One of my favorite lines from "Shawshank Redemption." Italian 10 year is over 6.5% and rising, the 2 year was up to 6.2%, stands at 5.9%. "But, if Italy can implement reforms, they can grow and narrow their 4% budget deficit!" Have you seen the Italian PMI numbers? Either the PMI surveys, which have been a pretty accurate predictor of GDP, are completely wrong, or Italy is already in recession, and the 4% deficit will rise higher, reforms or not. Given where yields are, it would take alot for the ECB to rein it in -- which they can do, it just looks like they don't have the will (wanting to get Italy to act right) or ability (German pressure).
And oil...what can I say? Hints from Israel? Maybe, but the market is even more desensitized to those than they are to Europe's "all fixed!" declarations. My sense is that hedge funds, traders, et. al., are in denial, trying to make money before the year is out, hoping things work themselves out, and the market goes higher. I was watching Bloomberg earlier this morning, they were interviewing traders, and that's the impression I get from their sanguine views on Italian yields. Rumors of Berlusconi resigning? That's ridiculous, even for a euro-rumor. They don't know their man - Berlusconi would be dictator if he could install himself as such.
And oil...what can I say? Hints from Israel? Maybe, but the market is even more desensitized to those than they are to Europe's "all fixed!" declarations. My sense is that hedge funds, traders, et. al., are in denial, trying to make money before the year is out, hoping things work themselves out, and the market goes higher. I was watching Bloomberg earlier this morning, they were interviewing traders, and that's the impression I get from their sanguine views on Italian yields. Rumors of Berlusconi resigning? That's ridiculous, even for a euro-rumor. They don't know their man - Berlusconi would be dictator if he could install himself as such.
I think I may be wrong that the market isn't worried about Iran.
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