 | The expected short-covering rally is upon us, once again ushered in by a huge hit of hopium. More “free” money is rumored to be going the way of the banksters.
With surprising frankness, ECB President Mario Draghi said Wednesday that even though the risks to recovery in the euro area were increasing, he will refrain from Longer Term Relief Operations (LTRO) at this time.
Of course we can’t get too excited. Draghi did announce a lengthy extension to banks' unlimited access to ECB loans thereby extending short-term liquidity. Still, he sounded almost sane when speaking about further LTRO. So for now, we’ll give Draghi a quiet golf clap instead of thunderous applause.
But let’s look closer at his comments:
"We think that so far … there's plenty of liquidity in some parts of the area and there is a shortage in other parts of the euro area,"(read: If it wasn’t for Germany I’d be singing an entirely different tune).
"Some of the problems in the euro area have nothing to do with monetary policy. And I don't think it is right for monetary policy to fill other institutions' lack of actions." (Read: Here’s a crazy idea Greece. Go collect some taxes! Or France; why today of all days, does he decide to lower the retirement age for pensions?)
Unfortunately, here at home, there’s not a single-shred of sanity, as the stock market shrugged off all things European, and rallied once again on “hopium”. The present sugar high is of course from the future QE3, and we all know Backstop-Ben will show neither restraint nor rectitude when it comes to further easing.
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
larrylevin@tradingadvantage.com
Trading Advantage
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Trading Signals from the Electronic (ES) mini-SP 500 - Pivot sell @ 9:08am at 1301.75 = -0.50 & b/e (2 lots)
- Algorithm positions (10)
- “Reading the Tape” positions (2)…combined Secret’s, Algo, & “Reading the Tape” total… -2.50
ES 1311.25 / 1300.75
POC... 1307.75
YM 12350 / 12264
NQ 2541.75 / 2523.25
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Keep a civil tongue.