This was the FIRST TIME we saw a European bailout that failed within HOURS. The markets have said it's not good enough.
Bonds have rallied. Again. Rates are effectively ZERO.
As one trader said to me, "No returns=no investments=no growth."
Traders don't want more debt on debt, they want 1) a restructuring of sovereign debt obligations, and 2) a massive restructuring of the southern European economies.
A restructuring? Like Greece? No way, they say. Not for everyone else. So far, everything is being done to preserve the bond holders. But we now have a sovereign debt crisis alongside a banking crisis. The governments can't bail out the banks, and vice-versa.
They can't get anything like that any time soon. In its place, you will see: the ECB will resume bond purchases, and another LTRO--number three--soon.
Meantime, this should be one of the heavier weeks for volume, but it's not starting out that way. This is quadruple witching---the quarterly expiration of stock and index options, and stock and index futures. On top of that, this Friday is also a quarterly rebalancing in the S&P 500, and next Friday is the YEARLY rebalancing of the Russell 3000 and Russell 2000.
All of this would normally produce volume, but traders seem paralyzed, staring bug-eyed at European headlines. Guys are not turning their books as much.
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