Sept 14. Stocks and bonds ride tide of liquidity
Sept 14. Stocks surged as new Basel rules were interpreted as another free pass for the banking system. Financials staged a nice rally, reminds me of Wile E Coyote, smugly breathing a sigh of relief as he believes he’s averted being crushed by a boulder only to inadvertantly launch another one that lands squarely on his head. I was completely wrong about how the market would react to this news, thinking that it might cast banks in a more negative light, but it was sort of like the relaxation of mark to market accounting in spring of 2009. So I guess I’m the one with the anvil dangling overhead.
–US budget numbers were released for August. I saw an interesting piece that said interest expense accounted for 8% of tax revenues, up from 5% earlier in the year.
–Retail Sales today expected +0.3%.
–Volume was light but there was quite a bit of treasury call buying in the form of butterflies and call spreads, mostly in October which expires one week from Friday.
http://www.youtube.com/watch?v=hz65AOjabtM
