The market is about speculation, and this is what we have been getting the last couple of months. Speculation that things aren't as bad as they seem, there's no reason to panic, so risk appetite seems to be returning, as we sell off on bonds and return to the market. Although this rally goes against my better judgement, you can't fight the tape. The trend to the upside is very strong at the moment, and its hard to pick a top right now.
Financials continue to lead the charge, with the XLF, (financial ETF) up 10%. This was sparked by Warren Buffet comments on Wells Fargo, and speculation, that some banks wont need as much extra capital raising.
With so much money on the side lines, especially in mutual funds which are cash rich at the moment, it is easy to see how we could continue to go much higher still, as those who have not gotten into the rally already will not want to miss out.
I still stand by my belief that at some point this year we are going to have another real stab to the downside, but at the moment I remain long.
Bunds as would be expected sold off, and fell below 122. In theory downside should be capped since its unlikely they are going to raise rates any time soon, and monetary easing still seems the way to go for these central banks.
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