Home > Debt, Economy, Market News > Why the market rallied at today’s close….rumors of another European debt “solution”

Why the market rallied at today’s close….rumors of another European debt “solution”

(Non) News Of Dexia “Bad Bank” Sends Market Soaring
“If anyone had any doubt this market is broken beyond compare and controlled by complete idiots, this should put all doubts to rest. Anyone wondering why stocks are soaring, the reason is that according to non-news, because this was first reported yesterday by the FT, Dexia will park €180 billion in worthless assets in a bad bank. This is beyond ridiculous as Belgium, even in JV with France, will be unable to ringfence and hence fund this amount of capital for the now nationalized bank. It also means that Belgium is about to be downgraded following a long-overdue warning by S&P and Moodys to cut the country. It also means that Belgian CDS will soon trade points up front. It also means that Belgian funding costs will soar. It also means that French CDS will explode tomorrow and that interbank markets in Europe will collapse (even more) once the market realizes that France has just diluted its “bailout dry capital” by rescuing a Belgian bank. And so on. And so on. But for now the ripfest is here. Fade every uptick as this is sheer desperation out of Belgium which pretends it is Switzerland and can do with Dexia what the Swiss did with UBS. Hint: it is not and no, it can’t.”

Via Zero Hedge

Market Snapshot: Dow Jones Soars 400 Points On European Rescue Plan #42
“Moody’s ITA downgrade took some shine off as EUR drops 60 pips and ES now 13pts off its highs. TSYs are 3-4bps lower in yields. Gold/Silver not moving much on it.

On the basis of old news, more promises, lack of any clarity, and Dexia’s dump on the Belgian government, the equity markets staged a 4% rally in the last 45 minutes to end an incredible day. Our assumption is that this was simply the bounce that everyone expected as we seemed to have squeezed shorts into lunch and were limping back lower on AAPL disappointment. Quite clearly, there were a few uncomfortable equity shorts who were squeezed out rapidly and incessantly as the S&P massively outperformed credit as well as the broad basket of risk assets – even TSYs only managed to sell back to earlier day’s high yields (as opposed to extending). Gold/Silver rallied (though well off week highs) as the USD dumped back near the week’s lows and copper and oil rallied but again no where near as ebullient as stocks. Evidently, the equity move is exuberant at best but these squeezes seem able to maintain longer than anyone expects.”

Via Zero Hedge

FT Causes Massive Short Squeeze With Mother Of All End Of Day Rumors
“Here are the key selected sections from the FT story that sent the Dow Jones soaring 400 points from its intraday lows: “Although the details of the plan are still under discussion, officials said EU ministers meeting in Luxembourg had concluded that they had not done enough to convince financial markets that Europe’s banks could withstand the current debt crisis… “There is an increasingly shared view that we need a concerted, co-ordinated approach in Europe while many of the elements are done in the member states,” Olli Rehn, European commissioner for economic affairs, told the Financial Times. “There is a sense of urgency among ministers and we need to move on.” Mr Rehn cautioned that while there was “no formal decision” to begin a Europe-wide effort, co-ordination among EU’s institutions – including the European Central Bank, European Banking Authority and the European Commission – on necessary measures had intensified.” So, there is …. nothing definite, just more speculation, more rumors, and more innuendo. But hey, it worked last week with the Liesman rumor. It obviously would work for the FT which has become the End of Day rumor source du jour, first with China bailout rumors (since denied), then with recapitalization rumors (denied), and now with this joke. Pathetic.”

Via Zero Hedge

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Categories: Debt, Economy, Market News
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