This market is getting interesting. It seems there isn't much of a bullish sentiment, obviously. But more interestingly, these CDO writedowns and ratings downgrades are starting to occur at a frequency that seems to not be affecting the market anymore. Another thing: financials are being well supported today. Is it reason enough to be bullish simply that the bearish bet is losing its luster?
A bounce in the financials will not alleviate the consumer, consumer spending will reign in for months to come with continued foreclosures and the fallout. Also to note, we are not getting a pullback in oil, even as the dollar is having a strong rally today. Further evidence that funds are manipulating oil and blaming it on the dollar.
<i>"what happens to the bears when CDO writedowns don't work anymore?"</i> Not a scenario we need to worry about for the next year or so. Writedowns are a long ways from finished
the emotional responses from CDO writedowns will go down overtime, this might happen in as little as a few days
what will happen when the market realizes that there are more write downs next earnings season? what happens when they realize there are more write downs after more mortgages reset in 2008? what happens when you combine a recession to the equation?
Wall St. screwed itself by puttin' Joe Homeowner on the street. Up to now, the graft, I mean "donations" given to DC has kept them at bay. No more. Now, they start looking at Wall St., see all the other crap going on, the excrement hits the wind oscillator. It's going to be very, very tough to be a Banker for a while.
Why is the bullish case all that more appealing. Economy is being helped by rate cuts that may be ending soon and coupled with slowing economy. What's so bullish about going long in a slowing economy with profits in question?