28 January 2011

SP 500 and NDX March Futures Daily Chart - The Sleeper Awakens

This is familiar. Demonstrations are taking place in a country for several days, and suddenly the US financial markets take notice and dive as it is risk trade off. Sounds like Greece all over again, without the flash crash.

Even Hillary of State weighed in, hedging the US bets on the if-come, encouraging their guy for thirty years Hosni Mubarak to be measured in his response, and perhaps step aside nicely since they like the opposition leader Mohamed ElBaradei who although currently under house arrest may be a contender, depending on which way the military tilts. A military I should add, that receives more direct US support ($2 billion annually they say) than any other country except Israel.

Perhaps the Egyptian government should compromise and force the demonstrators into free speech zones, deep in the desert and away from city and canal. Its the American way after all.

The important IPO of BankUnited was consummated this morning, and Blackstone and Carlyle, along with their underwriters on the Street, breathed a sigh of relief, and then pushed the 'sell' buttons.

The US equity market is very thin and held in weak hands. When genuine selling appears, and in this case for a part the withdrawal of artificial support, prices drop sharply as the risk trade comes off. Gold, silver and the dollar all rallied. But what about the bonds? Cliche-wise, this will probably end badly as Ben stretches the dollar and the bond to fill the pockets of the monied interests. 

And as for the next incident to stir the muddy waters of this gaseous recovery, head to higher ground if they start showing live pictures of demonstrations from the Americans' worst nightmare, Ar Riyadh. Then this will not be so easily dismissed as the rants of an 'uneducated people incapable of democracy'' as they said today on American TV, don'cha know.