There has been an eerie silence on trading desks for a month now; what's up?
In mid-December, you could chalk it up to exhaustion and the holidays; but as we now head into the middle of January and light volume and tight trading ranges continue, there are fewer excuses.
1) Hedge funds and retail brokers both tell me their desks are dead because everyone is waiting to see what will happen.
2) Most accounts are heavily in Treasuries or cash.
3) All agree that what is needed is: a) more trust and confidence, and b) investors to get sick of holding low-yielding Treasuries.
One encouraging sign: most traders note that there has been a pickup in interest in higher-yielding corporate bonds, as well as municipals, in the past week. This is the first encouraging sign that might signal investors are coming out of their foxholes.
The two issues competing for the attention of traders are the details of the stimulus package, and earnings guidance for 2009. Early signs for guidance are not encouraging: guidance continues to come down in key areas like energy, materials, and retail.
- Alcoa Downgraded As it Prepares to Report Earnings
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