Today was a big day for financials as Wells Fargo predicted some very upbeat first quarter earnings. Profit of $3billion on revenue of 20Billion. Most oft his profit was from the increase in refinancing, which in turn led to Bank of America rising 35% since it is likely it will benefit from the very same thing. For the week for equities we are slightly up, but the pace of increase is slowing as would be expected after such a huge run up. The earnings season really starts to gather steam next week with a barrage of companies reporting next week including the mother ship General Electric. Most of the action in stocks and bonds will be underpinned by these results.
On the bond front, it was an extremly quiet day volume wise. BoE kept rates unchanged and that pretty much killed game for short sterling as there was not much reaction to the news and I think short sterling traders started the holidays early. On Euribor front we had a sell of in spreads as we rallied in stocks. For Bunds we pushed down lower and settled at 121.87, looking ahead I think we need to be looking at breaking 121.50 if we are to head any lower or otherwise my bet is we still head towards 124.
People have been asking me alot lately where do we head now for stocks, and my feeling is that in the last month nothing much economically has chnaged, but just the mood has changed, slightly more risk appetite is returning and people jumping on the back of the rally hoping not to miss it. This market right now just represents a huge pool of emotions. FEAR of missing the rally, GREED of not getting out after such a big move up, there are those who are leveraging in the option market because they think they have missed to much of the rally so far as 20% more options traded then the daily average today, and over 50% more then on a normal pre holiday trading day.
I still remain a bear, and I think we are to still head down some point this year as I have said in previous posts. Only time will tell...
Happy Easter
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