Tuesday, March 10, 2009

Savage Thoughts: Why The 6% Move

From Robert Savage of GS.

The question of the day is whether today is a risk rally or a short squeeze or a bit of both. Hard to tell the difference as you experience the shove of pricing with US equities up 6% after Europe closes up 5-6%. The HSBC and Citibank headlines on encouraging earnings helped spur this move but they arent the only reasons. The Bernanke comment on bank reserves helped. The data on inventories and investor confidence both minor stories helped. But mostly today is about the indecision of the bears over the last 3 trading sessions to print aggressive new lows. So if things dont go down, they go up its that simple. For FX the knock on effect has been notable SEK has been a big winner, so too has NOK and EM FX. Gold as an alternative currency fails today as both the EUR and USD regain status in a world less concerned about the end of the world. Some of this is the G20 meeting speeches and the drumbeat for more global coordination and spending. Perhaps most surprising outcome is the lack of action in EUR or JPY or AUD or CAD. The most clearly confusing signal on the day is that oil which has been a barometer of global demand is lower. So many have their doubts about today and its sustainability - For now enjoy the sunshine. Sphere: Related Content
Print this post


Peatey said...

What's a "risk rally"?

Anonymous said...

i think he means a legitimate increase of risk exposure