Futures ramped higher overnight. EFSF euphoria is in full bloom. And so is End-of-Quarter markup. I'm focusing on different scenarios now. 1230.71 is back on the table, and possibly a bit higher.
Just as the party is starting over in Europe, some are starting to sober up. Germany’s FDP Threatens to Vote Against EFSF Revamp. I doubt anyone is listening, but they should.
German Chancellor Angela Merkel’s junior coalition partner, the Free Democratic Party, is threatening to vote against an overhaul of the European Financial Stability Facility if discussions about leveraging the fund don’t stop, Die Welt newspaper reported.
The FDP opposes any form of leverage for the region’s rescue fund because it would increase the burden on German taxpayers and circumvent parliament, Hermann Otto Solms, the party’s deputy floor leader and finance spokesman, was quoted as saying.
There is also this story. German turmoil over EU bail-outs as top judge calls for referendum
Germany's top judge has issued a blunt warning that no further fiscal powers may be surrendered to Europe without a new constitution and a popular referendum, vastly complicating plans to boost the EU's rescue machinery to €2 trillion (£1.7 trillion).
It seems that we should enjoy the rally while it lasts for we may be sober for a long time.
I will obviously have to switch my strategy -- no more adding to short inventory against my SSO and SPY calls unless the market confirms that this latest scenario is wrong.
For me, the S&P would have to break through yesterday's 1131.07 lows to do that. Preferably today. I don't think that's in the cards.
But as I Tweeted yesterday when mentioning the 1166.76 gap, you never know.
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