Sell-Off

by Larry Levin

Well, well, well, the market just couldn't ignore the cancer in Europe any longer - at least today anyway. The market was sold-off hard both here and in Europe as yet more bad news from Greece surfaced. Often thought to be in remission, Greece's massive debt problem just keeps showing up again and again as a bona fide metastasized neoplasm.

The sell-off was inevitable; Greece found it more and more difficult to sell its IOUs on the market as its treasury market was routed. Nearly each day over the last week Greece asked for a bailout that was reported as a done deal, then was refuted by the Germans as complete nonsense. Before the Germans were able to debunk these claims that it was prepared to rob its citizens for the benefits of Grecian pensioners, the US markets always rallied. Then, as we found out each time, once the so-called bailout was refuted, the markets yawned and collectively said "so what, we're not giving back these gains."

Until today. The Dow fell enough, today alone, to strip away TWELVE days of gains.

If it weren't for the ridiculously useless ratings agencies, however, this may not have happened at all. In the usual Johnny-Come-Lately fashion, Standard & Poor's downgraded Greece sovereign debt to junk this morning. Yeah...TODAY...after months of wailing and gnashing of teeth by the Greek government, civil unrest/riots, massive work stoppages, etc.

The rating agencies were probably waiting on the Germans, hoping that they didn't have to actually do their jobs. After all, if the Germans bailed out the Greeks S&P wouldn't have had to do their jobs. They probably didn't like a recent headline in Germany’s biggest-selling tabloid, which ran a front-page headline asking: “Why do we have to pay Greece’s luxury pensions?”

But the German's have no fear - the USA will bail out the Greeks. I said this before and I mean it! I doubt it will be done overtly, but rather through the IMF, whose biggest donor is the US taxpayer. Then again, if JPM or GS has just $10 at risk via Greek sovereign debt, Tax-Cheatin-Timmy will make up another lie to bail out his buddies via some BS "global goodness" nonsense.

“The biggest risk now is that the market speculates against every single indebted peripheral country, and that could lead to a sovereign debt crisis,” said Axel Botte, a fixed- income strategist at AXA Investment Managers in Paris. “The contagion risk is real.”

Ah-hem, Mr. Botte, there could be a contagious sovereign debt crisis not because of market speculation, but because of moronic government policies. Governments are massively in debt, like the USA, and it is getting worse - not better. Sadly, all governmental do-gooders are foolish die-hard Keynesian believers.

Like Communism, everywhere Keynesian economics have been tried - have F A I L E D.



Previous Day's Trading Room Results:

Trade Date: 4/27/10

E-Mini S&P Trades*
(before fees and commissions):

1) OTF sell at 2:18pm @ 1190.00 = b/e & +2.00 (2 lots)

2) Algorithm positions (7)

3) “Reading the Tape” positions (24) …combined Secret’s, Algo, & “Reading the Tape” total…+16.50



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