With yesterday’s close in the SPX cash at 1075, dead smack in the middle of the trading range from early July, the daily quote on today’s Bloomberg terminal seemed very apropos in describing the market action, “If you don’t know where you are going, you might wind up someplace else,” said Yogi Berra. I’ll add another of his, “If you come to a fork in the road, take it.” Stocks are dealing with the tug of war of a clearly softening economy on one hand and the hopes that it’s just temporary in part due to the hopes for a political ‘time out’ in Nov. I do not want to get into a political/policy discussion at all but it’s clear a ‘time out’ is desired by the market. The ECB’s Weber said he prefers to wait until after year end in normalizing policy due to possible “end of year tensions” and the Euro quickly moved lower in response and European stocks followed. The European iTRAXX financial 5 yr CDS is wider by 9 bps to 137, the highest in a month. Also as a result, German bund yields went to new record lows. The Shanghai index lost 1.7% from a 3 month high and the Sensex index lost .3% from a 30 month high.
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