, most of them will be caught by surprise by inflation and there will be no time left for them to run.

Latest polls indicate a growing support for EU’s budget- discipline accord by Irish voters. This support is expected to provide comfort for European countries especially the Irish coalition government that Ireland will pass the agreement in an alarming referendum.

The Business Post newspaper published on its Sunday issue, the Red C poll results that indicate a 60% to 40% support for the fiscal treaty by the Irish voters. The poll, however, excluded those who didn’t know what to vote.

The polls also indicated an increase in the majority from the previous 53% to 47% results released a month ago.

Irish Prime Minister Enda Kenny promptly announced government’s plans to conduct a referendum on the agreement to strengthen the EU so that it can be scrutinizing national budgets.  He said that the decision was arrived at after serious consultations with his legal advisors who explained to him the need to have the fiscal treaty put to a public vote.

The Sunday Independent also released results for the Millward Brown Lansdowne poll that indicated that 37% of Irish voters were in support of the agreement while 26% were opposing it. 21% of the voters said that they would vote conditionally while 15% of them were still undecided.

However, analyst argue that the Irish government was at first indisposed to carryout a referendum for fear of facing a harsh rejection of the austerity necessitated by its international rescue.  Analysts also cite that Irish voters have a tendency of endorsing EU treaties in re- run votes.

The Prime Minister announced that he will soon announce the date of the referendum.

It is also clear that Ireland faces the risk of being excluded from accessing a permanent Euro Zone emergency rescue fund in the future in case the treaty was rejected.  Ireland is currently struggling to come out of the program struck with EU and IMF in 2010 probably by the time the rescue funds end next year.
Results from the two polls also indicated that 30% of voters support the Fine Gael, the ruling party led by the Prime Minister, while 16% of voters support the Labor party.

The two major opposition parties, Sinn Fein and Fianna Fail, also have support of about 18% and 17% respectively, according to the latest polls.
However, while Sinn Fein vows to mobilize voter to reject the fiscal treaty, Fianna Fail promises to urge voters to vote for it.

(Reuters) – The EU’s President Herman Van Rompuy has warned against the European Council President Herman Van Rompuy warned against smugness with which the euro zone debt crisis is being dealt with  and emphasized the importance of adhering to budget rules and easing deficits.

Speaking on a Dutch television program on Sunday, Van Rompuy said that although the situation is normalizing, it is not yet over and the Euro Zone has to do everything possible to ensure that the situation never repeats itself in future.

Van Rompuy also added that an agreement was signed on Friday by the European leaders that will enhance stricter adherence to budget rules. He also pointed out that the 1, 000 billion Euro liquidity injection by the ECB has gone a long way in stabilizing the fiscal market.

Although the debate about Euro Zone’s disintegration has died down, governments still wish to cut down budget and work towards strengthening economic development. He said.

“If a plan does not meet demands we will take sanctions. That has never happened in the union. We have to make this credible otherwise the crisis will repeat itself.”

Since December 2009 when he was appointed as the Council president, Rompuy has made significant strides in resolving the obligation crisis. He has brought together various European leaders, trying to workout a plan that will help in reducing the debt.

He has also issued a warning to the countries that won’t meet dearth reduction targets emphasizing that they will have to pay more for debit refinancing. This has seen countries like Spain setting themselves softer budgets for 2012 contrary to the initial agreement under Euro’s austerity drive.

Van Rompuy is also pessimistic about some countries pulling out of Euro Zone saying that that would be the end of EU.

Some Dutch leaders like Wilders oppose Euro’s bailouts and highly support the Dutch minority government. Wilder argues that Dutch citizens should be let alone to decide whether to return to the guilder or to keep the Euro.

But Dutch’s Prime Minister Mark Rutte, vehemently opposes the request by Wilders for a referendum to return to the guilder arguing that such a move would cause huge crisis to the Netherland’s export- oriented economy. A large portion of parliamentarians in Dutch supports bailouts and supports, citing the need to have a single currency and the risks of Euro Zone country going insolvent. ($1 = 0.7573 euros).

The recent fall of U.S. stocks has spruced a weekly progress for the Standard and Poor’s 500 indexes. This came at a time when market indicators are showing an uptrend in the benchmark gauge outdoing global fiscal growth prospects. It is also notable that the convention, which pushed the benchmark higher in 2008(INDU), has maintained an upward trend since then.

Preliminary closing information also indicates that the S&P 500 index fell by about 0.3 percent to 1,369.55 at 4 p.m. New York time, while the benchmark gauge rose by about 0.3 percent, which has been its current trend since Feb. 24.

Experts such as John Carey, a money manager at Pioneer Investments, claim that the recent fall in stocks has led people into thinking that the market is a bit confused. Carey is also optimistic that the Europe’s debt crisis is likely to cause a major slowdown. He says that although people have relaxed about the debt crisis, the fundamental issues hang about unresolved.

Most people attribute the sudden drop in stocks to the slump that was experienced by the Euro and the increase in Spain’s budget deficit target for the year 2012. It is also believed that the sudden decline in German’s retail sales had a hand in the fall. Notable is the attempt by the Euro-area finance ministers to authorize the region’s bailout fund to issue bonds for Greece’s restructuring yesterday. This is the initial step in discharging funds from the salvage package.

The S&P 500 restricted its unsurpassed start to a year since 1991 (SPX) on grounds that Europe would domesticate its crisis. Reports from Bloomberg indicate that S&P trades at about 14.1 times detailed earnings, which is highest since August. However, this is below the average. It is also notable that, for the first time since 2008, Dow managed to close over 13, 000.

The Darien based investment banker, William Jennings, has been arrested and charged with hate crime that involved a confrontation with a New York cab driver.

STAMFORD – A popular investment banker has been arrested and charged for assaulting a cabbie in Darien on Wednesday. William Jennings, 47, was found guilty of threatening a New York based cabbie after he disputed the amount of cash that the banker was supposed to pay for the ride, police said.

William was charged with a number of crimes including second-degree attack, stealing of services, and second-degree bullying based on bigotry. The incident happened at Knoll wood Lane in Darien.  He was later released on $9,500 bond and he is expected to appear in court on March 7^th.  The banker, however, denied the charges and through his lawyer said that he is the victim in the case. Darien police Lt. Ronald Bussell confirmed the incident claiming that the cabbie reported about the assault to police about 12:30 a.m. Dec. 22.

In his statement, the cabbie told police that he had driven Jennings home to his $3.6 million Knollwood Lane home about midnight but the banker refused to reimburse the $200 cab fare and became rude, threatening him and abusing him on racial basis.

The driver also said that they later drove around in search of a police officer who could help them to settle the issue. Before they could find a police officer, the banker stabbed the cabbie’s hand with a pen knife as the cabbie tried to put his hand into the commuter booth through, Brusell said. Jennings’s profile shows that he is a reputable executive with Morgan Stanley.

His lawyer, Riccio, also said that Jennings was fully cooperative and that he was willing to assist the police in their investigations. He also added that his client was a victim of abduction, and therefore he shouldn’t be the defendant.

Riccio insisted the cabbie had charged his client $300 for a ride home from the city, which he said is an exorbitant amount. When the banker balked at the fare, the cab driver threatened to return him to the city, the lawyer said.

Jennings was being fluffed up from one side of the neighborhood to the other while the cabbie ignored stop signs and red lights, speeding en route for the center of town, Riccio said.

Riccio also admitted that his client drew a pen knife he uses for fishing and insisted to be set free of the cab since he was frightened. It was on the Post Road, where the driver tried to grab the knife from the banker and he was injured while putting his hands through the partition, Riccio said, claiming that it was not intentional.

Riccio also added that the driver decided to pull up the car in front of Darien Sport Shop next to the Interstate 95 entrance. That was when the banker managed to get out of the car. However, the attorney denied the allegations that Jennings issued threats or used racially derogatory words to affront the cabbie.

The ISDA’s decision to deny the CDS entry to Greek debt has been disdained by many investors claiming that any payouts in the bond market are mainly brought about by the attempts by Greece to force investors into its restructuring deal. Majority of investors are optimistic that such outcome will come about. They are also positive that the decision will impact adversely on other unstable bond markets in Europe.

The European determinations committee was also quick to elucidate their decision by issuing a short statement – which is contrary to what they normally do. Another problem with the statement is that it didn’t break down properly the details of the decision.

But in an attempt to justify the decision, Dow Jones Newswires Katy Burne offered a complete breakdown of the decision: That the decision was made according to the legalistic definition of when subordination occurs. According to Katy Burne, subordination occurs when one group of debt holders is ranked lower than another group, and lags behind the higher-ranking group in its payments collection from borrowers.

The committee also defines subordination as the change that occurs in the ranking of payment priorities of a debt, ranking it lower than another group.

However, for any CDS holder to be allowed to collect payments, there has to be enough proof by investors to show that an overt subordination has occurred.  Also, such subordination must have occurred through contractual arrangements. The investors must also prove that their securities are deteriorating in value.

Katy also argued that although Greece passed a legislation that was meant to supplement the Greek-law bonds, it didn’t touch on subordination. However, it was clear that the law was meant to force private investors into a bond swap. The problem with this bond exchange is that it will put private creditors at a higher risk of making losses while the ECB would benefit from the preferential treatment of exchanging bonds without collective-action clauses.

Experts say that since the bond contracts do not provide for mandatory subordination, the committee will never have the flexibility of ruling a credit event for the CDS. They also argue that the whole matter comes from the fact that ECB accumulates debts of other nations. Michael Cirami, the president of Eaton Vance argues that the matter is of vital important since it impacts adversely on the significance of government obligation across the world and most importantly, Euro Zone.

Although the latest retract brought a LTRO that is way below par, Fed Chairman Bernanke’s testimony forced traders to chill out their hope for more Quantitative Easing. This, in turn, caused dollar strength to push the EUR/USD lower.   

The truth is that, if Wednesday’s session psychology was being driven by the U.S. dollar, then such retract was just an alteration. This is especially true considering that pressure on the US dollar Index by the Dow Jones, which has maintained an upward trend, is still escalating.

Notable is the fact that the dollar has not yet sold off despite equities looking much stronger pre-market. The upturn has slowed down as the quick-fix time frames are a merger between 78.93 and 78.69 on the U.S. Dollar Index.

I am personally pessimistic about the EUR/USD being in the yet, although it’s somewhat close. Consider the following decision levels:

Despite the buoyant momentum and feeling that pushed the pair up to about 1.3500, there are still no clear signs of the pair maintaining an uptrend considering that it has contrived steady green grab candles with an insignificant upwards angle.

Noteworthy also is the fact that EUR/USD was far from penetrating the gravitational lug of the 200DMA. However, it is still early for us to overlook the possibility of a re-visit considering that a buying support could build between the 34 period EMA high and 20 period SMA close that are currently overlapping.

Of importance to do, right now, is to watch the possibilities of a downtrend. This means that you should monitor closely the quick-fix term intraday charts such as the 30-minute up to the point where the market trend will lose the 4to 6 o’clock angle.

Before you begin to bargain for bottoms, you should wait for time frames like the five, 15, and 30-minute (indicated above) to begin to shift the downtrend. For me, Intraday is a seller’s market but longer-term, I’m not very certain.

Remember, Forex trading is a risky investment and you need to have enough information on how to go about it before you can even think of investing your hard earned cash.