The next three months are crucial to the survival of the EU. If they are to make it out alive and into the future, the require support and cooperation of the markets.
Remember that the ECB and EFSF, along with the potential cooperation of the IMF, have hundreds of billions of euros on the sidelines. That’s not enough money to fix the crisis. It is potentially enough money to spark a rally in euro bonds just in time to absorb their auctions.
That’s what I would gather they have been doing throughout the past three days.
It started with CDS contracts being sold in size a few nights ago (the Fly posted the numbers in the news section). Then it spread to euro bonds the next day.
Today, Italy had a twelve month auction at yields near half of what they were going for at the time.
Who buys bonds like that, other than a government body? Why purchase that many one year bonds down to that yield level, when any investor could get them for the higher yield on secondary markets?
Now the Europeans are entering the end game, buying their own debt in size, determined to try and bring back the private money to the table with visions of huge payoffs. Will they succeed? Or is their bluff even now being called by Soros’ type investors shorting their debt as fast as they can get their trades cleared?
I guess the answer is: we’ll see, won’t we.
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CCJ has my blessing if it can get over $20
also be advised that the $USD is at a level that going any higher has negatively effected US exports
therefore if it falls here, commodities will shoot higher, including gold and oil
NOTE: here’s a jewel for you old man – keep an eye on JVA
How do you suppose oil will shoot higher from here? What do you think its been doing since October?
The doomsday scenario is off the table right now
If you think the rally in oil has been impressive in face of a rising dollar, just wait until the dollar starts tanking
Even after the rally in stocks and oil, being long now with the dollar at long term resistance is a low risk play
If the dollar instead breaks out, then I will reconsider.
Bear in mind, resistance does not take into effect a second round of LTRO from the ECB. Or Chinese central bank policy. Or desperation from emerging markets to maintain their growth rates. Any of these things can cause the dollar to cut through your overhead ristance like it were made of Philadelphia cream cheese.
Also, if oil does rally, how high do you think it goes before it ushers in a second recession?
If the dollar breaks, oils 2011 highs would be the first target
Also we are above the Oct 2011 resistance peak on the SPX which is bullish but its important we stay above the 200 simple moving average
Sell in May and go away is what I’m thinking for 2012
Agree with you here Cain. You still short oil?
I say the SPX has plenty of room to rally, even with a strengthening dollar, so long as oil stays under $100. And I’m going to bet it does, at least until May…
I also think CCJ will be the story of the year.
I’m still short oil and energy, but this time through SCO and ERY.
So let’s see. Oil markets are pricing in a war with Iran, the closing of the Straights of Hormuz, Nigerian oil going off line, a soft landing in China, U.S. growth, some solution to the EU debt crisis, and a weaker dollar.
So when none of those things happens, what then?
And boom goes the dynamite.