Macro Man’s a bit pressed for time today, so he’ll confine today’s effort to making two observations:
1) He’s not sure exactly what explains yesterday’s equity rally: Paulson’s comments (yawn), hopes for groundbreaking policy initiatives at this weekend’s G20 (good luck with that), or short gamma positions (possibly.)
But consider this: yesterday’s intraday range of 11.6% in the SPX……
…was very nearly as much as the entire yearly range in 2005!!!!!!
While it might appear tempting to conclude that the worst is over- the SPX has once again resoundingly rejected the 800 level- Macro Man prefers to keep his options open. Yesterday’s price action was rather similar to that observed on September 18, when the SPX made a new and then surged higher to close at its highs. This was the day that Paulson announced what has become the TARP. Yeah, that worked out well.
2) On a lighter note, it looks as if global central bank liquidity programs are beginning to loosen up the market for poorly-performing, illiquid assets. How else to explain the advert below?
Originally published on November 14, 2008 at Macro Man blog and reproduced here with the author’s permission.