But the top story has to be the unwillingness of US lenders to supply dollars to the Eurozone. Therefore the CB's of the US, UK, Switzerland, Japan, and of course, Europe, needed to step in with a promise to open the liquidity floodgates. Stock markets rallied. SOLD!
This news wasn't good enough to push the OEX through the upper end of its range, so the condor referred to last week still looks like a good trade to be in.
The VIX is still at a hefty 30+ and well supported, as it should be. If it breaks the level in the chart below, then we'll know that the market is ready to take a breather. Don't hold your breath.
So all eyes now turn towards this week's FOMC meeting. To print, or not to print, that's the question. And how will the markets react to either outcome? Any comments?
One statistic to keep an eye on is the 10-yr borrowing cost for Italy. Currently it's at 5.59%. The ECB is buying Italy's bonds like there's no tomorrow. If the rate gets to 6%, then the Greek problem will look like a mere dress rehearsal.
Everyone seems to really scared right now about inflation. The bigger fear I think we should have right now is deflation, and that the expansion of credit by the Fed should be seen in combination with the contraction by the banks. In that larger context, the Fed’s move no longer looks inflationary. It looks instead like the only means we’ve got right now to create badly needed credit.
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