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Credit Ignoring Equity Rally
As several pundits already pointed out, today's supposed political regime change (the polls are still not closed) implies that the stimulus spigot may well be closed for the Obama administration, after the Massachusetts "policy no-confidence" slap in the face, on the verge of the President's one year anniversary. What this implies is that the economy at this point could very well be on its own. Just ask Paul Krugman (or any economic skeptic for that matter) what will happen to the U.S. if gobs of money can not be printed out of thin air to support a recovery that as the NAHB data earlier indicated is already heading into a potential double-dip situation. Yet the market is giddy. Let's paraphrase - the equity market is giddy. Credit, oblivious to the 1% pop in stocks, has turned wider once again, with key indices IG and SovX both trending wider for the day. IG 13 was 84.5 bps at last check, 1 basis point wider for the day, and almost 10 bps wider since January 11. Yet equities are almost 1% higher in the same period.
And while credit is certainly spooked by the rise in the dollar, equities once again, continue to trade in a vacuum of the Fed's devices. Which begs the question: does real money even trade equities anymore?
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silly bond mkts, equities are for kids.
What's an equity?
"today's supposed political regime change implies that the stimulus spigot may well be closed for the Obama administration"
I find it hilarious that Republicans are suddenly considered the height of fiscal probity. But yes, for the sheer joy of obstruction and to tank the market prior to the election, they will most likely shoot down any new stimulus through Congress. That leaves the Fed.
Might be interesting if bonds, dollars, and stocks
all tanked together as Big4 weekly positions
suggest...
http://www.jubileeprosperity.com/
Interesting to ponder reality says it won't happen.
It's no fun to trade stocks anymore as everything is manipulated.
do you mean trade or short??
there is still lots of quick swings to take advantage of
This reverbates very well with the recent report from Barron's..
Why is everyone so confident that "liquidity will keep flowing"? Didn't I think the same way till mid-2008 myself? And didn't I decide never to turst Fed on this one again? So why are so many people fooling themselves? Maybe they are just older than myself and got used to trusting Fed on the liquidity issue?
I watch Bernanke before Congress and it's not difficult to see how scared the guy is.
And still, no one cares.
Well, I got a little bored just trading the indexes so I bought one of the 100 best growth stocks according to a certain newspaper that gives me Irritable Bowel Disease (IBD) and colon blow just thinking about it. I got absolutely creamed on it, partly because most of those stocks are pump and dump penny stocks that have greatly overstayed their welcome, and partly because I feel that stops are for big pussies! So that was my foray into actual equity trading, now I'm back to my safe and secure indexes...
Biff