The wheels seem to be officially in motion for the EU and IMF to extend money to Ireland who will in turn further restructure and recapitalize their banking system. Whether money in excess of this will go to Ireland’s general budget remains to be seen but Ireland seems intent on only keeping this ‘bailout’ for their banks and nothing more. This is in contrast to Greece whose government ran out of money. Bank bondholders again are getting saved and while its good to see this fire put out and some time being bought, the excess leverage that was the genesis of the problem still remains when there was a perfect, albeit painful, opportunity to cut debt levels. China did officially announce price controls on “important daily necessities” that they say will only be temporary and seem to be targeted. Because the policy wasn’t broader, Chinese stocks bounced after the drubbing they’ve taken over the past week. The rest of Asia followed the rally.
Following the AAII reading of individual investor sentiment last week where Bulls rose to the highest level since Jan ’07, the market correction since has quickly changed sentiment. Bulls fell from 57.6 to 40, the lowest since Sept 2nd while Bears rose to 32.5 from 28.5, also at a level last seen on Sept 2nd.
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