Rally running out of Fireworks?

Where is the rally going to get its lift from?

I think they are running out of fireworks. The US released figures for new Home sales showing them UP. They released figures showing sales of durable goods UP. They even managed to get Morgan Stanley to persuade Qatar to buy 1.5 billion of the US taxpayer’s stake in Citi for 6 billion. Meaning they ‘made a profit’. Of course this profit is like removing a splinter from your toe while still manfully striding around with a plank shoved through your face. But I shouldn’t be so negaitve. Look at the positive. The splinter doesn’t hurt nay more!

The result of all these bubbles of good news – the DOW plunged back under 10K again.

Why?

Well, house sales were up but prices on those housese were still DOWN. Again. For the 6th month in a row. On Durable goods – If you take out innexplicable and in my opinion nearly suicidal orders for airplanes, then Durable Goods was in fact DOWN. But Citi and Qatar are good news. Except if you’re from Qatar. Dubai builds it own follies. Qatar apparently prefers top buy other people’s. Good to know gullability is universal.

What do you think Morgan Stanley told them? “This is your chance to get in on the ground floor of Wall Street’s recovery and own part of one of the biggest players!” Something like that? Amazing. Citi used to trade at $50. Monday it traded at about $4.60. Qatar bought for $4.13 and the value immediately went down to $3.84

Question for Qatar – what is going to raise the price of Citi? The US has a tanker load more to sell which should push th eprice down more, and Citi is badly exposed to CRE losses. Just wondering.

Commercial Real Estate losses are coming. I can’t see what force is going to stop them. Particularly if pressure mounts on the US for it to raise rates. That pressure is growing. The second largest Spanish bank BBVA is getting hammered and may be on the verge of having no liquidity in large part, I think, because of its expossure to US CRE carnage via its US subsidiary Compass Bank.

The Euro is down again. Greece is rumoured to be doing exactly what we all thought it would – try to NOT impliment its ‘agreed’ austerity measures. And Italy, continuing its turn as Euro jester, announced the highly realistic austerity plan of €42 Billion in cuts. It was greeted with a call for a national strike by one of Italy’s largest unions. Italy – €42 Billion in cuts – fat chance!

Remind me again – where is the rally going to come from?

2 thoughts on “Rally running out of Fireworks?”

  1. Golem XIV - Thoughts

    China wobbled on buying debt. The financial world trembled.
    China reassured. The bankers were so relieved they hear the angels singing to them that it is OK again, to borrow and spend exaclty as before.

    Rally today. Worry next week.

Leave a Comment

Your email address will not be published.