The waiting game is back on....

Time for reflection and premise checks I guess.... the market been in supportive mood again..... at the open on Monday ECB and its allies put in bid across all sectors and floated the market (read banks) with free liquidity - the tide went out again and things normalised.

The investment banks is back at their game of praising the central banks and politicians - makes sense to 'brown nose' your paymaster ... nothing new there.

The support this week looks strong and firm, but it raises the the queston of which type of intervention is this?

The FX type - putting in bids, not telling when, testing markets, and then backing down, or the 1992 Bank of England version: Sitting on the bid in secondary P.I.G.S debt and toxicating the already poor ECB balancesheet?

Both approaches have negative impacts, the most important one being: It crowds out the private demand for fixed income in P.I.G.S as no one in their right mind will buy 2-year Greece at 95 cents in the dollar, which will enforce quicker resolution on austerity and structural reforms.

It is very tempting to join the biggest investment club in the world: 'Everything is good and getting better' when looking at macro data, as my friends in Goldman put it yesterday: 'It's the positive macro cycle vs the funding crisis'  - the piece goes on to describe how 'fundamentally' the data is good and improving while uncertainty of path re. Euro-zone creates misalignments in capital.

Well, the misalignment is in the fact that government/central bank is moving toxid waste from one box to another without ever thinking it needs to pay for it!

ECB has de-facto started QE - as their deposits seems to be colleteral! Joke- utter joke, the ECB ...

We have had a few bad days as we unlike the week-end before did not back down on risk, and how its time to revisit the Oracle of Delphi and find some anwers to these questions:

Will we have to see new highs before this collapses?
IS ECB on a QE or not?
Will new UK government use GBP as lever to increase competitiveness?
How long will ECB intervene in secondary market?

In other words, it's tough to be bearish right now, as the "logic" indicates its time to cover and rest.......(I note MS ex-post has found the market is now in bull-trend ...... See ZH yday)

For now I have increased the gamma-downside in equitites as I can't be member of the "fair weather club"

Safe winds,

Winston