Are markets acting rationally taking into account the current economic figures? The simple answer is no and the reason is because markets are fixed. The stock markets keep climbing to new highs, giving the appearance, to the general public, that all is well and the economy is recovering….it’s not. The Euro continues to disappoint and when does a bad outlook translate into higher stock prices? It doesn’t, it translates into mass fraud by the banks using High Frequency Trading and algorithms to give the impression of liquid and healthy stock markets.
Taken from The Hedge….
It would appear that the credit markets both anticipated and began to price in what is now the worst recessionary period for the European Union on record a few days ago. However, their exuberant, ever-hungry colleagues over in equity land remain in the bad is good mode and can’t get enough of these higher prices. Where ever we look around the developed world, equity prices are lifting as credit deteriorates. The masses ignored these lessons in 2007; are they ignoring it again? Or is this just another short-term divergence? If so, it is bond-buying time… if not, take your equity profits now because these divergences are unsustainable.
European stocks and credit…
US stocks and credit…
Sovereigns ain’t buying it?
and protection is bid
It’s time to get your cash out of the markets.