If the fed puts the European banks on the American taxpayer's backs as has been suggested by some, I think the calls to end the fed are going to be getting louder and louder. THE FED BETTER NOT BE DOING THIS!! I mean it is one thing to provide liquidity in a crisis, another to give money to these European banks that have been ridiculously stupid.
But the action or rumor of an action by the Fed to save European banks at American taxpayer expense would certainly explain the move upwards in oil and the Euro.
There has also been some data that is minimally positive. China's PMI went from being less than 50 for the last three months to 51.1 per HSBC, a razor thin positive expansion, but the Asian markets soared on that bit of positive news. The Philadelphia PMI also turned positive.
But the negative news, which has been overwhelming, has just been ignored. One city, I think Chicago, had a negative PMI. While China's PMI is barely positive, Europe's is squarely negative at 47.2 and falling. U.S. home prices are still falling more than expected and consumer confidence is at a two and a half year low.
In addition, French bond yields have soared higher decoupling from German bonds, a terrible sign for France and French banks. CDS on European debt continues surging higher, and Europe is trying to ban said CDS.
The Italian government is on the brink of collapse per the Financial Times, and Italian 10 year bond yields are almost at 6%, a rate at which they cannot pay down their debt.
And I haven't even gotten into the squabbling over the EFSF yet. I don't know how anyone thinks the EFSF is going to amount to anything more than a pea shooter. The banks write down Greek debt by $100 billion, and the EFSF lends them $100 billion. How is that positive?
I have to say Arwen I am tempted to break my trading rules and join you in buying more DTO.