Something IS NOTRight!

I have a bad feeling about the upcoming trading day. All week we have been plastered about how Greece is going to get bailed out and everything will be back to normal for the wealthy and powerful.

A Few days ago the market started out strongly and ramped up even higher mid morning on rumors that Germany and others were or had planned a Greece debt bailout restructuring plan.

There were various stories in the media about short bets on the Euro:

http://online.wsj.com/article/BT-CO-20100208-714174.html?mod=rss_Currencies

The news of sovereign debt problems have pressured the Euro for the last month, although these debt problems have been there all along, but one would assume that the Euro would stage a rally with the news flow? The Euro only rallied slightly and stocks headed back down over the next few days. The Euro this morning is actually back to the same levels before the Germany/Greece news was reported.

Well. This morning the entire news flow is surprise GREECE! I know a story is overexposed when I get 10 CNBC push message announcements on my I-Phone within 5 minutes. I mean do these guys actually read the news and look around and figure out what is going on, or or they simply in a race with Bloomberg to get out the most stories with the facts wrong? I don't know as of yet what is going on in Europe with regards to Greece. This is after spending the better part of last night reading some 20 stories! This is a major developing story with many layers. Its just simply too early to make a guess on market direction. There is simply far to many uncertainties out there.

MARKETS DON'T LIKE UNCERTAINTY

This alone tells me that the sovereign debt problems around the globe are being taken very seriously now by investors. Risk premiums are up. What has me more worried is that US Treasuries are stuck in quicksand. The yields just have to go higher to entice more buyers to purchase at auctions. What we have seen over the last few auctions is that the demand is not there at these yield levels. I am thinking that yields in the 5-5.25% will entice buyers in the 30Y, and 4-4.25% in the 10Y. That type of sell off in bond land will be painful especially if there is a corresponding sell off in equities. At the moment equity futures are are 3 points or so. One would think we would get some push here, but I firmly believe that the sellers are in charge at the moment and all rallies will be sold. This market to me looks like we are headed for 9K on the Dow.

My gut feeling about today centers around fear and uncertainty. We have jobless claims out at 8:30AM, they will most probably look a little better and maybe the futures get a push there, but we all know that employment trends are weak and certainly have not turned a corner.

The jig is up. The liquidity tsunami led market rally from last March was running on fumes for the better part of December/January. February has brought reality back into focus. The more we hear about Sovereign Debt problems the more investors will exit markets.

I mean how much more does society have to take in terms of bailouts? The pressure on central banks and governments to subsidize bad loans from banks is one thing, but now other countries governments have to subsidize other reckless countries?

http://tradersutra.blogspot.com/2010/02/cruel-twist-of-fate.html

As I have noted before. The banks are technically insolvent if they actually had to properly mark their loans. Delinquencies are moving higher month by month, but banks have stopped foreclosing because they cant handle the inventory. This is called Strategic Non-Foreclosure. The banks are letting homeowners stay in their homes free of mortgage as long as they maintain their homes and pay the property taxes. The impending shadow inventory that is going to hit the country later on this summer will be gruesome.

How are central banks going to bail out the banks and credit institutions when their own governments need to be bailed out first? There simply is no more money and or political will for such shenanigans.

I don't like the way things are looking so far today.
Things don't seem or feel warm and fuzzy the way CNBC and Bloomberg are making them out to be.