Despite the bearish comments from many companies (I outlined them in my Trader Talk note earlier), there are a surprising number of traders who are arguing there is reason to start feeling more optimistic.
The bull case is that what is happening is:
--reduced reliance on commercial paper (CP) market
The end result will be smaller, more concentrated businesses that are better capitalized. There may be:
--4 major banks, several important regionals
--8 airlines, all powerful
--6 major, publicly traded housing companies.
What will trigger a broad rally? Two things need to happen:
--lower borrowing costs
--resolving short-term funding issues
How can we resolve the short-term funding issues that are paralyzing markets?
--we need counterparty risk perception go away--we need to have enough guys long credit default swaps to get burned
--confidence needs to return--Charles Campbell at Miller Tabak noted that famed fund manager Anthony Bolton had said this morninghe was bullish on the UK market.
Warren Buffett commiting money--albeit with a great return--is another confidence builder. We need more.
- Panicky Investors Making Some Bone-Headed Moves
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