Sunday, May 9, 2010

EU and IMF Go QE in Europe

Europe blinked and did what I figured they would. The EU and the IMF are now promising to make loans and buy almost $1 trillion in sovereign European debt.

That is the EU starting the process of moving the crappy debt on the balance sheets of European banks onto the balance sheets of the European Taxpayer. That is a potential huge win for the shareholders of these banks. Without the bailout, they are out of business - with the bailout, they sell a bunch of worthless Greek debt for Par (100 cents on the Dollar).

Stock Market Futures are up a little over 2% around the World. I will not look a gift horse in the mouth. It used to be that you would buy strength on dips, but now it seems that the crappier the fundamentals and technicals of your holdings, the higher they bounce.

European Banks move to the top of my list - Credit Suisse (CS) and Deutsche Bank (DB)seem to be closest to obvious support.

I am assuming that they bid will come back quickly to Commodities, as $1 trillion is a huge sum of money and it will need to get levered up 5 or 6 to 1 in the near term by these banks, as they start to trade their own accounts with taxpayer money (sound familiar).

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