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Even with my generally bearish outlook, I'm surprised by the persistence and ferocity of the recent decline. What's the cause? Earnings have been generally good, at least compared to estimates lowered since Q1. US economic data is generally okay, at least nothing bad that we don't know. Helicopter Ben continues his looming absence, but this shouldn't be a surprise to anyone as the five-year expected inflation hangs around 2%, not nearly enough political cover for QE3. The temporary debt-ceiling non-fix shouldn't be a surprise to anyone, either; even if it were, the market decline started in earnest only afterward, which is equally remarkable as the calm beforehand.

The only plausible explanation is Europe, as the last PIIGS, Italy, got pummeled recently. Even the core, mighty Germany, got hurt. Perhaps Italy shot itself in the foot by the (rumored and officially denied) second cancellation of bond auctions. But let's face it, unlike Spain, Italy has a real economy. While Spain does have a heavy bond-roll this year and is hurt by the current surging yields, the troika probably still has enough political will to tough it out this time. Bond vigilantes may have to wait until next time for the big prize. And a next time there will be, just probably not now.

But even in the worst-case (short-term) scenario, how bad can it be -- US gets downgraded, Greek CDS gets triggered? These have been very much like an orgasm the world has been trying to reach for months and, as such, would be spectacularly anti-climatic when and if it finally comes. Let's just get on with it, get it off, and get it over with.

In short, tell me something, anything, bad that we don't already fear. I don't claim to know when the bottom hits. But I'll be waiting for a big risk-on reversal in the coming days and weeks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: Waiting for This False Bear to Pass