Friday, October 7, 2011

Ai Yai Yai

So NFP came out better than expected and made the /ES rocket to 1173 giving me an accute myocardial infarction. But in the spirit of keeping it real the ratings agencies swooped in to save me by instituting downgrades across Europe (hallelujah baby Jesus). More seriously though, shouldn't this have been expected? Did anyone really think that the banks in Europe were immaculately recapitalized? Or that the sovereign debt hell turned into sovereign debt heaven? Or that China was not crashing to the floor smashing it's face?

There is so much tail risk that I have no problem being on the right side of the trade for the wrong reason.

Off topic, but another thing I was ruminating on earlier, is that about 1-in-5 Americans are on food stamps. This is important because if you're on food stamps you probably won't qualify for a mortgage and with U6 unemployment @ 20% most (if not all) ipso facto will not qualify for an ultra-low mortgage rate with T's at record lows. So whatever Bernanke is trying to do with Operation Twist will be an epic failure. This is another anchor holding down the housing market and every industry that is a proxy to it.

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