From "Buy The Rumor" To "Buy The Rumor Of The Rumor"
From Peter Tchir of TF Market Advisors
We have now moved from buying the rumor, to buying the rumor of the rumor.
Is this another reason for stocks to bounce? Or just admitting that EFSF is too confusing in its present form, and cannot do enough, and has so little support that we might as well move to ESM? Maybe the EU members have decided that if anyone was going to spend more money in Europe, it should be something they control directly and not this super CDO? Maybe they finally realized that the EFSF was supposed to be replaced by ESM in 2013, but EFSF was going to issue 30 year bonds? Maybe the German approval vote is more questionable than we are being led to believe?
Maybe its as simple as the analysts noticed that the algo's no longer simply bought stocks when EFSF was in the headline, so have added ESM to push the market higher?
Who is this employee who left his briefcase open at a bar with a Bloomberg reporter? Or is someone sending out leaks, waiting to see how the market, responds, and if it's not good enough, they send out another leak? It sounds bizarre.
There is no longer any point watching this. Those that are bullish will be cheered by each and every step, and believe it is a sign of more to come. Those that are bearish will view each headline with derision, until something big and real happens one way or another.
The price action seems as likely to be sucking out shorts, giving the longs some conviction, and I don't think the market is positioned as bearishly as it talks. Too many people seem to really want (need) this market to go up. If the market was as short as some people think, I believe we would be a lot higher already. This is a pretty weak bounce given the drubbing of the past 48 hours and all the attempts at positive headline generation.
While we are all focused on the headlines out of Europe, I am wondering when S&P will take the axe to some bank ratings? Back in January, S&P proposed a new methodology for bank ratings. It was an open call for comments. Given that Moody's started with their new methodology this week (blaming less government support), I wouldn't be surprised if we see action by S&P sooner than later.
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