Okay, it's a little early to call the close today but considering the strong trend up erasing all the losses we experienced yesterday after a strong day trading Wednesday and it appears the mortgage backed securities market is going to have its first positive week trading in the entire month of October.
Amazing considering the fact that at the end of Q3 (September0 we were expecting a strong move even higher bringing rates lower... instead we witnessed a systematic sell off bleeding value day after day until we found support which we are now rallying off of. It's important to understand the losses incurred in October, was not a firesale or in response to economic data that suggests a real recovery is beginning. The losses experienced were all based on mere conjecture and the European leaders jaw wagging. Yes I will concede they have apparently come up with a deal, but the deal which they've announced is a small band aid placed over a large and bleeding wound. Moreover, it appears as though there are more wounds that do not have band aids yet. Right now the Euro plan is to hopefully squash the Greek debt issue thereby containing the spread of a debt crisis across Europe. Problem is, they don't seem to realize the patient they're treating is a hypochondriac, as while the voluntary (curious whose going to volunteer) haircuts for 50% applied to Greek debt does nothing to address the Italian and Portugal debt issues.
Point is, the all clear siren investors are listening to will soon be the "world is on fire" siren which will send them running back to the bond markets.
True this is one man's opinion... so disagree with me if you choose to. Just have a reason that doesn't include the DOW rallying, and is based on Keynesian economics which this euro experiment has proven does not work.
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