The "bailout" of Greece last week was supposed to put the European mess to rest. The market soared on the news that Greek bondholders, apparently willingly and happily, took a 50% haircut on their investment, avoiding the CDS nightmare that would rival the Lehman Brothers Bankruptcy in 2008. But alas the half life of these government coordinated bailouts is only a few days, as the money printing, can kicking, and manipulation can only prop this broken market so long.
And how about MF? Perhaps all we need to do is change one letter in that ticker to come up with the next financial stock to go belly up from their European bets? MS was down close to 10% today and finished down 8%. I think it obvious who the market is picking for the next shoe to fall. The only confirmation we need is a press release from Morgan Stanley stating their strength, lack of European exposure, and profitability. Jon Corize as recently as only a few weeks ago stated his firm was in fine shape. I recall similar musings from LEHM only days before it faced an untenable funding crisis.
We could be at or near a tipping point for the markets. I am a big bear, and after such a large drop, its only natural to think the markets will bounce. As I write futures are up, but Europe has yet to open and this relief bounce in the Euro should be short lived.
For tomorrow we have Ben Bernanke and his team of USD printers announcing their next plan to revitalize the economy. QE3 is a distinct possibility and the dip buying we saw in October could very well continue into November. If we've learned anything since 2008 its that Ben Bernanke will print as many USD as it takes to get us out of this mess. And that means stock have the chance to rally sharply on the Feds comments. So be nimble tomorrow.