Sunday, June 10, 2012

And you get a bailout, and you get a bailout....

Some times the markets are a little slow on the uptake.  If you remember WAY back on June 1st when the weak jobs number hit the tape I said "I wouldn't be surprised to hear the "QE3 is coming, QE3 is coming" chant by the end of the day."

Well, it didn't quite happen on that Friday but by midweek the talk of easing was on everyone's lips.  More liquidity from Central Banks (namely the Fed and China) lit a fire under the markets and resulted in the best week for the markets this year.

By Friday, it was becoming clear that there may not be a great deal of appetite in the US for further easing but never fear, in the Friday Rumor Round-up we heard that Spain might be in line for a handou... ooops, I mean bailou.... ooops, I mean "credit line".

Remember for the past two months Spain has been pounding the table "WE ARE NOT GREECE", but the Spanish bonds were telling a different story and it was clear that smart money was betting that Spain was in fact, a really big version of Greece.  Over the weekend we've received confirmation that Spain has gone hat in hand to the EU in search of 100 billion Euro bailout fund.

The immediate market reaction has been a huge relief rally around the globe (roughly 1% for the US futures right now) but there are many variables that need to be ironed out.

* What happens to existing Spanish bonds?
* Will the German Parliament be on board with this plan (I think there is 30% chance that they push back).
* Well, who's next?  Italy?

It should be an interesting week.

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Just when you think NYS has the market cornered on crazy sales tax rules consider the variables hidden inside Maine's snack tax rules...

"Today, the purchase of five bakery doughnuts can be subject to sales tax; six are tax free. A small container of milk is tax free at the convenience store but taxed at a sandwich shop. Ham and cheese are tax free when bought at the deli counter, but a deli platter of ham and cheese at the same place is taxed."

Cheers!




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