Market Update 10 28 11 _ On second thought....

 

 

From: Steve Scaramastro [mailto:SScaramastro@Viningsparks.com]
Sent: Friday, October 28, 2011 10:52 AM
To: sscaramastro@viningsparks.com; 'Lisa Butler'
Subject: Market Update 10 28 11 _ On second thought....

 

 

News out of Europe was greeted with great enthusiasm yesterday.  After the announcement was made that a plan was in place to “fix” the problems the market breathed a huge sigh of relief and stocks went up and bond prices went down and all was well.  In fact things were so good it looked like the Texas Rangers might even win the World Series...first Europe is saved and now the Rangers will win the series…how much better could a day get, right?  Then everyone went home and after the buzz wore off they got a chance to think about things…and then reality started to creep in…and maybe they realized “hey…Europe is still pretty hosed right now…and this business they announced looks a lot like our QE1 plan…and that didn’t really fix anything here when we tried it…maybe I shouldn’t get too excited by all of this.”  And then they watched in disbelief as the Texas Rangers lead began to slip and the sure-thing win was now in doubt…and then they had to stay up late because things got ugly and the game went to extra innings…and then the Rangers lost and they went to bet angry. 

 

Then they came in to work today and started throwing money back into Treasuries.  We are rallying this morning and yields are heading lower from yesterday’s highs.  The 10-year Treasury is up almost a point in price at the moment and is trading at a 2.30%.  That is still a level we can live with…but it’s a sign that the market is contemplating the news and starting to hedge the bets it made yesterday.

 

I don’t know what Europe’s road to recovery will look like but I seriously doubt it’s going to be a smooth ride that takes them quickly from riots and tear-gas to prosperity and fiscal responsibility.  I picture it being more like a rain-rutted dirt road that hasn’t seen a bulldozer in years…there will be a lot of bumps along the way, it will be slow going, and at times you will be worried that the vehicle might actually break. 

 

That’s all the news to report so far…but they day isn’t over.  Yields are moving lower and I’m thinking of dressing up as a Greek debenture for Halloween…I’ll have a very limited audience that gets it, but those that do should really appreciate it.  

 

Have a great weekend, and if you have any questions just let me know.

 

Steve Scaramastro, SVP

800-311-0707