Monday, December 12, 2016


Remember the great character of Mad Magazine?  His mantra was, "What, Me Worry?"  Old Al seems to be running things these days; nothing can stop the euphoria that has enveloped everything.  The ten year closed at it's highest yield (2.47%) in ten years as the optimism relating to the U.S. economy increased.  The DOW was up 40; the dollar reigning supreme against everything but oil related currencies (who cares) as people become more convinced that the production agreement will hold (it will not).  And as for the attitude towards our friends in Italy...

Wow!  Unibanc is well on it's way to raising some 14 billion Euros of new capital.  Of course they have had to sell a couple of their crown jewels to do so but Hey, who's counting.  And Monte de Paschi...this weekend it announced that it will go forward in it's attempt to raise 5 billion in new capital through a variety of mechanisms to include a debt for equity swap with junior bond holders.  To repeat:  it has no chance, no chance at all of it happening UNLESS the fix is in and there is an alternative credit risk standing in the wings about which we know nothing.  Perhaps there is because everyone with whom I spoke this morning in Europe believes that there is a deal in the works.  Perhaps so but if there is not and the Italian government has to engage in a straight bail-out as discussed on Friday and in the process wipe out a substantial number of small investors (voters), Mr. Newman's view will change very quickly and with it I suspect the view of the markets as a whole.  Not to belabor the fact but that scenario spells big trouble on a global basis as certainly the Euro and the Union will be imperiled.

But we are not there yet and things are so good that there is talk--nay suggestions--that the Fed moves 50 b.p.s on Wednesday.  I don't think so but how sentiment has changed.  Janet?  Janet who?  What the heck, Babe, you had some good, long innings.

We will see what tomorrow brings because I have a feeling that this thing is getting to the day-to-day stage.

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