If the all seeing eye could talk about the follies of the public, surely he would be saying something about what fools these mortals are. On July 2, the market dropped to the terrible 1000 level at 1010 on news that the former colleague of the chronic bear from Barrons was bearish on technology because of fears of stimulus and today it went up to the 1110 level because he had turned more optimistic. Mention of the 39% return in 2009 would cause Falstaffian laughter and songs of mirth would break out above.

Almost as humorous is the fixed incomes moving to a 10 day low on news presumably translated from the Yiddish that the former student of the liberal MIT command economy people was tightening in Israel. In a jiffy, the fixed income reversed, and the idea that tightening is anti inflationary came back to the fore, amid fears that his students and colleagues emanating from the white shoe bank to central banks all around the world were ready to take guidance from him once again. Let us hope that his counterpart and admirer in the US does not once again pay him a visit of homage as his first stop as the economy can't stand any more stasis, any more tapping of the depleting wells that are the human actors responsible for all the wealth.

There was the usual backdrop of earnings reports, and increased guidance from Fed Ex and Utd Parcel. So far, the CEO's are doing a great job with the guidances as 83% of the companies that have reported so far according to Bloomberg have beaten guidances. Now that the earnings guidances have become easy targets, the public turns its attention to sales guidances which as previously noted here is meaningless relative to profits.
Much talk is made about institutions moving their equity holdings to 68% relative to bonds as if this reflected anything more than the 10 percentage point divergence in bonds and stocks that happened at the end of the month.

The all seeing eye notes such things as that the market is at a high near the end of the month and that is when traditionally the market likes to do a do-si-do. It notes that the European stocks have gone up 5 days in a row on allayed fears of stress test results. But it laughs out loud about what the assumptions behind these stress tests are, as reported by Marginal Revolution with such stress things as real estate only going up 2 % a year. Well that's okay for Brussels and the Potomac but for the rest? It also notes that the grains have plummeted to one month lows on rain, and a full moon, and wonders how this should be quantified.

All in all it's a happy day for the public, and the restaurants in New York should be busy. However, the all seeing eye will not be celebrating and will join the chronic bear who has caused so much misery for at least the next several days.





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