Dumb and Dumber

We have had nothing but bad news in recent weeks out of Europe, yet we are sitting within spitting distance of recent highs. The market clearly wants to go higher but the news out of Europe is making it nearly impossible. The market is looking for any signs of a clue out of Europe in order to take off.

Banks are being told delever in Europe. This means they have to sell assets, regardless of what measures governments are taking. It does not matter what budget Italy puts in place or what austerity measures it takes. Banks still need to sell assets. That is the reason sovereign spreads continue to blow out. There are simply no buyers for these assets (in the size necessary) other than the ECB. Everybody seems to realize this except for the ECB themselves and some German lawmakers.

The peripheral countries have agreed to the measures Germany and the ECB have asked for. It is time for the ECB to act. I apologize for the late posting but I don't know how many times I can repeat the same thing. There is simply nothing new to say. Hopefully, something will change soon but I'm not holding my breath.

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