The taking of the largest TARP recipient has boosted risk market trades - once again. The White Pak of Eurodollars has moved slightly back from the precipice. The term structure is moving out in a confidence sign even as Twist hits its stride.
The massive rally in equities is way ahead of the actual developments. The magnitude of the reactions tells us the Central banks and Administrators have lost control of the casino. The elastic relationship of "stuff" to money in a quantitative regime has gone ballistic. Directionally, we were in tune with the move. The amplitude is dialed up to a Spinal Tap-ish 11. If "stability" is the goal, clearly they are wide of the mark.
Still, from mid-Oct to Mid Nov could provide another window of relative calm and chaos metric improvements. The "Lehman benchmark" analysis of the market will continue.