ITS A GUN FIGHT. BRING A MACHINE GUN.
The news cycle has moved on from Greece and is now focusing on Italy. Italian bonds to be specific. The problem for the past week has been yields on the Italian 10 year. The higher they go, the more chances there are that the country they provide financing to is about to go belly up.
The perceptions on these issues have a tendency to take on a life of their own. From one day to the next they are magnified, dissected and investigated a million times over. The resulting assessment changes from wildly pessimistic (today) to abundantly hopeful (yesterday) on a day to day basis.
Today we're catching the pessimistic side of the trade. There is no way to tell whether this assessment is any better than the abundantly hopeful side that was presented to us yesterday. The articulate incompetents that populate Wall Street will dissect the news for you, using seemingly sophisticated analysis backed up by a suit and a tie. For all the sophistication they present, the applicability of the analysis to your bottom line as an investor is nonexistent.
The truth is often times presented to you in the prices that prevail. Equity markets, at present, aren't thrilled with the fact that Italian yields are blowing through levels that have in the past signaled impending death for sovereign nations. The US markets are reacting by selling off some 2% in the futures.
As so often times is the case, the opening of the market on days like today is where emotions lie. The close of the market on days like today is where reality lies. With that said, I don't plan on taking any action until the final hour of trading. If I do take action, it will be in the reduction of exposure to equities.
If you plan on participating in this gun fight, you better bring a machine gun.
